Mount Holyoke named in Paradise Papers scandal

Graphic by Carrie Clowers ’18

Graphic by Carrie Clowers ’18


In early November, the International Consortium of Investigative Journalists (ICIJ) publicized a cache of over 13 million confidential documents, all relating to the offshore — meaning tax-exempt — investments of world leaders, politicians, and corporations. Included in these entities are over 100 colleges and universities.

Mount Holyoke College is one of 12 Massachusetts institutions named in the documents, alongside fellow Five College Consortium members Smith College and Amherst College. 

The huge amounts of money held in the endowments of private colleges such as Mount Holyoke are usually tax-exempt. College and university endowments only pay taxes when they invest in private financial firms, since this activity is viewed as a business-related venture.

According to the New York Times, many colleges and universities utilize the loophole of “blocker corporations” to dodge payment of taxable investments. Blocker corporations operate in offshore tax havens like Bermuda and the Cayman islands, nations with minimal tax liability for foreign businesses. 

By handing legal responsibility for their taxable investments to these offshore entities, schools can avoid taxes on significant investment gains. 

Use of offshore accounts is not implicitly illegal, but according to the New York Times, this practice entangles institutions of higher education in a system that can be utilized to hide money and obfuscate investments that could be seen as controversial or unethical. 

“I think that students should know where their money is going,” said Emily Pollack ’20, the Co-Head of Membership for the Mount Holyoke College Democrats. 

However, many institutions view this strategy simply as a lucrative business practice. Mount Holyoke disclosed its position on the matter in a statement released by Shannon Gurek, vice president for Finance and Administration and treasurer at Mount Holyoke. 

“Investing in offshore vehicles is both legal and commonplace,” the statement reads. “Institutions like Mount Holyoke seek to generate long-term returns while mitigating risk to allow us to further our mission to provide scholarships, financial aid and additional resources to operate the College.” 

Dan Czitrom, professor of History, expressed concern about the practices of colleges and universities revealed in the Paradise Papers. “It raises the question of the relationship between these big pools of capital that we call endowments and corporate practices and tax avoidance,” said Czitrom. “To me, it suggests that the world of higher education and the world of corporate America are closer than ever.”

In light of the Board of Trustees’ decision last year to continue investment in the fossil fuel industry, Mount Holyoke’s utilization of blocker corporations raises questions about potential efforts on behalf of the college to conceal investments that many students and faculty oppose.

Shannon Gurek said that this was not the case. “The opacity of the investment fund is consistent, whether it is a typical private equity fund arrangement or if it utilizes a blocker entity,” said Gurek. “The difference is simply the legal entity around the investment fund.”

Nevertheless, the Paradise Papers have sparked anger. Students nationwide struggle with increasing tuition and mounting debt, while at the same time, their institutions amass enormous sums of money by exploiting this loophole in the system. 

“I think students have an obligation to understand the place of their institutions in society,” Czitrom said. “I think it’s always positive when students are organizing and putting pressure on the institution to be the best that it can be.”

“Putting full trust in an institution after this leak won’t be as easy,” said Pollack.