At ten past seven on November 17, 2008, Hans Schoenburg ’10 stands on stage and looks out at a packed room. He grins. “Welcome to the first meeting of the Responsible Endowment Project,” he says. The room reverberates with so much applause that he is slightly surprised and has to clear his throat.

Schoenburg is the co-founder of the Responsible Endowment Project. He is six foot seven with the kind of flowing blond hair that makes girls jealous. Tonight, dressed in a brown jacket, blue collared shirt and khaki pants, he looks as nervous as a seventh grader at a middle school dance.

Schoenburg articulates a set of points that he and the Project’s roughly 20 original members have refined over a three-month period. The Responsible Endowment Project (REP) was started by a group of students who share a concern for the social and environmental impact of Yale’s endowment. With $17 billion, the REP’s members reason, the endowment and its renowned chief investment officer, David Swensen, have the potential to become agents for positive change in the financial world. For students, a responsible endowment could address a buffet of activist interests: labor, environmental, human rights. Ultimately, Schoenburg announces, “We believe Yale’s mission should apply to the endowment.” The audience claps loudly.

The REP is one of over 75 student activist groups at Yale, and its rallying call has existed since the Vietnam War. In the past, Yale has allegedly invested in companies that produce napalm, support apartheid, fund the civil war in Sudan, and profit from the war in Iraq. Though the Investments Office has divested from some of its most notorious holdings, it has ignored numerous appeals to become more transparent.

As Project members point out, the first step towards an ethical endowment is transparency. The majority of past efforts to protest the endowment didn’t know enough about what they were protesting, because Yale’s endowment is famously secretive and because students didn’t always research it adequately. Whatever they did, it was no match for the second-largest endowment in the academic world and its invincible money-making guru Swensen. The story of students challenging the Yale endowment is sort of like playing David and Goliath on repeat — except that David never wins.

Members of the Responsible Endowment Project, like the countless student movements before them, are determined to defy history. This time, the nation’s economy is in shambles and people are crying for Wall Street’s head. Members of the Responsible Endowment Project have a positive message, a broad-based student coalition, and nearly 200 people in a room on Old Campus who care about what they have to say.

This time, they believe, things will be different.


For the past few years, the Yale Investments Office’s annual report has been a glossy, 32-page bundle of fiscal joy for Yale alumni. In 2003, the report shows, the endowment’s return clocked in at a measly 8.8%. Four years later in 2007, the return had soared to a staggering 28%. Few people know how that happened — and as long as money keeps rolling in, very few people care. But the Responsible Endowment Project is determined to find out.

In its last annual report in June of 2007, the Investments Office broke down the endowment as follows: 23.3% in absolute return (a euphemism for hedge funds), 11% in domestic equity (public stocks of American companies), 4% in fixed income (bonds), 14% in foreign equity (non-U.S. companies), 18.7% in private equity, 27.1% in real assets (timber, oil, gas), and 1.9% in cash. REP faces a daunting task: of these investments, only domestic equity and real assets — 38% — are potentially researchable by its members.

The statistics aren’t exactly exhilarating. “It gets very technical, very quickly,” admitted Aaron Podolny ’12, one of the original members of REP. Unlike genocide in Darfur or the closing of overflow homeless shelters in New Haven, the endowment does not immediately conjure up images of human faces. Because it’s an abstract concept, he said, “very few people think about its impact.”

As a freshman, Podolny possesses earnest enthusiasm that makes him conspicuous in a crowd of disillusioned upperclassmen. During our first meeting in Bass Library, he spoke with such animation that a cranky academic told him to shut up.

In order to gain more knowledge about investing, Podolny has begun reading David Swensen’s Pioneering Portfolio Management and Christopher Browne’s Little Book of Value Investing. “Yale has been able to generate these substantial returns since the 1990’s, and I think it’s worth learning about that,” he said. He and other members of REP have done considerable research from the information they can obtain, most of it on tax forms that the endowment must file. They look up the companies on Google and SEC databases, and they contact activists and experts, some of whom have protested these corporations for years.

