ESG investing has risen among college and university endowment funds in the wake of increased stakeholder demands for sustainable investments as well as greater community impact. A landmark 2020 study by the Intentional Endowment Network demonstrated that higher education endowments are successfully meeting or exceeding objectives through mission-aligned investing.
Many colleges and universities choose to redirect endowment investments locally in order to create greater community impact beyond the boost they bring communities’ economies. University endowments have taken several paths to making a difference at home.
Partnering with Local Investors
Founded by the University of Denver in 2016 and headquarted there, the Impact Finance Center has sought to build and support impact investing ecosystems with a focus on the local region. For three years, its pilot program CO Impact Days has held annual events to bring social ventures and local investors together. This led to more than $280 million in impact investments, exceeding its $100 million goal. The pilot was designed to be replicated in other regions, and the Center is currently building an investor network with partners in New York.
Higher education endowments also invest in the needs of local communities. In 2017, the University of New Hampshire made its first impact investment of $3.06 million to the New Hampshire Community Loan Fund. The fund extends flexible financing to small business owners, provides home loans and financing for affordable housing, and makes loans to local food producers. The university followed in 2018 with another investment of $1 million. As of May 2021, the Fund has loaned $350 million to underrepresented clients and programs in the state and leveraged an additional $795 million from partners.
Investing in Sustainable Local Industries
One way that university endowments add community impact to their ESG investments is through helping local products and resources become more sustainable. For example, the University of Maine is a partner in the state’s Maine Economic Improvement Fund. Combined with partnerships and grants, the fund invested more than $100 million in Maine-based industries in 2020. In addition, the university’s extensive research on biomass energy uses local sources for fuels. It also works with the local forest products industry on new bio-based materials for uses including building components to wind blades.
Seeking Broad Opportunities for Impact
Investors and community members wishing to partner with local universities can find a range of unique community impact programs throughout the United States. Investments by Arizona State University’s revolving fund for sustainable projects are available to community members. The university has achieved carbon neutrality and ranked first among US institutions on sustainability in the Times Higher Education 2020 scores.
Williams College invests in local emissions reduction projects in Massachusetts. The college has invested more than $100,000 in four project types to date: building materials recovery, healthy homes, heating systems, and solar walls.
Dickinson College has made several impact investments in its central Pennsylvania community and offers the purchase of carbon offsets to reduce emissions by funding a nearby forestry project.
The success of university-supported efforts like these can inspire colleges and impact investors alike to reassess and appreciate the familiar mantra: “think globally, act locally.”