the board plus an investment counsel, or a finance officer of the college. In 1958-59, out of 200 IHL, 68 relied on outside investment counsel, 64 on a committee of the governing board, 49 on a trust company, and 19 on their own institutional investment staff. The trend was toward expert advice. The least satisfactory results seem to occur when a committee of the board is in full charge. The sample is small, however, and the year of the study quite some time ago, and hence the results are acceptable only with reservations.
For many years it has been suggested that a central organization should be created to handle the investment funds of small colleges. This is a very sensible idea and might result in better investment advice at lower cost. It is clear from past performance that the small institutions do not earn as much as the large institutions in the management of their investments. But a recent study of HEW reveals small variations by size of fund, with the range from 3.62 per cent ($15 to 30 million and $3 to 4 million) and the maximum 3.82 per cent ($2 to 3 million). The return for the largest funds ($50 million or over) was 3.65 per cent. As we suggest elsewhere, accounting differences impair comparisons to some extent.
The proposal of a central investment organization was at one time made to the Carnegie Corporation; but they turned it down on the grounds that actual judgment must rest on those who are legally responsible, namely, the trustees of each particular institution. Others feared that a concerted management policy might have unfortunate effects on the stability of investment markets.
It is of some interest that trustees of many IHL have been able to shift this responsibility in recent years to investment trusts that sell shares to their institutions. Apparently one of the largest investment trusts reported that 110 colleges and schools owned nearly $2 million of its outstanding stock; another reported 28 educational institutions among its 1,374 fiduciary holders of its shares.1