Protesters want colleges to cut financial ties with Israel, but how much would divestment really matter?

What’s happening

As pro-Palestinian protests have spread to college campuses across the country, students involved have made one specific demand more than any other: that their universities divest from all financial ties with Israel.

Chants like “Disclose! Divest! We will not stop, we will not rest!” have been heard consistently at demonstrations on dozens of campuses throughout the U.S. over the past several weeks. Though the specifics vary, in general the students want colleges to reveal where they’re investing their endowment funds — which in some cases amount to tens of billions of dollars — and sell off any stakes they have that could be seen as supporting Israel’s assault on Gaza.

Collectively, American universities have an estimated $840 billion in endowment funds, which they invest in a variety of ways to expand their holdings and cover expenses. Most of that money goes into investment funds or other complicated financial instruments, but some of it is also invested in individual companies.

At certain schools, the protesters’ demands are relatively narrow. At Brown University, for example, a group of students is asking the administrators to divest from a small number of companies, including weapons manufacturers with close ties to the Israeli military. At other schools, the calls for divestment are much more ambitious. Columbia University protesters want their college to pull out of any investments in firms they believe are supporting Israel, reportedly including massive companies like Google, Amazon and Airbnb.

Most universities have either ignored protesters’ divestment demands or rejected them outright. So far, it appears that only one school has acceded. On Tuesday, Sacramento State University pledged to divest from “corporations and funds that profit from genocide, ethnic cleansing, and activities that violate fundamental human rights.”

Why there’s debate

There is some precedent for universities altering their investments in response to political pressure. In the 1980s, the anti-apartheid movement successfully convinced more than 100 colleges to cut ties with South Africa. More recently, some schools have divested from controversial industries like tobacco, private prisons and fossil fuel production.

Some Israel supporters view divestment — along with the protests in general — as inherently antisemitic.

But even among those who are less ideologically opposed to the idea, there is a lot of skepticism that the push for divestment from Israel will make much of a difference. First, protesters would have to have the leverage to convince their schools to actually change their financial strategies and take on any losses that may come from doing so. Even then, many financial experts say modern investing is so complex and interwoven that it would be unfeasible, if not impossible, for colleges to untangle themselves from any company doing business with Israel. Others say that the entire debate is centered around an amount of money that is simply too small to matter, regardless of what colleges do.

Advocates say divestment is still important despite all of its limitations. They argue that students have a right to have a say in where schools invest. Some also believe that winning concessions on divestment could be a powerful symbolic victory for the broader pro-Palestinian movement and also create a stigma against doing business with Israel that could eventually grow to a point where it does make a measurable impact.

What’s next

While it seems extremely unlikely that America’s universities are going to start divesting from Israel en masse any time soon, there are a handful of examples showing that even small concessions on the part of administrators — in some cases, nothing more than a promise to consider the proposals in the future — can be enough to bring the protests on their campuses to an end without violent police intervention.

Perspectives

Divestment would be challenging, but it’s not impossible

“Divestment from Israel would not be straightforward. It might not be immediate. … But it is certainly possible.” — Annie Lowrey, The Atlantic

Calls for divestment are nothing but wasted breath

“Resisting magical thinking about how financial markets work would help [protesters] better direct their efforts today.” — The Economist

Protesters should put their energy toward getting their schools to help Gazans directly

“I wish there would be more demands from the protesters for university endowments and other actors to spend money in Gaza, rather than to divest from Israel. Gaza is in need of an unprecedented rebuilding effort, after the massive destruction resulting from the war.” — Dany Bahar, Forward

Divestment is more of a political message than a tangible goal

“Whether universities ultimately divest and whether that has any material financial impact on Israel might be less important to the protesters than whether their calls for divestment alone can make the status quo politically untenable.” — Nicole Narea, Vox

It doesn’t matter whether colleges divest from Israel or not

“You can do this, but it won’t make much difference. By holding a few shares bought on the secondary market, Columbia University isn’t helping Israel’s war effort, and divesting wouldn’t hinder it.” — John Authers, Bloomberg

Divestment is a strong issue for protesters to rally around

“Divestment appears to be more of a rhetorical demand by those seeking an end to the Israel-Hamas war than it is a pragmatic strategy to bring about that end.” — Dan Primack, Axios

Small-scale divestment is possible, but anything more is a fantasy

“We are so much more entwined than we were 50 years ago. If you said, ‘I do not want any investment in any company that has anything to do with Israel,’ they’d have to sell pretty much everything. It would be a nightmare. But if you want just those with the most exposure, that might be more possible.” — Ray Hill, finance professor at Emory University, to Atlanta Journal-Constitution

There’s zero chance that divestment will change the course of the war

“It’s harder still to translate divestment’s small effect on companies into a change in the policies of the countries where those companies are headquartered. Countries such as Russia and Iran have persisted for years in the face of sanctions far more punishing than anything that the Columbia endowment, or all university endowments, could possibly impose.” — Megan McArdle, Washington Post

If colleges divest, other firms will have to answer why they’re not doing the same

“Divestment itself doesn't really influence the companies or the industries being targeted directly. It's more the stigma created and drawing attention to the issue more broadly.” — Todd Ely, professor of public affairs at the University of Colorado Denver, to NPR