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Standing Up to Money and Power with Cross-Sector Organizing around Endowments

Collaborative communities of shared interests unite.
By Kelly Grotke

Graduating Oberlin College seniors at a June 2022 commencement ceremony turn their back on Oberlin Board of Trustees chair Chris Canavan to protest the college’s union-busting and austerity measures. Photo by Susie Kantt, whose daughter Abby Kantt spearheaded the protest

In “The Man Who Corrupted Hadleyburg,” Mark Twain spins a devious little tale about a man determined to exact revenge upon a town that prided itself on being the most virtuous and upright place, where honesty and resisting temptation were central to both educational principles and collective life. Despite this, the town had badly offended him during a visit. With monomaniacal dedication, he began to plot his revenge, eventually devising a scheme that would corrupt the eminent citizens of the town by provoking avarice and mistrust, leaving the town’s reputation in tatters.

At the center of his scheme is the tantalizing illusion of an enormous pile of cash—the reward due to one of the town’s residents for the kindness of having given a ruined gambler a second chance with gifts of money and advice. To get the reward, the benefactor would have to reveal the precise words of the advice given to the gambler. A fiction within a fiction, this purported kindness never really occurred. Before long, and unbeknownst to each other, the town’s leading members began receiving notes informing them of the words needed to claim the reward at a forthcoming town meeting. Predictable chaos ensued, and the plotter unmasked the personal greed and vanity behind the community’s façade of upright honesty. “Why, you simple creatures,” he wrote to them afterward, “the weakest of all weak things is a virtue which has not been tested in the fire.”

I first heard about Twain’s story when I was an undergraduate at Oberlin College: one of my professors told me that Twain had used Oberlin as a model, having once visited the town and not cared for what he’d found there. Like Twain, he was skeptical about virtue reliably residing in towns, colleges, nations, or other types of collective groupings. Although he didn’t put it this way, the notion of kitsch captures what it means to take pride in a commodified “brand” exemplified by virtues that are asserted but never seriously tested. Most college mottos these days, for example, are ultimately kitsch in the sense Milan Kundera described in The Incredible Lightness of Being: “the aesthetic ideal of the categorical agreement of being in a world in which shit is denied and everyone acts as though it did not exist . . . kitsch excludes everything from its purview which is essentially unacceptable in human existence.” For example:

Lux et Veritas (Yale University)

Think Big. We Do.  (University of Rhode Island)

More. From Day One. (Indiana State University)

Think One Person Can Change the World? So Do We. (Oberlin College)

Truth Even Unto Its Innermost Parts (Brandeis University)

Not Unmindful of the Future (Washington and Lee University)

The Wind of Freedom Blows (Stanford University)

Veritas (Harvard University)

And so on, with nothing to suggest even a hint of the complex or corrupted, the unpleasant or uncertain, never mind trial by fire. Twain’s story was published in 1900, during our last Gilded Age, and now we find ourselves in another. The facts are brutal and, frankly, atrocious: according to a recent study by Oxfam, the pandemic period has created a new billionaire every thirty hours, and Oxfam predicts that a million people will fall into poverty at the same rate during 2022. Nationally, the pattern is similar: billionaire wealth increased by 58 percent while the farm workers we depend upon for food are forced to sleep in cars. In theory, we are still a democracy but ever less so in practice, given the immense power of money in politics.

Financialized Austerity in Higher Education

The current situation in higher education, from community colleges to the Ivy League, cannot be understood apart from the ever-widening gap that separates the wealthy from the rest of us. After all, a similar gap is evident within higher education itself, as elite institutions’ endowments have boomed while the vast majority of institutions are burdened by ever-increasing austerity measures and growing precarity. As the AAUP has documented, more than 70 percent of instructional faculty positions are now contingent. The economic conditions of the profession are in clear decline and no longer reliably offer the employment and benefits that would make possible even a modest, reasonably secure, middle-class life. Neither does earning a college degree, since the education “industry” has left millions of students, many of them women and people of color, holding trillions of dollars in debt.

I expect that most Academe readers are familiar with these miserable facts. And I trust that there are administrators, faculty members, staff, alumni, and students who are working in various ways to improve things, in recognition of the appalling waste of human abilities and time the current system perpetuates. Resistance to the status quo can and should take many forms, and I am grateful for the opportunity to participate in this special issue of the magazine focused on budget activism because I want to consider one possible avenue for action: the big piles of money otherwise known as endowments. Whether or not they have been corrupting, like the pile of money in Twain’s story, I leave to the reader’s judgment.

