Alternative Investments

SLAC Talk Addresses College’s Financial Situation – The Oberlin Review

On Nov. 2, I attended a talk led by financial experts Kelly Grotke, OC ’89, and Kris Raab, OC ’89. They were invited by the Student Labor Action Coalition to discuss Oberlin’s financial investments. Learning about Oberlin’s investments shed light on a common pattern in Oberlin’s current budgeting plans: austerity. Austerity measures work to reduce spending, which to many appear to be prioritizing profits at the cost of student satisfaction, good working conditions, and accessibility. Instead of acting as a college — whose goal should be redistributing excess earnings to make the school a more accessible learning environment for its students and a healthy workplace for faculty and staff — I believe that Oberlin is acting more as a company, with a goal of increasing wealth. 

Alternative investments are investments that fall outside of the typical markets, such as stocks or cash. These investments are illiquid, meaning they are hard to back out of even if they’re performing badly. Many alternative investments are also governed by private contracts, meaning they are subject to little oversight, and they are hard to value beforehand; they can often cost five times as much as what is disclosed on tax forms because of hidden fees. They do not legally have to be disclosed to the public, and they are a new attraction to colleges due to the possibility of a higher rate of return compared to traditional investments. Alternative investments typically go hand in hand with austerity measures; while they have the potential to raise a lot of money for an organization, they are associated with a lot of fees. These fees have to be covered somehow, which might result in other expenses being cut, such as low-level workers’ health benefits. Based on Grotke and Raab’s research, Oberlin currently has 64 percent of its money in alternative investments. This prioritizes business values over community values, because it means that we have no way of holding Oberlin College accountable for the investments they’re making, due to the secretive nature of alternative investments. 

Most of the questions surrounding Oberlin’s alternative investments have only one answer: we don’t know, because the College won’t tell us. Is Oberlin investing in morally reprehensible companies? We don’t know, but they have a history of investing in companies that don’t align with the values of students, including investing during apartheid in South African companies, which they only divested from once students learned about it and protested. Are the trustees in charge of investing dealing in conflicts of interest or self-dealing, using our money to boost their own or their friends’ companies? How much money is Oberlin actually making from these investments? We don’t know, but since it’s relatively easy to hide alternative investment fees, it could be less than the College is telling us. It’s possible that the College would make more money by investing in more secure and public routes, but it might refuse to because the resulting loss of secrecy would reduce personal profits. 

Oberlin’s reliance on alternative investments has very real impacts on the College itself. Grotke and Raab explained that when an organization embraces austerity and turns to alternative investments, it typically experiences low-level job loss, acceleration of work and deterioration of working conditions, declines in service quality, bankruptcies and loss of pensions due to opaque ownership structure that hinders accountability, maximization of “shareholder value” at the expense of other values, and increasing income inequality. 

We can see most, if not all, of these happening at Oberlin. The College has fired dining and custodial staff unionized with the United Auto Workers, who had stable jobs amid Lorain County’s high unemployment rate. It has also renegotiated the rent contract with the Oberlin Student Cooperative Association and closed two co-ops, cut disability services and other student wellness programs, and signed a contract with AVI Foodsystems that arguably decreases the quality of dining services while exploiting already-overworked students. They have shut down several faculty lines and have drafted a more expensive health care plan for many faculty and students without health care. I believe that our school, which boasts a history of academic access for traditionally marginalized communities, is now following broader trends of restriction in the name of monetary gain. They might be doing this, in part, through the secrecy of alternative investments, which helps them move money around without us being able to know if all these cuts are necessary. Oberlin College needs to stop going down a path of austerity and return to a mindset of public service and accessibility. 

There are many next steps that must be taken in order to ensure that Oberlin College does not continue down this path. Pressuring the College to allow an independent auditor to look over their investments would be a good place to start, so we can at least know what we’re working with, and so the College gets used to someone holding them accountable for the decisions they make. Go to oberlinslac.org to submit demands for anti-austerity measures and to get more involved with organizing. The slides from and recording of Grotke and Raab’s talk can be found there as well. We have the collective power to resist the College’s efforts to line the pockets of the most powerful stakeholders. Join groups that help you channel that power. 


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