REP objects to two of the Office’s current investments. The first is HEI Hospitality, a hotel management company that REP members claim overworks its employees to the point of workplace injury. The second is in 90,000 acres of land in Maine, what’s left of a 446,000-acre holding that Yale bought from Georgia Pacific in 1999. Most of the land has since become a land preservation, but the environmental activists in REP argue that it was mismanaged and only sold because it was rendered completely useless.

“Yale had the option to take a significantly more sustainable approach,” claimed Chris Termyn ’10, the other co-founder of the REP. Instead, he said, the land was logged at the industry standard established by the Sustainable Forestry Initiative (SFI). It’s “the next step up from breaking the law.”

Termyn has a CLEAN POWER NOW sticker on his laptop and a good deal of hair in his eyes, which he peers through like a curtain as he stares at the ceiling and tries to think of a simpler way of explaining the situation. He believes Yale drew revenue from the forests for ten years, stopping when they could no longer profit from it without degrading it. Now, he and other activists want to make sure that the rest of the forests don’t suffer the same fate.

The tricky part, as Termyn and other members of REP readily admit, is deciding how the Investments Office should deal with its “bad” investments. Do they want Swensen to divest? How do they think the responsibility of investments should be decided? By Yale students? Faculty? Should they not invest in bad companies? Or only invest in good ones?

On the issue of transparency, REP’s position is equally indecisive. Some suggest an expanded role of the Advisory Committee on Investor Responsibility, a standing committee made up of faculty and students. Others want a password-protected site open to the Yale community on which the Yale Corporation would post its proxy voting record. Still others want delayed transparency, meaning the Investments Office would disclose its portfolio from five, ten, or 15 years ago. “It’s a huge grey area,” Schoenburg admitted.

The members of REP know what they want: social responsibility and a transparent endowment. But the question that has them all stumped is how to get it.


According to Professor Bradford Gentry, a senior lecturer at the School of Forestry who currently teaches a class called “Private Investment and the Environment,” there are three different ways to think about social investing these days, and none of them are definitive.

The first, traditional strategy is to invest in publicly traded shares and to cast votes at shareholder meetings to promote socially responsible actions. This is the stance that the Yale endowment takes. If you buy a share in a company, you have a say in what it does. The endowment maximizes returns, and in theory is parlaying its power into encouraging socially and environmentally responsible actions.

“An alternative would be to say, ‘Actually we want the endowment not to generate as much as possible and we’re willing to take a reduction for these purposes,’” Gentry continued. That would mean divesting from companies that are not socially or environmentally responsible, and taking the hit no matter the cost. This is what most student movements protesting the endowment have advocated in the past.

But now, a third way of thinking about ethical investing has emerged. “There are an increasing number of very good investment opportunities around more sustainable activities, from things like The Body Shop and green consumer goods to energy-efficient products, water treatment systems and clean energy products,” Gentry said. With the current “green” movement taking off, environmentally responsible investing could possibly increase returns.

Jack Robinson, Chief Investment Officer of Winslow Management, a firm that invests in “environmentally conscious” companies, has been advocating this view since 1983. In a Master’s Tea he gave in Morse College last month, Robinson said the idea that investors would have to sacrifice returns in order to be socially and environmentally responsible is “just not true.”

There are two main reasons that green investing is successful, Robinson said. First, you reduce risk. “If you pollute, you’re responsible for cleaning it up,” he explained, and clean-up is usually expensive. Second, you reduce cost. “A price is going to be put on carbon,” Robinson predicted. He pointed out that Barack Obama’s administration has set a goal of reducing carbon emissions by 80% by 2050, an objective it hopes to achieve by implementing an economy-wide cap-and-trade system. According to Obama’s campaign website, the administration would auction off a limited number of pollution credits, each permitting a company to release a certain amount of emissions. High levels of carbon emissions would become extremely costly for companies and their investors.

