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February 14, 2002
Students Compel Williams College to Offer Social Investment Option for Donors
by William Baue
Alumni and other donors now can have their endowment contributions invested in a socially
responsible manner.
SocialFunds.com --
Liberal arts institutions often teach the ideals of social justice and environmental responsibility
in the classroom. In the boardroom, however, trustees often ignore the social and environmental
implications of school endownment investments. Students at Williams College in Williamstown, Massachusetts recently tried
to erase this incongruity by establishing a socially responsible investment fund for donors to the
school. After initial resistance, the college implemented a social investment option as a
component of its $1.207 billion endowment, allowing alumni to earmark contributions for socially
responsible investing.
 In the spring of 2000, Williams
undergraduates organized a month-long series of events to draw attention to pressing social and
environmental issues. Chuck Matthei, president of Equity Trust Inc. and a speaker on community land trust
issues at the series, became an advisor to the students on socially responsible investing as well.
Some students, who wanted their senior class gift to be invested using social and environmental
criteria, expressed frustration at the school's unwillingness to consider any such investment
criteria.
The students told Mr. Matthei that they were less inclined to support the
college with donations if the school refused to address socially responsible investing. They asked
if they could put money in escrow until the college came to terms with the issue. Mr. Matthei
replied that it would be possible to do that if there was a cooperating non-profit with
intermediary capacities.
The student group proceeded to set up the so-called Williams 2000
fund, whereby a qualified 501 (c) (3) non-profit would accept contributions and invest them in a
socially responsible manner. Contributors could receive their tax deduction, just as they would
for donating to the college. The student group chose to invest through the Equity Trust Fund,
which would donate earnings to Williams once a year. However, the fund would retain the principal
until the college agreed to invest the money using socially responsible investment criteria.
"The development office just went ballistic, picking up the phone with the students and saying
'What the hell are you doing? You can't do this!' And of course they could do it--they were doing
it," Mr. Matthei said. "The control of the process had shifted completely. Psychologically, it
meant the college no longer had the luxury to stonewall. They could either come up with a
reasonable program or risk losing potential donors and losing face and losing relationships and
losing money," Mr. Matthei said.
To get the ball rolling, students raised $1,500 and
Equity Trust Fund invested it in community development loans until the Williams College trustees
decided on a social investment option. The trustees decided to invest what it called the "Social
Choice Fund" in the Calvert Group's Social
Investment Balanced Fund. The trustees have agreed that when the Social Choice Fund reaches
$10,000, it will invest ten percent of its holdings in a community development loan fund
specifically geared toward supporting the Berkshires, the region that encompasses Williams College.
"What's been done here can be replicated at many other places," said Mark Reinhardt, an
Associate Professor of Political Science at Williams. "That Williams College, a pillar of the
Yankee establishment, has taken this step makes it harder to dismiss efforts at other colleges as
romantic or unrealistic. Furthermore, on the technical details, there's now a model to follow."
Williams announced the availability of the Social Choice Fund in its Alumni Review, and it
will also publicize the option during reunions, which typically result in the highest donation
activity, according to Williams Director of Public Affairs Jim Kolesar.
The students
involved in the initiative are hoping that their success will ripple beyond the college campus.
"This option may very well encourage some alums to consider socially responsible investing
with their own portfolios," said Daniel Shearer, a sophomore at Williams.
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