In 2012, The University of Alabama System’s endowment totaled $977 million. This enormous number represented a decline from pre-recession 2008, when the endowment was over $1 billion.

Currently, the endowment is invested in various ways, but the ultimate goal is to expand academic opportunities beyond what would be possible with state funding alone. Scholarships, fellowships, academic chairs and libraries are all financed in part by the investment returns on this endowment.

Even taking into account these wonderful uses for endowment money, and there is no doubt that the UA System would not be what it is without proper investment of its endowment, we should not be fooled into thinking that maximizing returns is the only 
obligation we have regarding how it is invested.

There are certain moral and ethical standards that should be taken into consideration as well, especially given the sheer size and potential impact of our investments. This is the basis for socially responsible investing, and, as a public university that is accountable to the entire state of Alabama as well as its students and faculty, The University of Alabama has an obligation to lead the way in this field.

This could be accomplished in numerous ways. For instance, the University could consider placing a certain portion of its endowment with an institution focused on the financial development of a community, particularly one somewhere in Alabama. Such institutions very often produce positive returns on investments, despite the fact that they are typically non-profits. The University would not only be increasing its funds for academic purposes, but it would also be empowering a local community to become financially healthier.

In addition, the University could establish a socially responsible investment management group, similar to the Dwight Hall Fund that was established at Yale in 2007. This fund could be financed with endowment money, or it could be established using entirely separate sources of funding. Either way, it would allow the University to appropriate funds toward the betterment of its community, while simultaneously offering best-practices to the field of SRIs.

Now, socially responsible investing does not imply that the investor needs to lose money on his investments. Rather, it simply requires that the investor take into consideration the impact that the investments will have on social well-being, and attempt to maximize that well-being as well as the profits.

I should also be careful to note at this point that I am not accusing the University of failing to engage in any kind of socially responsible investing. I propose that this unfortunate state of affairs be addressed, so we can move forward in our commitment to being a force for positive change in Alabama.

Chisolm Allenlundy is a junior studying philosophy and economics. His column runs weekly.