Smith College relies significantly on the earnings of its endowment to provide the kind of education for women that its founder envisioned: one equal to the best available anywhere. Fully one-third of the college’s operating budget—funding for faculty and staff salaries, financial aid, facilities and student services—comes from endowment income.
Built by gifts and investment, the college’s endowment provides intergenerational equity, assuring that the quality of education at Smith today will be available for generations to come. It is essential to Smith’s mission, and the long-term financial health of the college, that resources be deployed effectively and responsibly.
Some students at academic institutions, including Smith, have begun to advocate for divestment from the fossil fuel industry. A series of educational forums was held at Smith over the course of the 2013–14 academic year to consider the multiple and complex dimensions of the issue.
Smith’s endowment has a total fossil fuels exposure of 6.5 percent. This includes 2.7 percent in publicly traded investments and 3.8 percent in private equity holdings. Ruth Constantine, vice president for finance and administration, and Investure LLC, the college’s investment manager, conducted an analysis to investigate the potential effects of divestment on Smith’s endowment and financial health. Their study shows an estimated $140 million impact on endowment returns over a 10-year period—or, on average, $14 million less per year for the college’s operating budget.