“Divest from death,” read the bubble letters written in chalk on the sidewalk Tuesday in front of The New School in New York City.

The motto articulates one of the demands of the Anti-war protests on campuses that ask colleges or universities to get rid of your endowments of companies that benefit from the War between Israel and Hamas.

Campaigns to pressure universities to divest for political or ethical reasons go back decades, at least to the 1970s, when students pressured schools to withdraw from investments that benefited South Africa under the regime. apartheid. More recently, in the early aughts, schools established rules prohibiting investments in things like alcohol, tobacco and gambling, according to a report from the National Association of University Business Officials (NACUBO) and Commonfund.

By the beginning of the following decade, a sizeable minority of donations included some Environmental, social and governance criteria. in their portfolios, expanding the factors considered when weighing the value of an investment beyond profits and losses.

College and university endowments contain hundreds of billions of dollars in assets, for example, and Columbia University’s will reach $13.6 billion in 2023. Now, campus protests are drawing attention to who controls university endowments and how decisions about those investments are made.

WHAT ARE THE EQUIPMENTS?

Endowments are holdings and investments that higher education institutions, foundations, and some nonprofit organizations manage as a type of perpetual savings account. Many use the financial returns generated by those assets each year to help fund the ongoing work of the institution. Donors often give donations to institutions to ensure that they will have resources in the future.

WHO MANAGES THE INVESTMENTS OF AN ENDOWMENT?

Many schools, from the largest to the smallest, work with third-party investment managers, such as investment banks or hedge funds or specialized firms that have access to investment vehicles not available to retail investors, said Todd Ely, associate professor at the School of Public Affairs. at the University of Colorado Denver.

“Colleges and universities have fairly limited discretion in the actual specific investments their endowment funds go toward because they have hired outside experts to make those decisions. And sometimes those decisions are even privately held,” Ely said, meaning investors don’t publicly share what’s in their portfolio.

Donations are generally administered by a university board of directors, and donors agree on the purpose of any donation, usually to benefit the institution. They do not “belong” to current students, faculty, or alumni but to the organization itself.

HOW DIFFICULT IS IT TO CHANGE INVESTMENTS?

Georges Dyer, CEO and co-founder of Intentional Endowments Network, said it can be time-consuming and difficult to identify what exposure a school’s endowment fund might have to a specific company.

“It’s not as simple as some people think; Maybe it’s simply about selling some shares of a certain company. That said, I believe anything is possible in today’s financial services industry,” Dyer said.

Its network helps connect organizations with donations to learn from each other about how to align their donations with their mission and make their investments sustainable and responsible, for example, in the context of climate change. The network also recommends that transparency be a principle of sustainable, mission-driven investing.

Calls for divestment from fossil fuel companies, which began in 2011, make a moral but also a financial argument, he said, helping to win support from trustees and boards of directors who direct university investments.

“The link to investment, financial performance and the investment performance case is not always very clear,” Dyer said of calls for divestment based on geopolitical issues.

The protesters’ demands also raise questions about what a university’s priorities and responsibilities are, Ely said.

“Are you trying to maximize returns or promote a social or political agenda?” Ely asked. “And those who actually manage endowments on a day-to-day basis focus on risk and return until told otherwise by those with governing authority for the college or university.”

HAVE ANY SCHOOLS MADE CHANGES?

In spite of the pressure that the student protesters From California to Columbia University in New York City are taking leadership of their schools, Dyer, of the Intentional Endowments Network, said he hasn’t heard much from his member schools and institutions about divestment in this context.

Fierce disagreement over support or opposition to the war within university communities is another reason why schools likely have not taken action. Many on campuses hear calls for divestment from Israel or an end to the war as a measure an attack on the Jewish people in general or how to ignore the deaths and pain caused by the Hamas attack on October 7, which killed 1,200 people.

Jennie C. Stephens, a professor at Northeastern University’s school of politics and a climate justice fellow at Harvard-Radcliffe, has written a forthcoming book on the climate justice movement on campuses, including calls for divestment in fossil fuels. She said the initial reaction from universities when asked to divest from fossil fuels was also to say their funds were mixed with other investors, managed by third parties or that they did not know what they were invested in. Schools that committed to divesting from fossil fuels figured out how to do it.

“These elite institutions with large endowments have a lot of power and concentrate wealth and power through their endowments,” Stephens said. “And they have control over how that money is invested.”

DO TRUSTEES HAVE TO LISTEN TO STUDENT DEMANDS?

No. But divestment campaigns have been successful by using a variety of tactics.

At Pomona College, students voted in February to approve a referendum that included calls for the school to disclose any investments in weapons manufacturers or companies that benefited from what it called the “apartheid” system in Israel and then divest from those. companies. Kouross Esmaeli, a visiting assistant professor of media studies at Pomona College, said school leaders and administrators have told students and faculty that they cannot disclose all of their investments.

“’Oh, we can’t reveal this. This is difficult to do. It is impossible to analyze where our investment is,’” Esmaeli said. “All these kinds of excuses about why we can’t have control over our own money as an institution and no one buys it.”

Pomona College spokesman Mark Kendall said the administration has offered to meet with protesters and provide them with information about its investment policies and will continue to do so.

“The endowment investment supports our educational mission, including academic excellence and generous financial aid, for the long term,” Kendall said in an emailed statement.

Esmaeli acknowledged that divestment can take time and that the endowment can be complex, but he said the first demand from students and faculty is that the university commit to divesting from companies that are profiting from the war. He said the university can start with those identified by the Boycott, Divestment and Sanction movement.

“Different decisions can be made and the rules can be changed to allow us to have an open fund, where we know where our fund is going,” he said.

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