The endowment, the great black box of college budgeting, at least as far as students are concerned, is up for discussion at Dartmouth College, where an anonymous letter alleges that rich Dartmouth alumni “directed the college’s three billion dollar endowment to themselves, their firms and their friends.

According to an article by Randy Diamond at Pensions & Investments:

New Hampshire’s attorney general is looking into claims of conflicts of interest against members of the board of trustees and the investment committee of Dartmouth College in regard to their management of the college’s $3.4 billion endowment.

Anthony Blenkinsop, the Concord-based director of charitable trusts for the state of New Hampshire, said he is in the process of reviewing a letter sent to New Hampshire Gov. John Lynch and Attorney General Michael Delaney. The letter calls for an investigation into money managers who have invested the Hanover, N.H.-based college’s assets while members of the investment committee.

The letter essentially accuses the institution of squandering university assets through risky investments. “Over a period of seven years The College engaged Lehman Brothers in six “interest rate swaps” totaling $550 million dollars, the letter alleges. “The current value of these “swaps” is now in excess of two hundred million dollars.”

What’s more, the trouble seems to be that a whole lot of the endowment investment is connected with firms affiliated with university trustees. Dartmouth invests with firms affiliated with seven of the 34 members of the investment committee and board of trustees.

Now, it’s not really all that surprising that members of Dartmouth’s investment committee and board of trustees are affiliated with major American investment firms, but how does the institution draw the line? If this isn’t a conflict of interest, what would one look like?

And also, well, it wouldn’t be much of a problem if Dartmouth was using trustee-affiliated firms to invest the endowment in ways that made money, but if it’s losing money, well that’s something to investigate. [Image via]

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer