The Erasmus Endowment Fund was presented in broad outline during the Dies Natalis. By 2025 there should be 100 million euros in the Netherlands’ largest equity fund. Smart investment lets that yield between 8 and 10 million euros a year for EUR research, explained Chairman Michiel Muller during the presentation. Donors provide the money for the fund. Even before its official launch it had already collected 26 million.
An amount like this brings major responsibilities with it. And 8 to 10 million is a significant yield, so there needs to be some quite risky investing. How does the fund deal with donations? Four questions about the Erasmus Endowment Fund.
Are all the donations invested?
No. Major donors may stipulate that they want the money to be used directly for research. So that money is not invested, but is allocated immediately to a research group instead. The rest is invested by the Trust Fund in a variety of companies. The ratio of actual investment to money directly allocated is not known.
Who determines how the money will be invested?
An investment committee, comprising highly experienced investment experts, decides the funds in which to invest. The committee has four investment managers and one student member, delegated from the Erasmus Investment Society. This is currently law student Heleen Klep. The Chairman of the committee is Felix Lanters, Investment Manager at PGGM. The university does not have formal representation on the committee. However the Rector Magnificus does offer guidance to the disbursement committee, which determines which research will be given the funding.
On what does Michiel Muller base the annual returns of between 8 and 10 million?
The Fund does not base its calculation of returns on 100 million euros, but on the 100 million plus the 20 million the Trust Fund was already managing in the years prior to launching the new equity fund. By investing money long-term a somewhat riskier portfolio is possible than has been the case up to now with the Fund, and this enables an annual yield of between 5 and 10 per cent. If the donations invested directly in research are then added in, the Trust Fund maintains that the yield of between 8 and 10 million can be achieved, or can even be exceeded.
Are any sustainability or ethical tests conducted on the companies receiving the investment?
Yes. The Fund excludes 226 companies globally which are on a blacklist. The list contains companies which do not meet the ten principles of the United Nations Global Compact, based among other things on human rights and the UN convention against corruption. Below are the ten principles.
- support and respect promulgated human rights
- constantly ensure that they are not complicit in any violations of human rights
- honour trade union freedom and implement the right to collective bargaining
- ban any forms of forced or compulsory labour
- promote the effective elimination of child labour
- support outlawing discrimination in labour and occupation
- exercise a precautionary approach to harming the environment
- undertake initiatives to promote greater environmental awareness
- stimulate the development and distribution of environmentally-friendly technologies
- combat every form of corruption, including extortion and bribery
The Fund also excludes companies involved in the production of ‘controversial weapons’. This includes cluster munitions, anti-personnel mines and biological, chemical and nuclear weapons. Tobacco producers and companies involved in the production of coal are also excluded.