But unless "secret investment deals" with donors are either (1) illegal or (2) harming the university or its constituents (e.g., by prioritizing poor investments that harm the endowment), I disagree that this rubs an ethical line.
Since it isn't illegal, the only way I can imagine it being unethical is if these endowment investments in donor Funds were either actively dumb decisions or at the very least less smart than investing in some other Fund. And none of the reporting has gone in that direction. I suppose if there were insider trading that would also be unethical, but again, the reporting hasn't indicated anything like that.
Understood.
However the reason that there are usually conflict of interest guidelines here is because it's really hard to determine whether these investments are good or bad relative to others. And they don't have to be "bad", they might just be "sub-optimal". That's really hard to figure out.
In companies, you are often taught that you can't really determine the quality of decisions by outcome. Because there are a lot of things, such as unknown variables, changing conditions, etc, that can make the outcome of a GREAT decision turn out badly.
So you judge yourself on the decision-making process. And any decision-making process that doesn't account for conflicts of interest is generally considered to be a worse decision-making process than one that does.
It doesn't mean that you CAN'T invest with a donor. It means that you have a higher level of scrutiny on a decision-making process when there are known conflicts of interest involved.
So I'm not saying anything wrong occurred here. It's possible they evaluated these investment decisions
with full knowledge of the conflict of interest and still arrived at the decision to make this investment.
I'm just saying I hope they included it in their decision-making process. Failure to do so is a bad process.