In what follows, I discuss organizing campus community members around problems with endowments, including the widespread use of the so-called “Yale model” of high allocations in secretive, expensive, and hard to value “alternative investments” (also known as “private funds”) which has tied our institutions ever more tightly to the imperatives of finance and for-profit revenue extraction—often at the expense of the institutions and their educational missions. Because such investments have few, if any, disclosure requirements, it is almost impossible to get a sense of what is really going on with the money. Information such as actual rates of return, the amount of money paid in fees to external managers, possible conflicts of interest, and investments in socially or environmentally damaging companies remains hidden.

At Oberlin, the alumni-led 1833 Just Transition Fund (of which I’m a member), the executive committee of the Oberlin AAUP, Oberlin United Auto Workers Local 2192, and the Oberlin Student Labor Action Coalition joined together to protest the college’s increasing financialization—particularly through its nontransparent investments—and the imposed austerity that follows from it. One aspect of our coalition’s ongoing struggle against this disturbing trend was the submission of a letter to the Securities and Exchange Commission (SEC), which is contemplating greater regulation of the private fund industry. We support this objective, arguing that the impossibility of obtaining even basic information about the college’s investments from administrators and trustees has undermined the 1835 Finney Compact, which holds that faculty retain control over the internal affairs of Oberlin. But faculty obviously cannot retain that control when they are unable to get answers to questions about the financial condition of the college. And secrecy here means power, as top-down austerity and abuse of authority increasingly replace more inclusive approaches to governance. Organizationally, this means that a very small number of people have an immense amount of control over the condition and quality of other people’s lives and are rarely, if ever, held to account for the damage they cause. This is not a recipe for good governance.

Last year, the student-run Oberlin Review published our 1833 Just Transition Fund Board list of questions about endowment rates of return, fees, sector investments, and other important details necessary to assess the financial condition of the college. We received no response. Several faculty members had made similar requests for information, which were also ignored. Looking at our list will give readers a sense of how little information is publicly available.

Our cross-sectoral approach has been premised on a collaborative community of shared interests, one that is fundamentally threatened by repeated, top-down impositions of austerity. We do not dispute that financial matters need to be handled prudently, but, in an environment so lacking in transparency, cannot trust that they are. Another letter to the SEC that also focuses on higher education and that I cowrote with my research partner Stephen Hastings-King notes that the humanities in particular are disadvantaged by the current climate of financial secrecy and the treatment of budgetary logic as a veritable fact of nature—rather than as historically conditioned and contingent choices. Often portrayed as the least “efficient” academic disciplines in an environment increasingly dominated by concerns about return-on-investment (ROI), the humanities are under constant threat because their “value” is often measured in exclusively financial terms (so central has ROI become that it has even been turned into a metric by Georgetown University’s Center on Education and the Workforce). This is more than ironic, given how central expressions of extra-economic “values” such as freedom and civil rights have long been to American political culture. But who needs serious study when one can just substitute rhetorically appealing kitsch?

Running the College Like a Business

As Davarian Baldwin notes in his interview with Jennifer Mittelstadt in this issue of Academe, endowments are a primary interface between institutions of higher education and our culture of growing inequality and precarity, in which wealth flows ever upward and labor has become chiefly something to be managed rather than valued. Even at institutions with enormous endowments, the imposition of austerity measures continues—though with increasing opposition, chiefly from unions, as the examples of Columbia University, Rutgers University, MIT, and Harvard University, among others, have lately shown. Oberlin, which boasts an endowment of over $1 billion, is a case in point, as I chronicled in detail across two pieces for The American Prospect dealing with endowments and financialization. In 2020, just before the pandemic, the college announced that it would be laying off or outsourcing the positions of more than a hundred dining and custodial workers. Despite opposition from faculty, staff, and students, the college went ahead with its plans after the pandemic emptied the campus, refusing to bargain in good faith with the union. Health insurance for those laid off was extended for a year but only after organized alumni opposition.

The fact that Oberlin, a college that prides itself on its progressive values and history, could effectively ignore labor rights is shameful but not entirely surprising. Within the mentalité of neoliberal managerialism, everything is best “run like a business,” with the maximization of so-called “efficiencies” being both a social and an institutional good. Elizabeth Popp Berman has dubbed this approach the “economic style of reasoning,” one that has broadly taken hold across managerial sectors and professions and across political divides since the 1970s. She describes it as “a framework for decision-making whose influence is closely tied to its ability to claim political neutrality. It portrays itself merely as a technical means of decision-making that can be used with equal effectiveness by people with any political values. This, though, is a ruse: efficiency is a value of its own.” Efficiency-driven austerity is, in other words, an inherently political practice.