Asked what he would do if he were managing Yale’s endowment, Robinson said he would begin with some questions for the Investments Office. “Do you screen for carbon release? Do you know what your carbon footprint is? More sophisticated investors who ‘get it’ are beginning to ask these serious questions,” Robinson said. “If you’re not thinking green, you’re not thinking smart.”

Other members of the investing world are more wary about the growing green sector. “Conceptually we’re very interested in investing in alternative energy because you can hopefully kill two birds with one stone: you can do well by doing good,” said one partner at an investment management firm in Manhattan who spoke on the condition of anonymity, since employees cannot reveal the firm’s investment stances. Over the last year, his firm considered funding three different alternative energy projects — one each in wind, tidal, and solar energy — but ultimately turned them all down.

The projects presented a variety of problems. Some of the technologies were very new, and it was uncertain whether they would work on a commercial or industrial scale as opposed to a pilot scale. For the wind turbine company that approached the firm, some of the gear boxes were already breaking. Others, like the tidal power project, had not yet passed environmental regulations, and there were worries that an underwater windmill would kill fish. All of the projects required government subsidies, which are passed for terms of two, three, or five years. Investors can’t be sure that the subsidies will continue.

“Obama’s going to be there for four, maybe eight years,” the partner explained when it was pointed out that the incoming Obama administration had vowed to be more green. “I’ve got a 20-30 year project.”

The future of green industries is teaming with minutiae and uncertainty, just like the rest of the financial world.


Eleven months before the first meeting of the Responsible Endowment Project, Fortune Magazine commissioned a comprehensive poll on American consumers’ feelings about the U.S. economy. Of 1,000 Americans surveyed, 57 percent believed that there would be a downturn in the coming year, and 19 percent believed that the nation was already in a recession. “How worried are you?” CNN’s Money Blog asked readers, next to a pie graph titled “Consumer outlook: Gloomy.”

Over the next few months, it became clear that the United States had plunged into a full-fledged recession. In March, the titanic investment bank Bear Sterns was sold to JP Morgan Chase for $2 a share. In September, Lehman Brothers declared bankruptcy, Merrill Lynch was sold to Bank of America, and AIG sought a bridge loan from the Federal Reserve. On September 25, JP Morgan Chase agreed to purchase the banking assets of Washington Mutual. It was the biggest bank failure in history.

Those on “Main Street,” as politicians and the media termed the innocent Americans not working on Wall Street, were similarly hard-hit. Asked about their personal economic condition in the Fortune poll, nearly four in ten people said they were worse off than they were a year ago. Today, the unemployment rate is estimated at 6.7%, and likely to rise above 8%.

Many Americans are holding Wall Street accountable for this economic catastrophe. “This financial meltdown involved a broad national breakdown in personal responsibility, government regulation and financial ethics,” Thomas Friedman wrote in the New York Times in November of last year. The leaders of Citigroup, AIG, Goldman Sachs, Morgan Stanley, Lehman Brothers, and other financial giants had “brought the American and global economy to its knees through their reckless, short-sighted, down-right stupid investments,” George Packer ranted in The New Yorker on November 26. “I would like to see these malefactors of great wealth apologize to the country.”

It’s a watershed moment for investment management, one that the Responsible Endowment Project can only hope to exploit. During a crisis involving irresponsibility in the financial world on every level, REP wants to use Yale’s endowment as a catalyst for revolution. “If we started to drive the engine in that direction, we could improve the whole world,” Schoenburg said. REP believes that the prestige of David Swensen and Dean Takahashi, the endowment’s Chief Investment Officer and Senior Director of Investments, would lend more weight to the idea of ethical investing. “They’ve sent their protégés to other places across the country and they’ve changed the way that universities can invest their money,” said Katie Harrison, another member of REP. If they changed things once, why not change them again?

