The “Friends of Eleazar Wheelock,” an anonymous group drawing its name from the founder of Dartmouth, sent a letter to New Hampshire officials requesting that they take a look-see at the interrelationships between and among Dartmouth’s trustees and the university’s endowment investments. The investigation found that Dartmouth complied with the law, but did uncover that 13.5% of the university’s endowment is invested with funds headed by trustees or members of the university’s investment committee. Dartmouth had complied with the requirement that two-thirds of the board (with the trustee whose fund is involved not voting) approve the investments.
Dartmouth will now have the audit committee take a look at the investments to be sure that they do not pose “an unreasonable risk of appearance of conflict of interest.” Randall Smith, “Dartmouth Controversy Reflects Quandary for Endowments,” New York Times, January 6, 2013, p. B5. Oh, the unreasonable vs. the reasonable conflict of interest. Where is that line?  The Barometer can only offer that the line will be found in hindsight when one of these funds ends up losing money or worse.
The university indicates that it is proud its graduates have become some of the world’s leading money managers and that the funds were chosen on the basis of strategy, experience, and performance. No doubt, until something goes wrong. Exactly how does one fire a trustee? And about those placement commissions earned by trustees? Well, they earn them, but give back portions of those fees to Dartmouth and get a building named after them. Ah, the deeper we dig, the more we find. Wait until something goes awry. Anyone remember UNLV’s foundation board? These relationships are tricky things. Tread carefully, Dartmouth, ever so carefully.