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Wednesday, March 12,2014

Rethinking MSU’s endowment

Some ideas on how MSU’s $2 billion endowment might be spent to benefit the local economy

by Terry Link
The public relations team at Michigan State University did a fine job getting out the word about the school’s growing endowment recently. And the State Journal genuflected nicely towards its financial success in an editorial.

But like many who play in the financial casinos of the world, they pay little heed to what is left in the wake of their own financial gain. About 5 percent of MSU’s more than $2 billion treasure chest is used annually to fund a variety of worthy efforts, including student financial aid.

But the question of what the other 95 percent of the endowment is doing in the world other than growing MSU’s pot of gold is rarely considered. Are we subsidizing the sale of landmines or supporting corporate scofflaws or tobacco conglomerates?

MSU was once a leader in investment circles when it became the first public university to divest from companies doing business with apartheid South Africa. That wasn’t an action that the Board of Trustees dreamed up on its own. It was, of course, driven by committed students and faculty members answering the call of their oppressed brothers and sisters in South Africa.

Today the loudest call for divestment is aimed at fossil fuel companies. Colleges, cities and foundations are beginning to shift their funds away from fossil fuels for both climate, financial and social reasons. Some Socially Responsible Investing, or SRI, funds are keeping a small amount of fossil fuel holdings so that as shareholders they can push the companies to move their operations in more climate-friendly directions. MSU sits on the sidelines.

But it is one thing to focus solely on divestment and another to find better, more prosperous activities that benefit all humans and the natural world we share to invest in. I am drawn to the emergence of new ideas. Our human and environmental condition calls for some significant new approaches — to our economy, our politics and our education systems, to name just a few. Redirecting how we invest our money and our time could help us shift away from trajectories that lead to increasing poverty and inequality, ecological destabilization and general global insecurity.

What if, instead of debating this or that with the idea of one side winning, we used different approaches whereby winning meant finding the best idea, perhaps one not quite visible yet? How would that feel? What energies might it unleash? Why is competition always the preferred and often only approach considered to improve performance?

As readers of my blog might know, I am intrigued by ideas from various arenas and how they can be joined together to create something new, something better for the commonwealth of this amazing planet we inhabit and are unwittingly unraveling.

So how might an institution like MSU, which is a powerful anchor in this community, improve its financial position AND build a more socially equitable and environmentally sustainable future? Let’s float some ideas and see which ones might gather some speed.

What if MSU directed that a minimum of 10 percent of its endowment be invested in the tri-county area? This could be in businesses, bonding infrastructure improvements, social entrepreneurship venture capital — a mix, as most good investment vehicles advise. That would be $200 million working to enhance the quality of life in the community, which would make MSU and the Lansing area more of a magnet for others to want to live and work here.

What if, as a state-sponsored institution, it took another 20 percent, or $400 million, and invested it within the state, especially in entities that that call Michigan home? The income generated by those firms and their communities builds the tax base from which MSU gets some of its revenue. Most of the students come from families who live and work here. Circulating more of the money closer to home makes sense on many levels. For example, what if we invested in supply chains that collect a higher percentage of waste paper and transform it into recycled products that we all need and use, whether that’s newspaper, cardboard, tissue or printing papers?

Between our healthy forests and ample waste streams, there are business opportunities waiting for us to stimulate and invest in that benefit all of us.

This is only a beginning list of possibilities.

I’m not certain any of them will work. But I have a hunch that we need to create environments that stimulate creative thinking and possibility beyond the winning-is-everything battles we’re so used to engaging in. Possibilities emerge from ideas. What are yours?

Consultant Terry Link was the founding director of MSU’s Office of Campus Sustainability and is a senior fellow with the U.S. Partnership for Education for Sustainable Development. He can be reached at link@lansingcitypulse.com.

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