Preview of selected articles from the
upcoming issue of Trusteeship (July/August 2007)
Compounding interest in your investment committee
By Henry W. Bedford, trustee, Hamilton College in Clinton, N.Y.
A small college earns big endowment returns by attracting committed and experienced alumni to its investment team.
The impressive performance of college and university endowments has been the focus of a great deal of recent news media attention. Alternative investments, asset allocation strategies, and careful manager selection have all been thoroughly explored as reasons for the success of top-performing endowments.
Yet this analysis has overlooked something that Hamilton College has known for a long time—that the board’s investment committee can have a big impact on endowment performance.
Hamilton is a small, highly selective liberal arts college in upstate New York, with a student enrollment of 1,780. Over the past ten years, our endowment returns have consistently ranked in the top decile of all colleges and universities nationally.
The board’s investment committee has been instrumental in guiding the asset allocation and strategies of the fund, which has outperformed the Standard and Poor’s index by more than 4 percent annually over the last decade. I believe that the make-up of our committee and the manner in which we operate have contributed substantially to this success.
Our committee is hands-on; we don’t rely on outside consultants to manage Hamilton’s $690 million endowment. We oversee it ourselves, with the able assistance of the college’s chief investment officer, who is responsible for the day-to-day coordination of investments with committee members and our external money managers.
That means, of course, that the alumni who join our committee are signing up for a lot of unpaid work—but it is work that they enjoy. Read the rest of the story of Hamilton’s investment committee practices in the July/August issue of Trusteeship magazine.
Creating an e-history of the board
By Francie A. Frederick, and Rhonda Hankins. The authors are respectively, general counsel to the board of regents and board professional staff member in the Office of the Board of Regents of the University of Texas System.
Gathering and displaying governance documents and photos online can help educate the public, promote transparency, and preserve historical information.
Thomas Jefferson wrote that “it is the duty of every good citizen to use all the opportunities which occur to him for preserving documents relating to the history of our country.”
To suggest the same sentiment holds true for preservation of college and university histories is not a stretch. And no department has more primary documents and access to more firsthand knowledge of major institutional decisions than the office that supports the governing board.
The problem is, higher education boards face so many complicated, critical, and timely issues that the supporting office often has time and energy to meet only the most pressing needs, such as producing conventional minutes of meetings. Most consider the history of the board to be of only passing interest, which is why staff time and expertise are seldom devoted to systematically organizing board history.
Except in Texas. Under the leadership of a board chair with lifelong interest in history and great respect for the historical record, the Office of the Board of Regents of the University of Texas System has discovered that understanding the history of the board and making historical documents widely available serves purposes both practical and scholarly. Such documents might be considered a road map to landmark decisions in the development of the University of Texas System. They clearly document the architectural history of the campuses and offer insights into recurring issues system leaders faced.
What’s more, providing greater access to unpublished and unofficial materials, following careful review, contributes to the transparency of the board and complements the spirit of the sunshine laws that apply to most public universities. What follows is a description of how the Texas system board archives has blossomed in recent years. Continued in the July/August issue of Trusteeship.
Reining in those “maverick” trustees
By Barbara Kaufman, president, ROI Consulting Group Inc.
A small college earns big endowment returns by attracting committed and experienced alumni to its investment team.
Maximizing board performance has never been more critical than it is in today’s environment of rising expectations for governance and demands for greater accountability.
Hence one of the most complex and time-consuming issues for board chairs and campus leaders is managing relationships with board members who seek membership on boards as a way of advancing their own professional, political, or personal agendas. This phenomenon largely plays out on the stage of public higher education, though a different breed of “maverick” trustee sometimes confronts boards of private institutions. Boards simply cannot afford to be distracted by members whose special interests, personal needs, or disruptive behaviors derail effective collaboration and prevent quick, decisive action.
The troublesome conduct of maverick board members is not a tendency to be tolerated as a matter of “personality” or “style.” Such behavior divides the group, drains its energy, wastes valuable time, and may lead to unwanted compromises in decision making. A board code of conduct is a must for heading off maverick behavior, preferably before it gets serious.
However, even institutions with meticulous and well-publicized codes are sometimes plagued by the distracting behavior of some board members. “It is one of the most serious governance problems we face today,” says Molly Broad, president emerita of the University of North Carolina. “The magic in university governance is creating a board composed of strong individuals with connections to the political leaders and the university’s constituencies, and who also bring expertise about complex organizations. But these individuals must be willing to set aside their special interests to operate as members of a body corporate.”
The five types. Getting persistent mavericks on track is challenging and time-consuming. But once leaders understand the motivations of the various types of mavericks commonly found on boards, they can tactfully implement common-sense strategies to guide them toward productive governance behavior. I don’t wish to stereotype, but my experience working with higher education boards has led me to identify five basic types of mavericks. Continued in the July/August issue of Trusteeship.
A primer on bond ratings
By Lucie A. Lapovsky, former president, Mercy College
and trustee, Western New England College
An institution’s bond rating reveals nothing about academic quality, but it is a valuable indicator of financial health that good boards at least consider. Continued in the July/August issue of Trusteeship.
Still dreading the perfect storm
By Robert A. Sevier, senior vice president, strategy, Stamats Inc.
Looming on the horizon: A triple threat of changing student demographics, rising costs, and stiffer competition. What’s a board to do? Continued in the July/August issue of Trusteeship.
Columnists
Legal standpoint
IRS considering broader scrutiny of endowments, UBIT rules
By Pamela J. Bernard, vice president and general counsel, Duke University. Continued in the July/August issue of Trusteeship.
View from the board chair
Board Moving Mission and
Board Structure in the Same Direction
By Andrea J. Loughry, vice chair, University of Tennessee System board
The recent addition of audit and governance committees prompted Tennessee statewide governance leaders to review board organization.
Two entities: (1) the complex land-grant system comprising four campuses with three institutes and (2) a board of trustees comprising more than two dozen diverse individuals charged with leading a spirit, a vision, a plan. How can they work in partnership?
In Tennessee, we have found that the key is good committee structure.
Four years ago, our board operated under a simple structure with three standing committees: executive, academic, and finance and administration. The president had two advisory councils—one on advancement and outreach matters, another on faculty and student issues.
The stress of two failed presidencies and the influence of the federal Sarbanes-Oxley law prompted creation of two additional committees: audit and governance. The audit committee focuses on integrity of financial statements, regulatory compliance, and oversight of required auditing. It is made up of no fewer than three members. If extensive accounting, auditing, or financial management expertise is unavailable on the board, an external person may be added to this committee (but not as chair).
Among the governance panel duties are developing a statement of board responsibilities and principles of governance, reviewing bylaws, advising the chair and board on committee structure and board appointments, providing board orientation and training, developing and implementing an annual self-evaluation process for the board and individual trustees and overseeing ethics compliance. Continued in the July/August issue of Trusteeship.
A question for….
Neil Howe and William Strauss
Authors, Millennials Go to College (National Association of Collegiate Registrars and Admissions Officers, and Lifecourse Associates, rev. 2007).
How is the Millennial Generation of students changing colleges and universities?
Millennials are more in the public eye than any generation of youth since the young G.I.s of the 1930s. They attract substantial public attention—which explains why higher education is far more in the media spotlight now than a decade or two ago. Ever since the first Millennials arrived on campus in 2000, colleges have been adjusting to them. This new young generation is not well understood by many trustees, administrators, and (especially) faculty. Continued in the July/August issue of Trusteeship.
Both sides now…
Should citizens be permitted to
carry weapons on a college campus?
By C. Todd Gilbert and Paul Helmke.
Continued in the July/August issue of Trusteeship.
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