Rutgers is storing endowment money in offshore accounts, according to leaked papers


The offshore investments allow the University to make money while avoiding taxes


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The recently released Paradise Papers show that Rutgers has been storing endowment money in offshore accounts.         


The recently leaked "Paradise Papers" revealed that Rutgers is among the top U.S. universities using offshore funds to grow their endowments and pay little to no tax, The Guardian reported Wednesday.

Rutgers is one of more than 100 universities that were named in the millions of leaked documents from Appleby, a Bermuda-based law firm which specializes in offshore accounts such as private equity and hedge funds in Bermuda and the Cayman Islands.

The University was also revealed to have been among universities investing in EnCap Energy Capital Fund IX-C, a Cayman Islands-based hedge fund that primarily invests in oil and gas companies, according to NJ Advance Media.

Schools have increasingly been turning to secretive offshore investments that let them grow their endowments with “blocker corporations, and avoid scrutiny of ventures involving fossil fuels or other issues that could set off scrutiny,” The New York Times reported. 

The University has been making public strides to create a greener campus, particularly through the Rutgers 2030 Physical Master Plan, which includes updates to campus transit hubs, housing, student centers and athletic facilities.

The plan is built on a strong environmental foundation, from the perspective of protecting an open space, Frank Wong, assistant vice president of University Facilities and Capital Planning and University planner previously told The Daily Targum. 

The EnCap Energy Fund IX-C is part of EnCap Investments, which “has been the leading provider of venture capital to the independent sector of the U.S. oil and gas industry,” and has raised “20 institutional oil and gas investment funds totaling approximately $33 billion and currently manages capital on behalf of more than 350 U.S. and international investors,” according to its site.

Rutgers' endowment assets totaled $1.2 billion as of June 30 of this year, a 12.4 percent gain on its long-term investments over the last year, according to NJ Advance Media.

Blocker corporations cost the United States Treasury millions of dollars, The New York Times reported. They are legal, but are increasingly under the scrutiny of the public eye — a “trio of tax breaks,” including tax breaks given to those who donate to colleges, generally done by the wealthy, tax-free municipal bonds allowing schools to borrow money at low rates and endowment investment returns that are generally tax-free, cost federal taxpayers $19.6 billion a year.

In-state students at Rutgers can expect to pay approximately $14,638 in tuition and fees for the 2017-2018 academic year, an all-time high that was the result of a 1.85 percent increase in tuition and fees that was approved by the Board of Governors in June of this year.

A portion of the funds that are coming from the tuition increase will be going to salary increases, Kathy Dettloff, University vice president for Financial Planning and Budgeting told The Daily Targum.

“In general, it is not our policy to comment on specific endowment investments. Rutgers University manages its endowment pursuant to the university’s Investment Policy, and adheres to all applicable laws and regulations governing public university endowments,” the University said in a statement sent to NJ Advance Media.

Other schools named in the leaked documents were Princeton University, Columbia University and the University of Pennsylvania.

University officials did not provide a statement to The Daily Targum by the time of publishing.

Editor’s note: This is an ongoing story, which will be updated as more information becomes available.


Alexandra DeMatos is a School of Arts and Sciences senior majoring in journalism and media studies and women's and gender studies. She is the editor-in-chief of The Daily Targum. Follow her on Twitter @dematosaa for more.


Alexandra DeMatos

ad1049@scarletmail.rutgers.edu
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