Once again, students at Colorado College are raising concerns about where the institution invests its $532 million endowment. There’s a new push for divestment from fossil fuels. Colorado College investments in Wall Street corporations like Monsanto, Goldman Sachs, McDonald’s and Halliburton have also drawn criticism.
The response these students usually get from the administration is that the college’s financial hands are tied. The purpose of the endowment is to make a return on investment, and fund managers assure officials that investing in Wall Street will produce the highest yield with the lowest risk.
In light of the last five years of economic turmoil, can we say this conventional wisdom holds true? Colorado College lost some $40 million in the crash of 2008. Should American investment – whether it’s a multimillion-dollar endowment or a company’s 401(k) or your whole life insurance policy – continue to be channeled into Wall Street corporations? Are there ways to invest in the local economy that are just as prudent and would produce the same, if not better, return?
The PPJPC Local Economy Working Group is exploring new alternatives to Wall Street in “Slow Money” discussions with Colorado College students and others interested in a robust local economy.
Almost all of the 50-odd Colorado College interns who have worked for the PPJPC over the past four years want to believe that the college would stand up for a better future for them and the world. So do many alumni making their homes in Colorado Springs.
They don’t want to hear – year after year – that the college has no ethical concerns about its investments, that return-on-investment is the only goal of good business.
The PPJPC guesses that most of the CC community – students, faculty, staff and alumni – wants the college to invest in a just and sustainable future. The problem is that they just don’t know how to do it.
Finance officials are boxed in by what they have been told is the wisest option for the multi-million-dollar endowment: namely, Wall Street.
Wall Street is not the only option! As more and more people are discovering – especially since the financial collapse of 2008 – there’s also Main Street. In Colorado Springs, let’s just call it “Tejon Street.”
Imagine part of Colorado College’s endowment becoming an economic driver for the local economy. Instead of helping Monsanto destroy the agricultural capacity of the planet, the college could help create a sustainable food shift in El Paso County.
Instead of helping Exxon-Mobil produce gasoline to ship our food from California or Mexico or China, Colorado College could help create permanent local jobs in agriculture, food production and manufacturing.
Coloradans buy $12 billion worth of food every year, approximately 97 percent of it imported from elsewhere, according to economist Michael Shuman, author of Local Dollars, Local Sense.
Shuman’s 2012 food-shift study, commissioned by the non-profit Transition Colorado (and its Slow Money-style investment arm Localization Partners), concluded that if we produced 25 percent of this food in Colorado, we could create 31,000 new jobs across the state.
But such a food shift won’t just happen because “buying local” has become trendy. It will take investment to start new farms, train workers and develop new supply infrastructure.
The cost of a 25-percent food shift in a place as populous as El Paso County could require as much as $200 million in investment capital.
Right down Tejon Street, not more than three miles from campus, there are hopes of creating a Downtown Public Market – a year-round farmer’s market and local food hub. The market would not only address the current downtown food desert, but could become a major attraction for residents and tourists alike.
About $5 million will be needed to get the basic market up and running, to purchase property, renovate historic buildings and link up to regional farms. Colorado College would be a hero in everyone’s mind if it could move a few million of endowment funds from Wall Street to Tejon Street. Regents of the University of Colorado could be heroes as well.
But how? Wall Street has spent the last 80 years funneling American investment into major corporations. Fund managers just don’t know how to move capital into local markets. Everyone perpetuates the myth that corporate investments are low risk – even though Shuman calculates that the average rate of return on Wall Street from 1915 to 2010 was 3.8 percent.
Cities all over the country are now discovering Slow Money – vehicles for local food investments through local banks, credit unions, community development finance institutions, community loan funds, municipal bonds and the Small Business Development Network.
The Local Economy Working Group hopes to engage the community in a new discussion of moving endowment funds from Wall Street to Tejon Street. Sounds like a great future!
Steven Saint is the executive director of the PPJPC.