Report Details Alleged COI in Mass. Universities

A report released Tuesday by the Tellus Institute alleged that the Boards of Trustees of many of Massachusetts’s wealthiest colleges and universities, including Harvard, have conflicts of interests with companies with which the institutions do business. The report also stated that these institutions have failed to clearly report those relationships on documents required by the Internal Revenue Service and state attorney general.

The report, which sampled the 20 wealthiest colleges and universities in Massachusetts, named four “worst offenders,” including Harvard University, Boston University, Tufts University, and Williams College for providing “substantially problematic responses that raise major questions in both state and federal filings for 2009 and 2010.”

Acccording to the report, 70 percent of the schools sampled have at least one trustee affiliated with a company doing business with that same institution. Harvard, the report says, failed to disclose the names of board members who were involved with “related party transactions” with the University.

It found that only two of the universities sampled—Brandeis University and Northeastern University–gave “substantially clear responses” on the documents that they filed.

The report concludes that leading private colleges in Massachusetts interact with trustee-affiliated business far more than their counterparts nationwide, referencing a 2010 study by The Chronicle of Higher Education, which reported that a quarter of private colleges nationally did business with trustee-affiliated companies.

Richard J. Doherty ’76, president of the Association of Independent Colleges and Universities in Massachusetts, said that these percentages would likely have been much closer had more than 20 schools been included in the study.

The report also concluded that “the current transparency system is simply not working,” given that only a few of the schools in the study fully disclosed potential conflicts of interests.

Harvard’s Director of News and Media Relations Kevin Galvin wrote in an email to the Crimson that the policy of the Harvard Management Company is designed to prevent conflicts of interest.

“HMC has a robust and comprehensive conflict of interest policy, which specifically requires board members to be recused from any decisisions that may pose a conflict,” the email stated. “All tax filings and disclosure forms are completed in full accordance with all IRS and state requirements.”

Doherty said the report dealt only with potential, not actual, conflicts of interest, and that the IRS procedures had been recently updated before the time period that the report concerns. Furthermore, he said the procedures could have been interpreted in different ways.

“When you look at the institutions that we’re talking about, they have some of the finest accounting, financial, and legal professionals in the country,” Doherty said. “When somebody makes a chart that the disclosures are problematic, I would say, ‘problematic to who[m]?’”

The report was funded by Service Employees International Union Local 615, a union that represents workers at Harvard, according to Wayne M. Langley, the director of higher education for Local 615. Langley said that the union, along with about a dozen other groups, is currently sponsoring a state bill requiring more transparency about college finances.

—Staff writer Samuel Y. Weinstock can be reached at sweinstock@college.harvard.edu.