Thus, at Oberlin, the union-busting and outsourcing commenced, reputedly to save around $2 million per year, which is much less than it routinely pays out to Wall Street money managers in fees for the college’s extensive endowment portfolio of “alternative investments” and private funds. Board of trustees chair Chris Canavan insisted—in uncanny resemblance to Margaret Thatcher—that this was the only way forward, that there was no alternative. Many faculty members, too, acceded to the notion that “One Oberlin” (the name of the college’s most recent “strategic plan”) effectively excluded dining, custodial, and other service workers. This was unfortunate, not least because the austerity measures kept coming and would eventually hit the faculty too. If the majority of faculty members had opposed the initial cuts and union-busting, it is quite possible that many workers would still have their jobs.

Oberlin is a small town, and the college is central to it and the local economy. College service jobs had been prized positions: pay and benefits were good and came with the added bonus of tuition remission. People tended to keep those jobs for years, something that contributed to a sense of continuity, community, and collegiality between and among students, faculty, and staff. One might think treating all workers well and paying a comfortable living wage plus benefits would be a matter of institutional pride and accomplishment, but evidently and unfortunately the upper administration and trustees didn’t.

In the aftermath of union-busting and outsourcing, the culture and quality of service work at the college have declined. Some workers who had been earning an hourly rate of twenty-one dollars are now earning sixteen, which represents around ten thousand dollars in lost annual wages. I suspect that someone, thinking in terms of “efficiencies” that are purportedly politically “neutral,” thought Oberlin’s workers were “overpaid” compared to average hourly rates in the state and considered it a brilliant idea to bring salaries in line with that average. Wages, however, have stagnated for decades: according to the Economic Policy Institute, if the minimum hourly wage had risen with productivity, it would be eighteen dollars. In essence, progressive Oberlin is now helping to depress wages, driving people from the middle into the lower classes and contributing to ever-deepening inequality. Austerity and its accompanying “efficiencies” are, again, hardly neutral.

In line with what Jill Penn illuminates in her article for this special issue of Academe on the workload “stretch-out” in higher education, the pace of work also accelerated, with cuts to custodial staff amounting to more work for fewer people. Turnover increased as the jobs and wages declined from desirable to average or even worse. At least one worker was forced to put her house up for sale, and others had to pull their children out of college, since tuition remission benefits were cancelled too. Metrics and quotas contribute to an ever more instrumentalized and hierarchical approach to work, further eroding morale and contributing to a work culture in which disrespect, distrust, and hostility have become the norm. Conditions were so bad that some of the workers who had managed to hold onto their jobs throughout the outsourcing subsequently quit. The sense of being part of a community has been utterly broken. One former custodial employee told me that many dismissed workers are “devastated.” As she also pointed out, “social justice begins at home”—that is, on campus.

It remains to be seen if Oberlin’s renowned reputation for progressivism can ever recover. So far, the college’s situation continues to deteriorate: after students left for the summer, the administration announced it was outsourcing student health services for the second time to Harness Health Partners. Despite the college’s announcing that affected healthcare workers would have the opportunity to reapply for their jobs, none received an invitation to do so, nor were any rehired. Harness is a subsidiary of Bon Secours Mercy, a Catholic healthcare provider known to restrict certain services, especially those related to sexual and reproductive health. The reasons for this astonishing development remain unknown so far, but it is a shocking move for the first coeducational institution and one known to be a good place for LGBTQ+ students. Is austerity really more important than vigorously defending people’s control over their bodies, especially now that Ohio has become one of the more restrictive states with respect to abortion rights?

University Endowments, the “Yale Model,” and Governance

Most institutions are run along similar lines as their peer institutions—which is why so many of us who have worked in or proximate to higher education find it grimly comic when the conservative media depict colleges and universities as bastions of illiberal un-American radicalism. Our universities and colleges are also places where people are trained in concepts and practices that normalize the financialization of society and are often governed by administrations and trustees who contribute to this shift, especially as governing boards have become increasingly dominated by financial, business, and legal professions. But, again, their perspective is not a neutral one at all, and it can and should be challenged.

