University Endowments Are Mostly Mum About Firearms Investments

(Bloomberg) -- Is your alma mater investing in guns? Chances are, you’ll never know.

While some politicians and teachers, including the Florida Education Association, have urged pension funds to drop gun makers’ shares from their portfolios after the shooting in Parkland, Florida, universities contacted about the issue generally declined to answer questions about whether they owned such stakes.

Endowments have fewer disclosure requirements than nearly any other type of institution. With few exceptions, they adhere to blanket policies of keeping their holdings under wraps.

One endowment to disclose such holdings is the Texas Permanent School Fund, which supports primary and secondary public education in the state. In year-end filings required by the U.S. Securities and Exchange Commission of large traders, the fund revealed holdings in firearms makers Sturm Ruger & Co., Vista Outdoor Inc. and Olin Corp. The giant fund, with $34.9 billion in board of education assets under management, had to make the information public because it had more than $100 million in public equity assets. Only 12 university endowments had to make that type of SEC disclosure last quarter.

Among a total of 42 universities contacted for this article, seven declined to say whether the endowments held gun-related investments. Four said they had no firearm holdings. Most did not respond. Of the schools contacted, only the University of California said it had divested from firearms makers, having acted after the 2012 Sandy Hook school shooting in Newtown, Connecticut. (California State Teachers’ Retirement System decided to exit some of its firearm stocks after Sandy Hook.)

Activist Pressure

Jerry Ganz, a senior vice president of finance at the University of Connecticut’s Foundation, said the endowment didn’t have gun-related holdings that he knew of, but couldn’t say for sure. Elite private schools like Columbia University, state schools like the University of Florida and liberal arts schools like Williams College said they do not discuss portfolio investments as a matter of policy. In all, colleges oversee at least $566.8 billion in endowment money.

Students and activists who have applied pressure for divestment in the past on topics ranging from South African apartheid to tobacco use to companies that use child labor have wrung at least symbolic statements from some universities to steer clear of those holdings. Those measures, combined with actions by local governments and pension funds, have at times galvanized support for action.

But instead of gun violence, the issue that has resonated lately is harm to the environment. Students pressuring for divestment of coal and fossil fuel companies have had mixed success. Endowment offices at a handful of schools, including Yale and the University of Massachusetts, have agreed to protesters’ demands, while Stanford, Cornell and New York University have declined.

More Complex

Universities’ holdings have grown more complex over the years, as they have migrated toward picking investment managers and allocating their money by asset type, instead of choosing individual investments. Endowments can often say rightfully that they don’t track their individual holdings. The two largest asset managers, BlackRock Inc. and Vanguard Group, are reviewing their policies regarding gun-related investments.

Aside from gun makers, the National Rifle Association has faced a raft of defections as high school students and others protested for more restrictions on gun ownership after Parkland. A number of companies with direct ties to the NRA, like Delta Air Lines Inc. and First National Bank of Omaha, have publicly severed those relationships in recent days. FedEx Corp. is one of many others that have stood by the NRA.

Universities generate most of their super-sized endowments from two sources: investment returns and contributions from wealthy individuals and foundations.

Avoiding ‘Harm’

Notre Dame in Indiana, with $11.8 billion under management, said it adheres to guidelines from the U.S. Conference of Catholic Bishops, which asks members to avoid companies that “do harm.” The conference stops short of formal restrictions. The university declined to say whether it holds firearms investments, citing a policy of not commenting on its investments. Among the endowment’s largest donors, the Bill & Melinda Gates Foundation declined to comment.

Some college endowments are prohibited from social activism. The University of Texas Investment Management Company, which oversees $40 billion, is governed by a policy banning investments that would “advance social or political purposes.” Its endowment office declined to say whether it holds gun-related investments.

Divestment campaigns at colleges began in the 1970s, when students demanded their schools stop investing in companies that traded or had operations in Apartheid South Africa. By 1988, 155 educational institutions had severed investment ties, pressured by protests that gripped campuses at Harvard, Columbia, Michigan State and many others.

Fossil fuels are not the only business concern to spark college student activism in the last year. Students at Harvard, Yale and Cornell are now pressuring their endowment offices to shed holdings in Baupost, a hedge fund and one of the largest holders of Puerto Rico bonds. Protesters claim the debt burden is hindering the island’s recovery from the devastation of Hurricane Maria.

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