REP’s timing is either perfect or disastrous. With the nation decrying the reckless actions of Wall Street, the current economic climate could be ripe for the kind of change REP is advocating. But it is also a time in which the majority of the American population is scaling back. Burned by years of Wall Street’s shameless risks, most Americans are intent on holding on to what they still have. To some, REP represents students so absorbed in their own pristine, privileged worlds that they don’t notice the economy crashing around them.

“No way can I continue study at a university supported by the exploitation of my fellow human beings,” wrote one “appalled” sophomore commenter under the Yale Daily News article that covered REP’s meeting. “Then, um, leave,” replied another. “The rest of us,” continued the responder, “with our own blue-collar labor class parents, are too busy with silly pragmatic things like…keeping a job and getting the education they couldn’t afford at my age.”

According to the Investments Office’s 2007 report, 18% of the endowment, or $4 billion at the time, funds scholarships, fellowships, and prizes for Yale students. At a time when some students are challenging the endowment, there are many others who are just happy we still have one.


Reflecting on REP’s first meeting the next day, Hans Schoenburg was astonished by the tremendous turnout.

“There were lines to get in!” he exclaimed, throwing his hands up in excitement. “There were people on the floor.”

The first goal of any student movement is name recognition. With a flurry of media attention from the New Haven Register and the Yale Daily News, compounded by a sit-in at the Investments Office by the Undergraduate Organizing Committee protesting HEI, the Responsible Endowment Project has certainly achieved a degree of spotlight.

The next step is figuring out where to go from here. Both Schoenburg and Termyn would like to expand the group’s membership; they are currently talking to cultural, political and activist groups like the Roosevelt Institute and the Yale College Council. Termyn, for his part, wants to concentrate on creating a REP brand. There should be “tangible symbols that can represent our campaigns,” he said, pointing out the golden egg that REP used in its Facebook invitation, but he hasn’t decided what those images should be. As for specific demands, “it’s a discussion that hasn’t even started yet,” Schoenburg confessed. But the group plans to make a formal address to the Investments Office some time next spring. “It’s important that we do our research so that when we approach them, we’re at least talking on a similar level,” Podolny said.

The problem, of course, is that they will never be considered on a similar level. As with most activist groups, REP’s idealism provokes a wave of scornful cynicism. “The enviro-religious nitwits are at it again,” announced a commenter on the Yale Daily News article after REP’s meeting. “It’s sad to see the latest incarnation of student activism demonstrate some of the worst traits of its kind,” sighed an opinion article. The Investments Office, predictably, has barely deigned to respond to REP’s criticisms.

“As policy, members of the Investments Office do not comment on the University’s investments,” financial analyst Michael Schmidt wrote in an email from the Office.

The Investments Office’s strategy is incredibly shrewd. It will be nearly impossible for REP to build a case against a tight-lipped institution with an untraceable record. Idealism, curiosity, and determination are not enough to take on $17 billion. Professor Gentry cited studies that show boycotting companies — for example, those associated with apartheid in South Africa — was ineffectual. “Owning shares and pursuing shareholder rights in terms of proxy battles is seen as a more effective technique,” he said. In other words, you have to be in the system to change it.

The members of REP believe that simply protesting their ignorance will effect some sort of change. “I know a little about the endowment,” one eager freshman member of REP declared before the first meeting. “I know that we don’t know anything about the endowment!” But this isn’t enough. The members of REP do not have a fiscal plan. They aren’t sure how to determine what “responsible” means. They don’t know if green investing will increase returns. And they haven’t decided on any concrete solution for the investments they find objectionable. It’s true that these are the obstacles inherent to challenging the endowment; they do not stem from the incompetence of REP’s members. But that is irrelevant: the Responsible Endowment Project chose this cause, with all its problems. Until they resolve these issues, nothing will happen. Indecision is the graveyard of good intentions.