Native News Network

A seat on a private university board comes with a lot of authority. Trustees hire presidents, approve budgets, often have final say on academic programs, and are increasingly vested with the responsibility of determining how to invest giant sums of money.

But giant sums of money tend to mean giant questions.

Maintaining strong returns on university investments has become pivotal to the long-term health of many colleges and universities. As a result, individuals with experience and connections in financial management have become common on governing boards. But having people on the board who have connections to the financial world raises the possibility of conflicts of interest – board members privately benefiting by placing the college’s investments in their own firms.

In the wake of the 2008 financial crisis – when colleges with endowments greater than $1 billion lost an average of 20.5 percent, leading to significant cuts and the disruption of local economies – employees, students, and community members have begun to criticize the high-risk strategy endowment managers adopted over the past few decades. They have also questioned whether those managers are making investments with their institutions’ best interests in mind, highlighting instances where trustees invested an institution’s money with firms in which they had a personal financial stake.

There have been several instances of groups alleging that board members acted illegally or unethically, the most recent example being an allegation, under review by the New Hampshire attorney general, that surfaced last month at Dartmouth College that the board was steering the college’s $3.4-billion endowment to its members’ firms.