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An investigation by the Detroit Free Press reveals as much as $4 billion of the University of Michigan’s nearly $11 billion endowment is invested back into global projects run by the University’s top donors.

The Free Press spent months investigating the University’s investment transactions and currently is in the middle of a legal battle with the University over the state of Michigan’s open-records act for the release of information from the university on employee compensation. 

Based on the information received, the Free Press reports three Michigan alumni who were on the University’s Investment Advisory Committee managed more than $400 million in funds. In response to the report, concerns arose about the ethics of reinvesting funds into other businesses managed by wealthy donors.

According to the report, if the University had kept the consistent rate of spending on University operations as it had in past years, the endowment would have roughly 10 percent more to allocate toward programs such as financial aid and academic innovation. The report also claimed the top 12 percent of the richest institutions, including the University, control 75 percent of the total assets controlled by national universities.

The Free Press also found as the endowment fund increased, University direct oversight of the investments decreased. The Universitys Chief Financial Officer Kevin Hegarty and Chief Investment Officer L. Erik Lundberg were left with most of the power in deciding how to allocate the money. In addition, some large-scale investment decisions are not immediately publicly debated by the University’s Board of Regents.

A stronger endowment allows schools to diversify their spending priorities and earn necessary funding costs outside of student-paid tuition and dues. Conflicts of interest surround three of the largest donors: Sandy Robertson, Sam Zell and Stephen Ross. Robertson, for example, has donated $18.4 million to the University — the Free Press reported the Universitys endowment invested $170 million in Robertson’s Francisco Partners equity firm.

“Were a private equity leverage buyout firm and I guess you could say theres a conflict. But they look at what we’re doing and it does fit and they invest with some of our competitors,” Robertson said in an interview with the Free Press.

Ross told the Free Press he understood the concern between wealthy donors and endowment investments and voiced his concerns when the University sought to invest in his real estate company.

The University keeps much of its investment operations confidential, leaving some with concerns about the workings of the University’s Investment Advisory Committee and the systems in place. Millions of dollars donated to the endowment fund remain anonymous, further complicating the issue.

In an interview with the Free Press, University President Mark Schlissel said some contributors will pitch investments to the IAC but research is done on the investment irregardless of who proposed it.

“(University contributors) will talk to our investment officials and say, ‘Hey look, I heard of this great opportunity and you should check it out,” Schlissel said. “And its tremendously beneficial. We do the same due diligence on those suggestions that we get from donors that we do from investment people.”

 Correction appended: A previous version of this story mischaracterized the use of the University’s endowment

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