College Endowments: A Colonial Empire

In 1793, General Cornwallis, one of the leading British generals in the American Revolutionary War and later, the Governor-General of India, introduced the Permanent Settlement Act to the Indian territory of Bengal, which instituted the zamindari land ownership system into Bengal, Bihar, Orissa, and Varanasi. Under the zamindari system, each region would have an appointed zamindar (land owner) who would collect taxes on the ryots (peasants) who occupied his territory. The zamindar would send the majority back to the East India Company, but he would keep one-tenth of his/her winnings for personal gain. The zamindaris became extremely wealthy, hoarding jewels, building mansions, and trading in expensive textiles; the East India Company and the Commonwealth fared even better. A study by Lakshmi Iyer and Abhijit Banerjee found that 150 years later, territories that had a zamindari land system continue to have significantly lower investments in health and education than the land systems where peasants directly or collectively sent their taxes to the East India Company. The inequalities perpetuated by the unequal division of land in the zamindari system remained long after the land was redistributed and the regions continue to struggle to recover. The authors found that the land inequality was so damaging to the trust between local elite and the peasants that there was significantly lower per capita public expenditure on development in landowner states when compared to non-landowner states. Throughout history, we can see the irreparable damage caused by the concentration of land into wealthy privately-owned companies, trusts and funds. Why does it continue to happen?[su_pullquote align=”right”]The inequalities perpetuated by the unequal division of land in the zamindari system remained long after the land was redistributed and the regions continue to struggle to recover.[/su_pullquote]

Today, the oligarchs with deep pockets are not the state-sponsored corporations of old like the Dutch and British East India Company. We have new faces, who under the guise of social welfare, have amassed disproportionate global capital. Harvard University. The University of Texas System. The Bill and Melinda Gates Foundation. Kaiser Foundation Hospitals. The Howard Hughes Medical Institute. The Ford Foundation. The collective colleges of Oxbridge. These endowments toe the line between charitable organization and nonprofit corporation, all while providing little to no public information about their actions, responsibilities, and motives. Their primary motive is self-preservation: their principal value is kept intact or expanded through rounds of raising capital from wealthy donors while a small part of the principal is made available for yearly use and maintenance. Many students, faculty, politicians, and professionals have asked the question: where is the money going?

In April of 1986, UC Berkeley students built a shantytown in the Chancellor’s office to protest apartheid and advocate the University of California’s divestment from South Africa. In response to student protests across the nation, 155 higher education endowments divested from South Africa between 1976 and 1988. Fossil Free Wash U has continually advocated for the Washington University Endowment to divest from fossil fuels since 2014, when the Student Union passed a resolution 14-2 to support divesting from the top 200 fossil fuel companies. As of 2019, twenty colleges have divested from fossil fuels in some form. Students have long recognized the damaging ways in which a university endowment’s management strategy may conflict with its broader goals of social good and tried to keep their university endowments accountable.

Endowments dabble in questionable investments mostly because of their scale. To diversify their investments, endowments cannot put most of their money into the typical investment classes of stocks, bonds, cash, and index and mutual funds, classes which individual investors typically invest in. The best performing endowments have bet against the variation in the market by putting money into hedge funds, private equity, natural resources, futures, real estate, and more recently, farmland. These investments have a high barrier of entry for most individual investors and are thus much less likely to follow the trends of the stock market. As the garden-variety alternative investment strategies dry up and demonstrate lower returns than predicted, more and more endowments are turning to buying up large tracts of the lands of indigenous people. This farmland is often under-valued due to weak property rights regulation and outdated equity assessments. In 2019, The nonprofit GRAIN uncovered Harvard University Endowment’s investment in over 740,000 acres of Brazilian savannah, some of which Harvard Endowment’s subsidiary companies are contracting out for use by agribusiness. Over the last six years, Grapevine Capital Partners, a Harvard subsidiary company, has acquired land with access to precious groundwater reserves in California’s Napa Valley to hedge against California’s growing water scarcity troubles. An Oakland Institute report revealed that Harvard University, Vanderbilt University, and Spelman College were invested in Emergent Asset Management, a UK-based private LLC which operates the South African joint venture EmVest to buy agricultural land in Africa. Emergent Asset Management reports that villagers at one of the farms operated by EMVest did not consent to the land transfer or receive legal written notice about it.

[su_pullquote]These growing endowments will feel the same financial pressure to partake in international land-grabbing as other investment classes become harder to speculate on.[/su_pullquote]Each of these cases prominently features the Harvard University Endowment, by far the largest endowment in the world. While Harvard’s endowment needs to diversify the most to compete with the growth rates of its smaller peers, more university endowments are catching up to the size of Harvard’s. The University of Texas System endowment is valued at $31 billion and Yale’s is not far behind at $29 billion. These growing endowments will feel the same financial pressure to partake in international land-grabbing as other investment classes become harder to speculate on.

[su_pullquote align=”right”]“You cannot stick a knife in a goat and then say, Now I will remove my knife slowly, so let things be easy and clean, let there be no mess. There will always be blood.”[/su_pullquote]Land-grabbing leads to ecological degradation, population displacement, and ethnic violence. In Brazil and in the Napa Valley, local farmers are already complaining that Harvard’s acquisitions are being used to heavily exploit the local water supply by polluting local water sources and using up existing groundwater reserves. La Via Campesina collected testaments from farmers who were the victims of land-grabbing globally. In the Congo, many farmers were forced to move into cities and women had to work in factories in significantly poorer conditions. In Brazil, people who had their land taken from them were often forced to work for the new owners under significantly worse working conditions. In India, the land tenure system exacerbated caste, religious, and linguistic divisions which remain prominent in Indian society today. We may see certain ethnic groups bear the disproportionate burden of having their land taken from them, deepening existing inequalities. University students, faculty, and employees must demand that their endowments abstain from international land-grabbing and make all international land acquisitions public. Not doing so threatens the livelihood and property rights of millions of people. In Yaa Gyasi’s Homegoing, she writes, “You cannot stick a knife in a goat and then say, Now I will remove my knife slowly, so let things be easy and clean, let there be no mess. There will always be blood.”

Ishaan Shah ‘20 studies in the College of Arts & Sciences. He can be reached at ishaanshah@wustl.edu.