The never ending saga of the Arab-Israeli conflict has once again ventured onto college campuses across America, toned with the usual genocidal rhetoric, but also flavored with a tinge of financial verbiage. After all, as we’ve said countless times in Money and Investing, follow the money. If you haven’t been paying attention, the latest turn in the tragic saga happened after Hamas’ deadly Oct. 7 attack on southern Israel, when militants killed about 1,200 people, most of them civilians, and took roughly 250 hostages. It’s the Israeli response to this deadly incident that is drawing the ire of the pro-Palestinians. According to a local health ministry, Israel has killed more than 34,000 Palestinians in the Gaza Strip pursuant to the initial Hamas attack. The exact number of non-combatants is not known, but one source says at least two-thirds of those are woman and children.
So how did we get here? The demand has its roots in the Boycott, Divestment and Sanctions movement, a decades-old campaign against Israel’s policies toward the Palestinians. The latest foray at various U.S. college campuses has seen students demanding that their institutions cut financial ties with Israeli companies. . These protests are part of a broader movement that seeks to pressure colleges to divest from Israel and companies that support its military efforts, particularly in relation to the ongoing conflict in Gaza.
As usual, the yelling and complaining comes from one side. You’ll note that there are no anti-Palestinian uprisings across America as a result of the initial October 7th attack on Israel. You’ll also note that there is no call for a boycott or disinvestment of endowment assets that are tied to Arab entities. Perhaps it is because there are none worthy of investment. The cesspools of lower learning, like Columbia and the University of Texas, give the antiemetic’s the breathing room they need to further divide in Marxist fashion the institutions that once made America great.
One can only imagine the amount of academic work and studying that is taking place in the tents sprawled across these campuses. So what are these kids looking for other than time off from classes? The demands of the student protesters vary from campus to campus, but generally include:
- Stopping business with military weapons manufacturers supplying arms to Israel.
- Refusing research funding from Israel for projects that aid the country’s military efforts.
- Divesting college endowments from money managers who profit from Israeli companies or contractors.
- Increasing transparency about funds received from Israel and their usage.
With that said, it is very difficult to actually determine the extent to which college endowments are invested in anything Israeli. Universities with large endowments spread their money across a vast array of investments, and it can be difficult or impossible to identify where it all lands. According to the Department of Education, about 100 U.S. colleges have reported gifts or contracts from Israel totaling $375 million over the past two decades. The data tells little about where the money comes from or how it was used. In addition, colleges sometimes dodge reporting requirements by steering money through separate foundations that work on their behalf.
Early indications are that the universities are not going to budge in regard to the student divestiture demands. In one regard that is quite a surprise, as the academics are largely the ones coaxing the students into GroupSpeak behavior. Perhaps there is a modicum of sense left among the business minds that run the endowments. Like all other institutions to date, American University, rejected a resolution from the undergraduate senate to end investments and partnerships with Israel. According to Sylvia Burwell, president of American University, “Such actions threaten academic freedom, the respectful free expression of ideas and views, and the values of inclusion and belonging that are central to our community.” Sounds a lot like the rhetoric from the UPenn and Harvard presidents right before they were forced to resign.
It’s refreshing to hear that even at places like NYU, value investing is still front and center. NYU spokesman John Beckham rejected the divestiture notion saying, “This is not something we’re considering. The University’s strategy is to maximize return in endowment to meet the University’s needs.” Well said.
Like their corporate brethren, endowments are invested in a wide array of categories, from traditional stocks and bonds, to private equity and venture capital. All with the pursuit of maximizing the value of the endowment. Instead of divesting, one might consider taking a more activist role in the companies that the universities invest in, ala activist investing. This way funds remain fully invested, expenses are limited, and one would imagine that students would garner an audience with corporate boards. According to Charles D. Ellis, an investment consultant and former chair of the Yale endowment’s investment committee, “Far more effective would be well reasoned letters, meetings and presentations [to companies] presented in a calm, factual way.”
As you can imagine, this will all be short term in nature. School will be out in a matter of weeks, endowments won’t divest, tents will be taken down and students will go on with their pampered safe space lives.
