February 12, 2013
University Endowments and Conflicts of Interest
Last month the New York Times reported on potential conflicts of interest at Dartmouth College relating to connections between its endowment investments and university trustees. The article states that last year an anonymous letter to state officials in New Hampshire, where Dartmouth is located, alleged that such conflicts existed because the endowment has invested in at least six investment funds in which past or current trustees have an interest. It also notes that such apparent conflicts are not unique to Dartmouth, although the number of such conflicts there appeared to be on the higher end for at least Ivy League institutions. The New Hampshire Attorney General's office ultimately determined that an official investigation was not warranted into the allegations.
The articles fails to consider, however, whether these investments were chosen in a manner that complied with Dartmouth's Conflict of Interest Policy or otherwise were adequately vetted. It therefore risks creating the impression that a conflict of interest is always a situation to be avoided regardless of whether the transaction at issue will ultimately benefit the university or other institution, as determined by disinterested parties. While a charity may choose to take that position out of an abundance of caution, such a position is generally not required under the fiduciary duties owed by a charity's leaders to the organization.
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