Our criticisms of the MSU administration are not credible unless we also examine UM

Submitted by jbrandimore on May 4th, 2018 at 1:08 PM

When appropriate.

Apparently, Dave Brandon is still employed at UM, he merely changed his name to L. Eric Lundberg and now runs the UM endowment investment area.

Reading this, he's a DB on the level of the original DB (Dave Brandon).

I personally smack MSU for its misdeeds at every opportunity. I'd be a hypocrite if I overlooked media reports of possible corruption on the UM campus.

Freep warning: https://www.freep.com/story/news/local/michigan/2018/05/04/university-m…

Comments

boliver46

May 4th, 2018 at 1:12 PM ^

fiscal irresponsibility or potential fraud to the shit-show going on in E.L. seems a poor choice of what hill to die on.

Rape/Molestation and subsequent cover-up and denial seems a TAD more impactful. (/s for the TAD portion).

InterM

May 4th, 2018 at 1:22 PM ^

that the alleged fiscal irresponsibility involves a University endowment built on private donations, and not public funds.  If donors don't like the way the University is managing its endowment, they can vote with their feet and stop donating.  Is this also true of the MSU victims?  Uh, no.  Once again, the Freep tries to manufacture a scandal from a slow-moving audit while whistling past the MSU graveyard.

bluebyyou

May 4th, 2018 at 2:55 PM ^

The two issues are very different and one has nothing to do with the other. This is where the OP is off base. 

I read the Freep report and it raises questions that are concerning.  $11 billion is way too much money to not have all the i's dotted and t's crossed.  Management of the endowment should be a concern to all of us involved in the Michigan community as endowment funds benefit a vast number of programs and students.

Saying if donors don't like what is happening they should stop giving is nonsense.  Do a sound audit, if there are problems address them and let people know you are running a tight ship.

MileHighWolverine

May 4th, 2018 at 3:30 PM ^

You can do a back of the napkin audit, you don't have to wait for the University to open the kimono....just look at the endowment size every year as listed by the Univesity in their annual financials which they are required to file. I believe it breaks out beginning balance, additions to the endowmnet via donations and then the year end balance. Using those 3 numbers you can come to a reasonable conclusion as to how it's being run....if it lags the over all market, that's when you raise the alarm. If not, who gives a shit if alumni who donate to the University are ALSO running the endowment.

 

 

bluebyyou

May 4th, 2018 at 4:00 PM ^

Sounds like a plan.  Let's just use an index fund and be done with it, fiduciary responsibility notwithstanding.  Have you read Schlissel's comments on the topic?  If not, here is a link:

https://www.freep.com/story/news/local/michigan/2018/05/04/university-m…

The Freep is a great pain in the ass but that doesn't mean they are always wrong.  In this case, from reading their article and other info, it seems that the process needs to be tightened up.

MileHighWolverine

May 4th, 2018 at 4:50 PM ^

I have read his comments and still think the Freep is wrong. You have a lot of people who have no idea how complicated these things are opining on what should be done. It’s clear neither Sclisswl nor the reporter know what an audit actually is or how to apply that to the endowment ..... Putting it into an index fund is fine so long as you are happy only ever getting what the market will give and that seems odd to me when you have a sophisticated group running a very large endowment...PE and VC opportunities should be a part of the portfolio and you can do other things with that money that would benefit the university and current students that aren’t possible if you invest it in a straight s&p index. For example, if i donated a large sum of money i would want a portion of it to go into VC/angel investing of student created companies as that would be a huge selling point for the business school which would attract high quality students,etc.

Anyway, the University should be free to invest however it wants and PwC gave its blessing via external audit. That should be enough. Just because some people don’t like that the endowment is chummy with alumni investors doesn’t mean there’s any wrong doing or fraud.

bluebyyou

May 4th, 2018 at 6:37 PM ^

I have a solid understanding of the audit process and realize, as an attorney and a CFA, it is complicated.  My comment about choosing an index fund was to satisfy your point that the metric for comparison should be market performance. I should have included a "/s."

The University should invest the money in a sound manner consistent with capital preservation and a reasonable rate of return. VC?  Really?  Not sure I'd go that way for endowment funds. The problem with using alums as investors should be obvious.  If bad investment decisions are made, you raise the potential for people to argue about impropiety/breach of fiduciary duty which is not a place you want to be.  It isn't that we don't have alums that are competent investment people, I'm concerned about the ramifications should they choose poorly.  

MileHighWolverine

May 7th, 2018 at 10:05 PM ^

I'm also in the business and have advised on a few endowment fund allocations and I don't have a problem with VC activity. Especially when you hit $11b, the endowment should be invested as an entity that has an indefinite timeline (i.e., lives forever) so I'm in favor of having a decent chunk (5%-10%) in PE or VC type activities that take a long time to develop but have potential for outsized returns. 

I understand your point on concerns for alumni but I don't see a breach in fiduciary duty if you select a qualified professional who also happens to have a degree from UofM. There are MANY such qualified individuals on wall street right now and cutting yourself off from access to those individuals seems like a mistake and bad investment decisions happen to ALL managers anyway. 

Endowment funds don't have to be invested purely for rate of return scenarios....it's possible to invest ways that further the mission of the University and supporting alumni could, emphasis on could, be one of those reasons. A lot of endowment funds are now investing in socially conscious companies (green energy companies especially) that I would argue are not financially sound but they are doing it for social reasons more than economic ones. 

InterM

May 4th, 2018 at 3:45 PM ^

I'm not saying Michigan's management of its endowment is a non-issue or that there shouldn't be an audit -- which, by the way, is already underway.  I'm just saying that any alleged mismanagement of the endowment -- much less the lack of transparency that the Freep is mostly complaining about -- does not exist in the same universe as MSU's malfeasance with Nassar.  Obviously, it only makes sense to take steps to assure donors that their gifts are being managed properly -- otherwise, duh, the donations will dry up -- but donors clearly are able to defend themselves in a way that Nassar's victims were not.

mackbru

May 4th, 2018 at 3:35 PM ^

Homers like you are insufferable. Just because the UM issue isn't as bad as the MSU doesn't mean it's irrelevant. It's a serious issue and the paper was right to air it. Papers aren't in the business of telling you only what you want to hear, Vladimir. And it's absolutely not fake news.

Stay.Classy.An…

May 4th, 2018 at 1:17 PM ^

is the type of thing that the NCAA shouldn't care about, because THIS has nothing to do with sports. If you are confused by my comment, see my thread on Nassar for a discussion on whether or not the NCAA should care about Nassar abusing student athletes.

HailHail47

May 4th, 2018 at 1:19 PM ^

The article is interesting and the issue needs to be resolved, and I’m confident it will be. Your moral high ground, equivocating this with MSU, and Freep, is what is getting you negged.

Some Call Me.... Tim

May 4th, 2018 at 1:24 PM ^

While comparing the two is obviously like comparing apples to car parts, the sentiment of OP's comments rings true IMO.  We can't totally rip on another school for their corruption and willful ignorance of what a faculty member does while simultaneously pretending like that cannot happen here.  When a situation like this comes to light, I believe we should make sure that we (as alumni and as part of the university) take a look inwards and make sure that people in the administration here are of the most upstanding character and are people we want to represent the university.  I see far too much [email protected] bullshit for my taste 

InterlopingYooper

May 4th, 2018 at 1:25 PM ^

What a train wreck. Everyone hates the new Star Wars movies because they aren’t able to see them for the first time through the eyes of an 8-year-old, Michigan Football is embroiled in some sort of a hostile land grab competition on Reddit and now this call for Maize & Blue guilt. Yikes. Everyone have a good weekend.