On November 5, Penn sent yet another email congratulating itself for its minimal climate action. Student organizations have already released statements angered by the utter inaction and heavily exaggerated claims of progress. Penn’s lackadaisical approach to responding to student demands, from their climate inaction, to their refusal to pay Payments In Lieu Of Taxes, and their paltry response to calls to do so, are a direct result of the disconnect between the Penn’s Board of Trustees and the actual demands of the student body and the surrounding West Philadelphia community.
Penn’s Board of Trustees consists of 56 members, many of whom are financial executives, CEOs, and billionaires. Furthermore, only two trustees live in the Philadelphia area, and Tom Wolf, by virtue of being Pennsylvania’s governor, is the only trustee who works in the public sector. The Undergraduate Assembly, the Graduate and Professional Student Association, and the Faculty Senate are able to make recommendations to the Trustees and the administration, but ultimately have no executive or voting power on any of the Trustees’ decisions. The Trustees clearly do not represent Penn’s population and the West Philadelphia community, but the Trustees “have sole responsibility for all investment decisions,” and have the “fiduciary obligation to invest the University endowment so as to maximize University resources.” Essentially, the Trustees are solely in charge of Penn’s investment, and their main objective is profit maximization.
Penn’s Trustees are heavily intertwined with the fossil fuel industry, meaning any calls for fossil fuel divestment fall on deaf ears. President Amy Gutmann is on the board of directors of Vanguard, the world’s largest investor in coal, and holder of over $360 billion total in fossil fuel funds. Chairman Scott Bok is CEO of Greenhill & Co., an investment firm that also invests and profits heavily off of oil and gas companies. Vice Chairman Lee Spelman Doty serves as Head of U.S. Equity at JP Morgan Chase. JP Morgan Chase has consistently announced climate change and sustainability initiatives and “successes” similar to Penn, such as aiming to invest $2.5 trillion over 10 years in green companies. Yet, even among other large banks, JP Morgan is the largest funder of fossil fuel companies.
Penn’s Trustees' socially irresponsible investing practices persist for one sole reason: to increase the University’s endowment and, therefore, the reputation of the Trustees. Outside of President Gutmann, all other trustee members of Penn’s investment board are financial executives, applying the same for-profit tactics of Wall Street to Penn’s endowment. Only about 5% of the endowment is actually reinvested in the school, a similar value to other universities. Penn and other schools argue that this is to ensure donations can be continuously invested in the University for years to come.
The true reason why elite universities insist on expanding endowments is that it is a form of reputation building, even in times of financial insecurity. During the 2008 recession and the COVID-19 pandemic, universities elected for budget austerity measures over tapping into their endowments. Another piece of evidence for this is Penn’s rising cost of tuition accompanying Penn’s growing endowment. Philanthropy as reputation cleansing is also on the rise among the wealthy, and one of the ways this manifests itself is through donations to universities. This sentiment extends to the University’s endowment, which has always been a source of pride, a way to compare itself to other universities, and a way to flex the might and influence of Penn’s alumni and donor base. Penn’s prioritization of endowment accumulation, from its shady international investments, to its recession budget austerity, is also a direct product of prioritizing reputation and prestige over the Penn population and West Philadelphians by a board of financial elites and wealthy alumni.
Students’ calls for divestment from fossil fuels, more investment in local schools and the West Philadelphia community, and further transparency on financial investments are justified, but as long as Penn’s endowment is run by a board of financial executives completely detached from Penn and the local community, accomplishing these tasks will be nearly impossible. The endowment should be reinvested back into the local community often damaged by Penn’s practices, rather than managed like a hedge-fund. As the growing endowment is not being used to pay students’ tuition, Penn students should at least be able to decide how Penn’s endowment is invested. Alternatively, as completely restructuring Penn's governing body seems unlikely, we should support taxing schools with large endowments, so that money can be reinvested for the greater good.
PENN JUSTICE DEMOCRATS is the premier student-run leftist organization on Penn’s campus. Learn more about them at pennjusticedems.org.