Such thinking is widespread at private and public institutions, whether they have significant endowments or not. At those that do, however, one can observe an interesting tension developing between two simultaneous priorities: on the one hand, fidelity to “efficiency-think” that leads to cuts, often recommended by expensive consultants who often serve as scapegoats for unpopular decisions; on the other hand, accumulating as much money as possible by whatever means. Paradoxically, the wealthier Oberlin has become and the bigger its endowment, the more it has fixated on austerity measures: after busting the union and outsourcing jobs, it imposed a single, subpar health plan on employees and reneged on a 2013 agreement about faculty compensation.

Why? The short answer is that we don’t—and can’t—know. One reason we don’t know is that Oberlin has chosen to follow an investment trend that has become widely popular among prestigious and wealthy institutions: over 65 percent of its endowment is invested in expensive, secretive, and difficult-to-value alternative investments and private funds.

This means that only a handful of people know what is actually going on with that money, and that handful, moreover, may not even include all members of the board of trustees and administration, who are often reliant on external managers for obtaining information about investments and how well (or poorly) they are performing. Such informational asymmetry inevitably erodes faculty governance and results in the running of institutions like Oberlin by what has begun to resemble autocratic fiat. Morale declines too because the lack of transparency and financial accountability works against building a culture of trust and cooperation.

On many occasions, faculty members at various institutions have been shocked when I have described these endowment investment patterns and their institutional effects. In an age when metrics for faculty, staff, worker, and student performance have become increasingly (if absurdly) important, it seems perverse that the people handling the money are free of any obligations to make disclosures that would show how well or poorly they’ve done their jobs. Opacity is, indeed, a prerogative of power.

Considering the ever-escalating requirements for ever-dwindling tenure, it is ironic that those charged with managing the money and imposing “efficiencies” and austerity measures will likely pay no penalties and face no real professional consequences, even if they lose millions of dollars of a college’s money and profoundly alter its culture for the worse. So great is the allure, power, and prestige of money in our time that you can inflate your hedge fund’s values, commit fraud, run an institution rife with conflicts of interest, destroy a company and offload its pension obligations onto taxpayers, open an account in a tax haven to shield the profits you’ve made from an invention subsidized by taxpayer money at a public university, and even get investigated by the SEC yet still retain your position on a college or university board of trustees. All these examples are drawn from real-life cases. They suggest that “running things like a business” really means that people with money are rarely if ever held accountable and that people at the widening bottom will be the ones who truly pay, over and over.

There is no moral distance between this finance milieu—which gives lip service to meritocracy or to what a libertarian might consider the “natural order”—on the one hand, and the dehumanizing and destructive fact of a society whose economic and financial order encourages extreme divisions of wealth, on the other. They are of a dysfunctional piece. That is not a politically neutral position, though it certainly crosses present-day party lines, and it should be deeply repugnant in any society claiming, even tenuously (like ours), to be a representative democracy. If there are values apart from monetary ones worth defending, and if our institutions of higher education are to research and teach what we value, then we have some serious work ahead of us.

Endowments are a signature aspect of the extreme and systemic inequalities in higher education. First, it is essential to understand the extent of their current opacity and how it influences governance and the exercise of power within and across different institutional contexts. That is a good starting point. At Oberlin, that influence has been overwhelmingly negative: despite a billion-dollar endowment, the austerity measures keep coming, without anything close to transparency. Second, it is important to understand that the imposition of austerity measures, even at incredibly wealthy institutions, is political and not a neutral fact of nature. Our coalition at Oberlin was premised on such an understanding. Alumni, faculty members, union members, and students banded together in opposition to what we find to be an unacceptably damaging and unaccountable mode of governance, one that has transformed Oberlin’s longstanding reputation for progressivism into mere kitsch.

We recognized that cross-sector organizing was essential because, politically speaking, imposed austerity succeeds when it sets people and interests against each other, breaking solidarities. It took us over two years, with lots of work, to reach that point. It is not clear to me what the future holds, at Oberlin or for higher education. But I know I am not alone in hoping that it is much better and fairer—less of what Kundera called a “world in which shit is denied”—than the current status quo. Complacency offers nothing worth fighting for.

Kelly Grotke is a member of the Oberlin 1833 Just Transition Fund board. She worked in securities valuation for over fifteen years and is currently a partner at the consultancy Pattern Recognition: A Research Collective. She is grateful to an anonymous donor for funding that enabled her to write this piece. Her email address is [email protected].

Image: Graduating Oberlin College seniors at a June 2022 commencement ceremony turn their back on Oberlin Board of Trustees chair Chris Canavan to protest the college’s union-busting and austerity measures. Photo by Susie Kantt, whose daughter Abby Kantt spearheaded the protest.

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