9/9/2009 On transparency

Today I share the transcript of a recent conversation:

Student: Fact Checker, could you identify for us a key university issue that you will be watching during the new academic year?

Fact Checker: Thank you for asking. I believe greater transparency in the governance of Duke -- particularly in the operation of Duke's endowment -- is imperative. I want to explain why……..

Faculty member: Whoa, whoa Fact Checker. We know that the University flack Schoenfeld said last semester that earnings of the endowment would suffer if more information were public. Duke simply needs the money!!

Fact Checker: I know what the flack said -- now let him prove it. What report is he citing? What expert is he quoting?

And Duke's investments should mean far more than making a profit. There's social responsibility and leadership too.

Faculty member: But isn't financial secrecy part of the territory for private institutions, universities and the like.

Fact Checker: Not at all. Consider please, three independent endowment funds created by Duke family members that benefit our university.

First, the widow of James B. Duke, Nanaline, established a very sizable Fund. Every year it lists all its holdings, all its trades, and all its profits and losses for every stock. It is overseen by the Trustees of The Duke Endowment. The editor of the Chronicle should ask his grandpappy (chair of The Duke Endowment) about this.

Second, Mr. Duke's niece Mary Duke Biddle established a very important fund that is an angel for the arts, and also gives small grants to projects that cannot get other funding to see if they can get off the ground. Check their exemplary website: there's no complaint that I see about a loss of earnings because they list every holding, every trade, and account for every profit and loss.

Third, Mrs. Biddle's daughter, Mary Duke Biddle Trent Semans, has established a fund as well that focuses on the arts. It too reports every holding, every trade. Check out the public portion of its tax returns, Form 990. Has Schoenfeld ever heard Mrs. Semans complain about the earnings on this fund being throttled because of the public disclosure?

Beyond this, every mutual fund I hold in my own private portfolio reports its trades stock by stock. No one has ever said, "Fact Checker, you are screwing yourself and getting lesser returns with all this public information."

Conservative student: Last semester my organization wrote to the Chronicle in opposition to disclosure. You have to remember our traditions and history: we are a private school entitled to keep secret what we choose.

Fact Checker: Sorry bud, but the conservative position would be what Duke University did for decades -- to release the very information that the Coalition for Transparency now requests. In fact the university used to mail this report to every alum. It could very easily post it on-line now. Visit the Archives in Perkins and review this.

Conservative student: hmmm, I did not know that.

Fact Checker: Well you are not the first to write a letter to the Chronicle (or a news story or column or editorial) while being half informed. You right wingers also made a point about the role of students in the governance of Duke University . Basically you said, "pay your tuition and graduate in silence." A vassal kind of relationship.

Too bad this too his not the conservative, historical position, where Trinity College and Duke University -- far more than today -- welcomed involvement and input from all stakeholders.

This is a proud tradition we should be very conservative about.

For example the current Strategic Plan was written with student participation. Just like the first Long Range Planning Report half a century ago. Terry Sanford fostered creation of the Young Trustee positions for student involvement at the highest level. The Chronicle spreads the news and creates an atmosphere for "thought and action," as its slogan (hidden this year) declares; it exists with great support from the University, including its choice real estate in Flowers Building , because it fosters student involvement.

And Duke goes through great lengths to keep its alums informed. The list is long: a great magazine, meetings. Schoenfeld's office in fact makes copies of all news releases available, along with copies of stories written about Duke, immediately available on his website.

The overarching point is this: Duke as an institution has welcomed input for generations-- but once again some administrators cast people who ask and seek answers on as dis-loyalists. The Duke tradition is precisely the opposite of the relationship that you suggested for students and the school.

Maybe the President is learning, however. This is what he said at the freshman Convocation this year:

"When you chose Duke, you chose a place that has made itself ever better by its willingness to dream bigger dreams and find ways to achieve them. And when I welcome you to Duke, I welcome you to join this history and write its future chapters."

Conservative student: Well…… write its future chapters. That is an invitation!

Fact Checker: Excuse me one second. Would you also place limits on the faculty participation in governance? The secrecy surrounding the endowment restricts them too. Or perhaps the conservative view is they should be damn thankful for their paycheck and should go quietly to the library and the classroom? And their subsidized country club.

Faculty member: Ha. Ha. Fact checker, you mentioned earlier social responsibility. You mean like our policy of not investing in the Sudan ?

Fact Checker: Now it's my time to say Whoa Whoa. That policy was highly touted when it was created several years ago -- which is to say 20 years after other schools like Yale created theirs. Duke's policy covers only "direct" investments, that is, when we go to the stock market and buy and sell. That's about ten percent of our money. Most of the money is not covered -- because Duke contracts to give money to a mutual fund, a hedge fund or a private equity manager who will then in turn make the actual investment. Duke has been very misleading about the impact of its policy, but that's why you have Fact Checker on your side.

Oh, have any of you who are good enough to be here today… do any of you see anything about the environment in Duke's "Guidelines on Socially Responsible Investing"?

And does anyone have the minutes of the Committee on Investment Responsibility -- its one meeting over the course of five years? Laughably, The Conservatives wrote in the Chronicle that this was sufficient. Here let me remind you:

"In our opinion, the call for "transparency" is especially baffling given that Duke's Advisory Committee on Investment Responsibility fully accommodates corporate social responsibility concerns."

Oh, and this happens to raise an emerging issue that is very important which Fact Checker is working on. We know that the relationships between some universities (and other endowments) and money managers are tainted -- filled with special incentives if not bribes. The disclosure of specific holdings would minimize the chance of the sharks getting away with this.

And one other point that Fact Checker is working on: a disturbing number of Trustees have filed secret Conflict of Interest statements because they are administering and managing university money -- and earning fees in the process. Fact Checker has just gotten names, and I intend to report fully on this in a Fact Checker Major Statement when research is far enough along. I used the word disturbing. What's an escalation from that.

Moderator: Fact Checker, our time is running out. Do you have some final comment.

Fact Checker: I would suggest everyone in Allen Building get some SPF 45 or higher, because the sun is going to shine in.


The Fact Checker archive is now open.



  1. Hi Fact Checker.

    Can we call you FC for short?

  2. Okay, "FC" it is.

    Not to be confused with the
    right-wing Duke Basher "KC".

    FC, when did you make the remarkable
    discovery the Duke BOT reads like
    a Wall Street banker's cabal?


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