The endowment and principles for funding Williams: A response to calls for divestment

To the Williams community,

During their June meeting, the Board of Trustees reviewed information related to two proposals on management of the Williams endowment. We—as board chair and college president, respectively—write to inform you of the outcome of the deliberations and offer insight into our thinking.

Anyone who has not been following the issue might wish to start by reading the recent report from the college’s Advisory Committee on Shareholder Responsibility (ACSR). It is a response to two proposals submitted to the committee last fall: One, from a student group, requested that the college divest from companies that sell weapons or materiel to the Israel Defense Forces; adopt ESG (environmental, social and governance) standards that specify what the college will henceforth divest from and not invest in; and be more transparent about its investment management strategies. The other, from a faculty member, requested that the college refrain from divestment, which it framed as a type of institutional speech.

After thorough deliberation, including a review of the ACSR’s report and recommendations; advice from the Board’s Investment Committee; an interview with members of the student groups Jews for Justice and Students for Justice in Palestine to hear their case directly; study of petitions from faculty, staff and alumni; and consideration of many points of view communicated to the college, the Board has decided to follow the ACSR’s major recommendations not to divest; to continue with our current, holistic investment philosophy, without adopting “a blanket exclusionary approach to ESG investing”; and to enhance transparency.

The Trustees’ deliberations were characterized by several major themes:

  1. Our view that the college’s foremost duty is to make the highest-quality liberal arts education available and affordable to a diverse population of future leaders.
  2. The Board’s fiduciary responsibility, encoded into the College Charter and Laws.
  3. The fact that the endowment is essential to that work, and is not a vehicle for expressing views on world affairs or conducting advocacy.
  4. Respect for the importance of thoughtful protest as a feature of a healthy educational community.
  5. Appreciation for the community’s interest in understanding the endowment, including our governance and decision-making practices.

In regards to the decision not to divest, the Board echoed the ACSR’s point that we should not “us[e] changes in investment strategy for solely symbolic gestures.” Similarly, the Board was not persuaded that narrowing our focus to an exclusionary ESG-driven approach would be either practical or an advance over our current, rigorous and holistic process. Subordinating overall investment strategy, in which performance and impact are assessed over many decades, to the volatility of geopolitical events and shifting ESG assessments would introduce significant new risk. The Board is unwilling to accept increased risk, given that we rely on the endowment to provide 55 percent of our annual operating budget, including funding for academic and co-curricular programs, faculty and staff salaries and benefits, facilities and financial aid offerings.

Divestment advocates have asserted the college’s “complicity” in violence through our endowment strategy, arguing that any investment, no matter how indirect and small, in companies that sell to the Israel Defense Forces requires changes in how we invest. The proposal for an exclusionary ESG-driven investment model follows this same logic. Divestment advocates claim that such changes need not result in reductions to returns, given available investment alternatives, but have also said that any reductions that occurred would be morally justified.

The Board does not believe that the endowment should be used to advocate positions on world affairs. And because our investment strategy consists solely of investing through third-party investment managers and funds, what might otherwise seem to be small, exclusionary changes in the composition of our investments would actually compromise our access to key investment managers, undermining the Board’s fiduciary obligation to manage the endowment in ways that fully fund the college.

Williams’ redistributive approach to endowment management has direct, very concrete benefits: By investing alumni donations into global markets in ways that magnify their power, we create educational opportunities beyond what many students and their families could afford otherwise, and beyond what almost any other school can offer. We are proud that this approach has made an excellent education accessible and affordable to tens of thousands of students over the endowment’s history.

The Trustees join the Williams community in wanting to see human suffering alleviated and injustices righted. We believe the institution’s distinct contribution toward these ends is to educate students who can go on as alumni to work in human rights, refugee work, journalism, scholarship, policy, international affairs and other relevant fields. The college supports pathways in the form of coursework, internships and on- and off-campus experiential learning. This year, for example, members of our academic community (often with support from endowed funds) taught courses and organized more than 30 lectures, workshops, teach-ins and other events about the conflict and the region’s history and current affairs. We look forward to additional offerings in the fall.

In regards to transparency, we are convinced that the community would benefit from additional, more easily accessible information about the endowment, its impact and the principles and practices on which we rely to manage it. This includes making the community aware of our processes for evaluating investment managers’ approach to environmental, social, and governance issues. The administration will start developing plans for this work over the summer and into the fall. Efforts might include enhancements to our annual investment reports and community learning programs.

In closing, we want to address the recent call for alumni to withhold donations as a way to pressure the college to divest. Each of us needs to follow our conscience by supporting causes we believe in, and Williams respects those choices. We would only point out that everything current students enjoy at Williams was paid for, in significant part, by the endowment and underlying gifts from thousands of alumni over many generations. Thus the main people harmed by any withholding of gifts are future students. The Board has a fiduciary and ethical duty to the education of those future generations, as a form of intergenerational equity. Williams offers many ways for alumni to give and volunteer that also align with one’s personal priorities and values, and our colleagues in College Relations are happy to talk about those opportunities at any time.

Coming back full circle, we want to reiterate our respect, on behalf of the entire Board of Trustees, for the members of our community who have questioned or critiqued our approach. Informed advocacy is an essential feature of a healthy learning community and a democratic society. In the present instance, the original proposals and ongoing engagement, including students’ detailed presentation to the Board, enabled us to consider many points of view and test our assumptions about the best interests of Williams and its people. The outcomes outlined in this letter will not satisfy those who would like the college to use its endowment to exert political influence. But that endowment, sizable as it is in individual and higher-education terms, is very small when measured against the immensity of the markets. Whereas Williams’ positive educational and societal impact, significantly funded by our endowment and achieved by a global community of students and alumni (not to mention our faculty and staff), is enormous and lasting.

The 2023-24 academic year exposed differences of opinion within the Williams community about the nature of solutions to the conflict in the Middle East, as they did within the nation as a whole. Amid such divisions, our goals were to learn as much as we could about the full range of views; take counsel from governance committees; reflect on the college and community’s goals and needs; and encourage steps that we feel will be best for our people and our college.

Liz Robinson ’90, Chair, Williams Board of Trustees
Maud S. Mandel, President; Professor of History; Program in Jewish Studies and Board member ex officio