...a university, like any corporation, is a persona ficta, an abstraction, nothing more than a convenient administrative mechanism for facilitating the work of a group of scholars and students. In the words of the Wilson report on 'The University and the City,' the university does not exist.

There are both long and short retorts to this conception of the university. A short answer is that only the belligerently naive can still conceive of the university as a locus of disinterested truth. As Clark Kerr (cited in Stephan Leibfried's excellent book, Die angepasste Universitat) has it:

What the railroads did for the second half of the last century and the automobile for the first half of this century may be done for the second half of the century by the knowledge industry: that is to serve as the focal point of national growth. And the university is at the center of the knowledge process.

If it is accepted that the university is producing a product unmistakeably destined for social use, instead of an eternal essence, it becomes difficult to see why members of the productive community should not have some say in the disposal of community resources.

A start at a longer answer would begin by pointing to the deeply ambiguous character of public charters of power in this county. Historically, the United States has ceded wide, Juasi-public powers to private corporations (rights of eminent domain to the railraods, rights of social engineering to foundations), and withdrawn these rights when "public policy" saw the necessity for doing so. Two examples of the imperative use of considerations of public policy are the abolition of monopoly rights of turnpikes in the early 19th century to make way for the railroads and a leading case in which a trust was declared illegal because it carried "a serious threat against the proper growth and development of the parts of the city" in which the lands in question were located. The rule of thumb has been to favor private remedies in the sense of freely-arrived at contracts or grants of public power as long as these have been economically progressive and not too perturbing to the body politic. Only in dire cases is there recourse to quasi-public regulatory bodies like the administrative agencies.

As charitable trusts and educational institutions (and most universities are both), universities have traditionally benefited from charters of broad scope granted by a public appreciative and often solictous of their socially productive role. From the point of view of the American reliance on ostnesibly private institutions to resolve social issues, the universities' retreat to a prissy functionalism is simply irresponsibility. Self-limitation of the university's social activity by appeal to the arch-humanist conception of the function of education may reinforce the middle class academics claim to be an "autonomous intellect,." But it flys in the face of the crudest political and budgetary realities, and gives up the battle just at the point at which it whould be joined.

The self-serving timidity of the universities' position can be illustrated by their treatment of the supposed legal objections to even a "socially responsible" exercise of their investor's rights. It is often alleged, for example, that were the university to intervene economically in outside political causes, it would abuse its prerogatives as an educational institution, and risk forfeiting its tax exemptions Or, it is urged that the university is legally liable to its financial supporters if it does not invest with exclusive return for maximizing economic return and capital safety. (These are but two objections drawn from a crowded field. The two problems presented here and the legal counters to them are drawn from a painfully fair book. The Ethical Investor, just published by three Yale professors. Their conclusion is that there are "no legal impediments" to their elaborate "moral minimum" investment policy.)

The tax-exemption objection can, according to our authors, be overcome with a bit of legerdemain no more complicated than reading the two sections of the Internal Revenue Code that impose political prohibitions on universities and other charitable organizations. Section 501(c)(3) provides that:

a. Such an organization may not "participate in, or intervene in...any political campaign on behalf of any candidate for public office" and

b. "(N)o substantial part of the activities" of such an organization may consist of "carrying on propaganda, or otherwise attempting to influence legislation...

Arranging academic calendars to permit campaigning for peace candidates would presumably run afoul of the code; few investment decisions are likely to. Even an expansive interpretation of "propaganda" or efforts to "influence legislation" would be circumscribed by the current Treasury regulations interpreting the exemption statute, which declare that:

The fact that an organization, carrying out its primary purpose, advocates social or civic changes or presents opinion on controversial issues with the intention of molding public opinion or creating public sentiment to an acceptance of its views does not preclude such organization from qualifying under section 501(c)(3) so long as it is not (an organization engaged in legislative or electoral activities.)

The Treasury further defines "educational," as used in the code, to mean "the instruction of the public on subjects useful to the individual and beneficial to the community." An institution is eligible for an educational exemption "even though it advocates a particular position or viewpoint so long as it presents a sufficiently full and fair exposition of the pertinent facts as th permit an individual or the public to form an independent opinion or conclusion."

The obligation to profit objection is similarly far from insummountable. A comprehensive argument against the claim that this "obligation" restrains the university in any way might be made in two steps.

First, it is asserted that the university enjoys as much discretion in the disposition of its funds an any business corporation. The Attorney General of New York has stated: