The people who are protesting the Israel-Hamas war at college campuses throughout the country are making demands — they want the higher education institutions to divest their endowments from any company that is profiting from the war in Gaza.
This week, at a protest that was taking place at New York City’s The New School, protesters wrote on the sidewalk in chalk “divest from death.”
Such demands are actually nothing new for university protesters, though the subject of the protests have changed since they first arose more than 50 years ago. Then, students were trying to pressure universities to withdraw investments they made that benefited South Africa under the country’s apartheid rule.
In more recent years, schools began to put rules in place that barred investments in things such as gambling, tobacco and alcohol, according to a new report issued form the National Association of College and University Business Officers and Commonfund.
Endowments at schools in the U.S. have increasingly included environmental, social and governance criteria, which ultimately has expanded what factors the schools weigh when they consider an investment beyond its simple potential profit.
Many endowments at universities in the country have hundreds of billions of dollars in them. According to a recent ABC News report, for instance, Columbia University — which has seen significant protests against the Gaza war recently, had $13.6 billion in endowments last year.
The protesters at Columbia and many other colleges are starting to bring attention to who is in control of these endowments and how the decisions about what to invest in are actually made.
Many of the schools that have endowments use the money in them as savings accounts for the future. The financial returns that are generated from them help to fund the ongoing work that the institutions undertake every year.
Many donors give to endowments when they donate to colleges, in the hopes that it will give the schools plenty of resources for many years to come.
To manage these funds, a lot of schools work with independent investment managers such as hedge funds, investment banks or other specialized firms that have direct access to investing vehicles that many retail investors typically don’t have access to.
As Todd Ely, who is an associate professor at the University of Colorado Denver’s School of Public Affairs, explained:
“Colleges and universities have fairly limited discretion in the actual specific investments that their endowment funds are going towards because they’ve hired these external experts to make those decisions. And sometimes, those decisions are even proprietary.”
Now, though, the protesters are calling for schools to have more hands-on control over what they invest in, and to shy away from anything that would benefit from war.
Ultimately, these demands then raise questions about what the responsibilities and priorities of universities are. Ely asked:
“Are you trying to maximize returns or promote a social or political agenda? And for those actually managing the endowments on a day-to-day basis, they are focused on risk and returns until they’re directed otherwise by those with governance authority for the college or university.”
