Challenging Orthodoxies: Conflicts in the Endowment World

Monday, November 28th, 2016


“How many academics does it take to change a light bulb? Change, Change who said anything about change?”

– Rogan Kersh, Wake Forest University Provost

Every endowment thinks the way they manage a portfolio is special, that they are unique; they aren’t. Just like every part of higher education, good ideas get copied. Innovation in higher education is scarce, elusive, and capacity constrained – just like investment alpha. Adding to the problem is the huge need, but significant resistance to, change on university campuses.

When there is change, it’s sluggish and glacially slow, which is a bit unfair to glaciers. Faculty members are the fierce guardians of the status quo. The building blocks of higher ed: priorities, governance, instructional design, and cost structure are hard to move and are mostly unchanged.  The only thing moving rapidly higher is tuition.

What seem to be missing are initiative and the leadership to drive change in the endowment arena. Most endowments utilize networks of investors all over the world, investing in some of the most brilliant entrepreneurs and cutting edge technology,.  Networks that are providing for breakthroughs in Palo Alto, university medical centers, and think tanks across the globe, like the Milken and Aspen institutes, Davos, and the UN PRI for example. Climate change might be the single most important investment opportunity of my lifetime. Students understand this, so why are endowments all over the country ignoring it instead of actively deploying assets to private equity and venture to drive change and create positive outcomes that are consistent with their unique institutional mission?

Ideas are everywhere and innovation, technology, and accountability are their critical components.  Ideas require tough choices and thick skins to survive the attack of the antibodies against change. Endowments should be using their assets and moral authority to invest in new solutions for experimentation and change, motivated by return and not survival. It’s an amazing paradox, universities and investment committees are full of brilliant and thoughtful people, but some of the most imaginative ideas are strangled by inertia, bureaucracy, bad advice, and shoddy governance.

Endowments can do better, do more, and do it now.