Dartblog

The conflict of interest charges leveled at the Board of Trustees continue to draw attention to the College. On AOL’s website, Joy Hayes calls for the Board to provide details of investments in Trustee-owned funds in order to validate claims that these investments were made in Dartmouth’s best interests. Dartblog asked for the same transparency not too long ago.

At the Volokh Conspiracy, former Dartmouth Trustee Todd Zywicki ‘88 posted the following comment:

Dartmouth’s spokesman says:

Justin Anderson, Dartmouth’s assistant vice president for media relations… “claims that these investments are in the best interest of the school, telling InsideHigherEd, “To forgo investments with a firm simply because a board member has some interest in the firm would be contrary to the best interest of the college.”

Well, perhaps - given the number of comparable hedge funds and private equity funds out there it isn’t obvious to me that prohibiting investments in a small number of funds that raise ethical concerns would be harmful to any institution. But even so, this response misses the point-the question is not whether a college should forgo investments because a board member has a conflict. The question is whether a college would have made the particular investment but for the conflicting interest. Would Dartmouth have plowed $77 million into these particular hedge funds and private equity funds if they had not been affiliated with trustees (read: “big donors”) of the college (of course, this is not a complete accounting of all of the investments either)? Note also that there is no public accounting as to how investments in these funds have fared compared to other funds so there is no way to know whether these funds have been chosen on their merits or for some other reason.

Before I left the Dartmouth Board I did finally get a rudimentary accounting of how much of Dartmouth’s endowment was invested in conflicting interest transactions (and even that minimal revelation was not easy to obtain). Despite my efforts I was stonewalled on my efforts to get an accounting on how returns on these particular funds compared to the rest of the endowment or how much was paid out in management fees to the relevant trustees’ firms. Before I was able to obtain that information I was kicked off the board (by secret vote).

Maybe the State of New Hampshire will be able to obtain more information in its investigation than I could.

Personally, I think this is a very big issue that is going to arise at an increasing number of universities and other similar non-profits in the years to come, so I think it will be useful to see what happens with the New Hampshire state investigation.