A Short History of Divestment at Reed
In January 1986, following years of student organized sit-ins calling for Reed to divest from South African companies in protest of apartheid, former Reed President Paul Bragdon stood on the steps of Vollum to announce that Reed would not “buy or hold investments in businesses owned or controlled by South African interests...which do not support and do not demonstrably implement the Sullivan Principles.” These seven principles were created by black activist Reverend Leon Sullivan, which he hoped companies would commit to in order to fight racism and segregation.
After Bragdon’s announcement, the Trustees continued doing business with companies in South Africa. Reed’s investment profile did not significantly change.
Following the path laid out by the South African Concerns Committee (SACC) in the 1980s, many groups have called for Reed to boycott and divest from various organizations; throughout the early 2000s, there are records of pushes to boycott Coca Cola due to labor violations in Colombia, Israel, and Sudan.
Of all of these movements, none have gained as much traction as Divest Reed, a student organization calling for Reed to divest from their primary bank, Wells Fargo, and the fossil fuel industry. Reasons for divestment include Wells Fargo’s investment in private prisons, which they claim to have divested from as of March 2019, and the Dakota Access Pipeline; their ties to the National Rifle Association; and their pattern of questionable business practices and legal troubles, including charging excessive overdraft fees and higher fees for African Americans and Latinos.
Moreover, the Paradise Papers — over 13 million confidential legal documents leaked in 2017 that revealed offshore investments that allowed companies including Facebook, Apple, and Uber to dodge billions of dollars in federal taxes — revealed that Reed was one of ten colleges invested in EnCap, a Cayman Islands firm that provides venture capital to oil and gas companies.
A 2017 New York Times article speculated that these investments may allow colleges to dodge taxes because nonprofit schools like Reed can be required to pay taxes on income unrelated to its educational mission. Investing in “blocker corporations,” like EnCap, funnels income through the corporation rather than the college. These corporations are typically established in no-tax or low-tax jurisdictions like the Cayman Islands, which effectively allows them — and therefore their investors — to dodge taxes. Samuel Brunson, a law professor at Loyola University Chicago, explained that “[these colleges are] not cheating. They’re not hiding money or disguising money… But they’re adding money to a system that allows people, if they want to hide their money, to do it.”
When asked for comment on the issue by the Portland Tribune, Kevin Myers, an official spokesman for the college, denied that investments in EnCap were used to dodge taxes and claimed that investment firms like EnCap are “just super complicated investment vehicles…[they’re] just kind of the mechanism for how that's done.”
The college’s official stance on the issue of divestment has remained essentially the same since it introduced its current Investment Responsibility Policy in the late 1970s. The Investment Responsibility Policy makes it clear that the goal of Reed investments is to maximize financial returns, regardless of ethical and political concerns. It also (in a statement which has become infamous among the Reed student body) claims that “to own is not necessarily entirely to endorse.” The Operating Principles of the college hide this position behind claims of academic neutrality, but given that the college has proven willing to address climate change and other political issues in ways unrelated to finance (examples given by Trustee Roger Perlmutter include the introduction of the Environmental Science major and the college’s efforts to reduce its own carbon footprint), it is possible that the issue is not one of neutrality, but of profit.
In an article published in the Reed Magazine in 2014, following an earlier push for divestment from fossil fuels, Perlmutter revealingly claimed that “Reed’s endowment is largely invested in funds whose strategies permit quick and untrammeled decision-making by fund managers. To these members, divesting from funds with carbon exposure would mean dissociating from managers carefully selected for the likelihood of high performance.” Due to the way these fund managers function, Trustees are not fully aware of what they are investing in — meaning that they have no way to ensure that this is even the most efficient way to invest.
Beyond divestment from Wells Fargo and fossil fuels, Divest Reed’s platform calls for greater transparency regarding board decisions and college finances, possibly by bringing back Reed Unions, forums on community issues which were held in the Student Union and included students, faculty, and board members. Caroline Hardy, the current organizer of Divest Reed, wants the trustees “to acknowledge that to own is to endorse” and that claiming otherwise is “an attempt to absolve themselves of the immoral things that they’re doing.”
Throughout the upcoming school year, Divest Reed plans to energize the student body and incorporate “new, exciting protest tactics.” Additionally, a group of economics majors is working on laying out an alternative investment model for the college. Divest Reed is also planning to reschedule their protest at the Wells Fargo building in downtown Portland. Initially the protest was slated for August 31, but organizers were forced to reschedule when the Wells Fargo building flooded. Divest Reed also hopes that the new president Audrey Bilger will continue to be receptive to the issue, and take a stand where Bragdon failed.