Investment Pool

With the creation of a corporation called The Common Fund for Non-profit Organizations, a number of colleges and universities, including Dartmouth, have joined together with Ford Foundation backing to pool endowment funds and engage professional investment management in order to realize a higher return on their money.

When The Common Fund begins on July 1, it is expected to have at least $50 million from 20 to 30 institutions. Institutions can place in the fund all or part of their endowments in amounts ranging from $100,000 to $10 million. Each institution will hold units in the fund, which will be revalued monthly to reflect investment results.

John F. Meek '33, Vice President of the College and Chairman of the Dartmouth Trustees Investment Committee, is president of the new corporation's board of trustees. The cooperative fund, he said, is the first of its kind among American educational institutions. It will be equities oriented and will have an investment policy of long-term growth rather than one seeking ordinary income, he added. In emphasizing both capital appreciation and earned income, it will be similar to the "total return" approach recommended in a Ford Foundation study of 1969.

McGeorge Bundy, president of the Ford Foundation, looks upon The Common Fund as "an important and promising step" to help educational institutions meet their growing financial problems. Thanks to a $2.8-million grant from the Ford Foundation, operation of the fund in its early years will be virtually cost-free for participating institutions, and this is expected to be an important inducement to membership. In addition to Dartmouth, initial members include Princeton University, California Institute 'of Technology, the University of Michigan, and Macalester College. Secondary schools are eligible, and later membership may be expanded to include endowed hospitals and other professional organizations.

Portfolio management will be handled at first by the Capital Guardian Trust Company of Los Angeles and Massachusetts Financial Services of Boston. It is estimated that only 10 per cent of American colleges and universities now use professional managers for their endowment funds. Most rely on their trustees or their own investment committees.