Why very few colleges will divest from Israel

Chants of “Disclose! Divest! We will not stop, we will not rest!” reverberated on college campuses last spring as students protested Israel’s conduct of the war in Gaza. This fall, protestors have renewed demands that colleges and universities end investments related to Israel.

At Columbia, students seek divestment from companies profiting “from Israeli apartheid, genocide and military occupation in Palestine.” Activists at Yale and Cornell demand divestment from specified weapons manufacturers.

Many colleges and universities have refused to divest. The University of Michigan reiterated “its longstanding policy to shield the endowment from political pressures and base investment decisions on financial factors such as risk and return.” Other universities, including Brown, the University of Minnesota and Northwestern, promised last spring that trustees would consider divestment proposals as part of agreements ending encampments on their campuses.

Although Brown and Minnesota have since refused to change their investment policies, Union Theological Seminary decided to divest from “companies substantially and intractably benefiting from the war in Palestine.” And Evergreen State College committed to work toward “divestment from companies that profit from…the occupation of Palestinian territories.”

Contemporary divestment demands follow a familiar path, which began with the anti-apartheid movement in the 1970s, and then extended to fossil fuels, Sudan, tobacco, private prisons, thermal coal, assault weapons and Russia’s invasion of Ukraine.

But the campaign to divest from Israel faces hurdles unlike those of previous campaigns.

While those campaigns centered on issues on which most faculty and students agreed — especially apartheid and climate change — the conflict between Israel and Hamas has sharply divided college communities. Although substantial majorities on many campuses favor divestment, opposition is intense, especially from Jewish students, many of whom believe singling out Israel for sanctions is antisemitic. While differences do not break down neatly on identity group lines — some Jewish students support divestment — rifts have emerged between many Jewish students and some of their Muslim, Arab and progressive peers.

Moreover, the political climate is far less favorable. Public confidence in higher education has plummeted and anti-Israel protests have become part of the war against “woke” colleges and universities. Politicians across the spectrum insist that protests and divestment demands have created a hostile environment for Jewish students. Inundated by communications from concerned parents, alumni and donors, congressional and Department of Education investigations, private lawsuits and threats of punitive legislation, campus leaders face enormous pressure to demonstrate zero tolerance for antisemitism.

Also, although current calls to divest center on the war in Gaza, they are linked to a controversial campaign of economic pressure on Israel, the boycott, divestment and sanctions movement (BDS), which began in 2005. BDS attracted a modest following on some campuses, but gained little ground elsewhere.

In 2017, the governors of all 50 states denounced BDS as “antithetical to our values,” and the Trump and Biden administrations condemned it. Thirty-eight states passed laws barring government contractors from participating in BDS and 24 state attorneys general condemned the “Brown Divest Now” proposal “as only the latest part of an antisemitic pressure campaign” and warned of “immediate and profound legal consequences” for Brown, its employees and students if adopted.

Further, many colleges and universities have recently adopted policies of institutional neutrality on political and social issues. And a growing number insist such policies prohibit divestment.

Meanwhile, changes in endowment investment strategies, the breadth of protesters’ demands and Israel’s integration into the global economy render divestment extremely difficult to implement. In the 1980s, colleges and universities usually invested directly in public equities, which made excluding targeted companies relatively simple. Today, large endowments rely heavily on third-party managers and a mix of private equity, venture capital, commodity, real estate and hedge fund investments.

Colleges and universities have little or no influence on the investments that fund managers choose and are “contractually bound to refrain from disclosing” what’s in a portfolio, the funds’ “secret sauce.” As Brown University’s Chief Investment Officer put it, “given today’s realities, it’s not possible to divest the way Brown did in South Africa or Sudan.”

Moreover, past divestment campaigns centered on issues narrow enough to render divestment feasible and relatively insignificant in relation to a university’s overall portfolio. Even fossil fuels offered a “generally easy-to-define group.” By contrast, demands to exit investments in companies that are “complicit in genocide” encompass a broad range of global enterprises.

Among the companies targeted by Columbia students, for example, are Hyundai, Caterpillar, Volvo, Airbnb, Microsoft, Alphabet, Amazon, Barclays, Boeing and Lockheed Martin. To exclude such companies — or Israeli companies in industries ranging from computer technology to medical devices — “would require withdrawing from many kinds of commingled investment funds” at significant cost to endowment performance, in the words of Vox reporter Nicole Narea.

Past divestment campaigns have had little direct impact. Divestment by 150 colleges and universities from companies doing business in South Africa had “little discernible effect on firm values,” perhaps because “the boycott primarily reallocated shares…from ‘socially responsible’ [investors] to more indifferent investors and countries.” The effect on corporate behavior of divestment from fossil fuels by 250 colleges and universities has also been negligible.

To be sure, divestment campaigns can heighten awareness of an issue and mobilize support. In South Africa, divestment, as one tool among many, may have contributed to apartheid’s end. But that divestment was rendered possible by a broad national and international consensus on the evils of apartheid. On Israel, at least in America, no such consensus exists.

Glenn C. Altschuler is the Thomas and Dorothy Litwin Emeritus Professor of American Studies at Cornell University. David Wippman is emeritus president of Hamilton College.