April 26, 2024 • 13 mins
Protestors at universities across the country have been demanding that their institutions divest from companies that are tied to Israel or the war in Gaza, a demand universities have long rejected as antisemitic.
On today’s Big Take podcast, Sarah Holder talks to Bloomberg higher education reporter Janet Lorin and California reporter Eliyahu Kamisher about what’s really inside endowment funds and why universities are unlikely to yield to the calls of disclose and divest.
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Episode Transcript
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Speaker 1 (00:03):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:10):
In the past few weeks, college campuses across North America
have reached a boiling point. Protests against the war in
Gaza have spilled out over Columbia's Lawn where protesters have
set up tent encampments, to the University of Texas at
Austin Emory University, Emerson College, and the University of Minnesota,
where police have arrested protesters this week. Many of the protesters,
(00:31):
from students to faculty, are asking for an immediate ceasefire
in Gaza. Some protesters have threatened Jewish students or expressed
support for Hamas, which is designated as a terrorist organization
by the US. Across the country, one demand has been
repeated again and again, from Columbia's South Lawn to Yale's
Binicky Plaza to UC berkeley Sprowl Plaza. Disclose and divest.
(01:02):
Campus activists say that they want their universities to be
more transparent about where their school's endowment money is going
and for these institutions to exit a range of investments
that they say are tied to Israel and weapons that
fuel the war in Gaza.
Speaker 3 (01:16):
We're asking for financial transparency because we don't even know
the extent to which the investments go.
Speaker 2 (01:23):
That's student nor Shallaby, who we talked to on Columbia's
campus today. Not far from her, they're already bleachers set
up for the university's commencement ceremony.
Speaker 3 (01:32):
In general, the plan would be not to leave until
they divest. So I guess if that means disrupting graduation,
then that's what's going to have to happen.
Speaker 2 (01:41):
Bloomberg's Janet Lauren has covered higher education finance and endowments
for fifteen years. She says both disclosure and divestment are
more complicated than they look.
Speaker 1 (01:51):
It's not really clear because colleges are famous for not
sharing what they're invested in. I would love to know
what they're invested in, Believe me, for fifteen years, I
would like I've been.
Speaker 2 (02:02):
Trying today on the show what these calls to divest mean,
how colleges and universities invest their money, and why universities
are operationally and ideologically opposed to these efforts. I'm Sarah Holder.
This is the big take from Bloomberg News.
Speaker 1 (02:28):
So we're starting to see encampments pop up at campuses
across the country. Starting with Columbia, Harvard, Yale, Texas, University
of California, University of Texas at Austin. And what these
colleges have in common is the students are asking, they're
demanding for changes to the endowments. And an endowment is
(02:49):
money that is stemmed from donations and those donations are
invested and every year, for example, Harvard will give the
school about two billion dollars in investment returns, and that
is what makes university run.
Speaker 2 (03:04):
And the way these gifts are invested is what campus
protesters have their eye on changing. Jenet says, students have
used publicly available data to find out what investments might
have ties to the current conflict, and they've identified investments
they want their schools to divest from.
Speaker 1 (03:18):
There is some public information available in securities filings, for example,
they're called thirteen F filings, and they give a snapshot
of public stocks that college endowment told at this particular
moment of time. And as they look in, they see
they're in mutual funds, index funds ETFs, and they see
(03:38):
for that filing date what colleges hold, and they see
stocks like Amazon, or they see stocks like Google. They
would like the colleges to divest themselves of those funds
invested in those individual stocks. Why because Amazon may have
a contract with their cloud computing service. Google may have contracts,
(04:02):
and what their concern is is that they're tied to
the war between Hamas and Israel.
Speaker 2 (04:08):
But Janet notes that what students can see in these
filings is just a fraction of a much larger investment picture.
Speaker 1 (04:14):
Schools. You know, they are some of the most sophisticated
investment managers you know in the world. Instead of investing
in US stocks and bonds which are easily sold, their
asset allocations include private equity, which are typically investments made
in funds that are held for ten years or so
hedge funds where you know, you give your money to
(04:35):
a manager and they may be buying and selling an equity,
and they may be holding it for as little as
five minutes, and they're trusting their money to outside people
to manage it. They don't have a direct control over
how those managers are doing, and they enter contracts with
companies and there's confidentiality and also competitive advantage.
Speaker 2 (04:57):
Well, how much of these schools money is kinggled up
in these companies and industries specifically.
Speaker 1 (05:02):
Well, if you're looking at again these filings called thirteen DEFs,
we're talking about say in a forty billion dollar endowment,
it might be a couple of million dollars, maybe a
little bit more.
Speaker 2 (05:14):
That amount of money can seem small when you're talking
about billions in endowments. According to reporting by Janet and
her colleagues, almost seven hundred institutions hold about eight hundred
and forty billion dollars in endowment assets.
Speaker 1 (05:27):
So it's a very small share.
Speaker 2 (05:29):
And so what would it look like for these colleges
and universities to start a divestment process. How would they
begin to do that?
Speaker 1 (05:35):
Well, I think it's easier to understand when they were
just held in US stocks, that would be a pretty
simple decision of selling a stock. We don't really know
what the holdings are in these endowments, Unlike when they
were invested in plain old vanilla stocks and bonds thirty
forty years ago, it was easy to see what they had. So,
(05:56):
for example, in South Africa, when students were protesting divestment,
the way colleges invested their money was very different. They
held US stocks, That's how they invested stocks and bonds
and when students were protesting. Michigan State University was actually
the first school, the first large university to say we
(06:17):
are going to sell our shares of US companies that
are doing business in South Africa, buy and sell.
Speaker 2 (06:23):
So you're saying it's not so easy to change the
way this money is invested.
Speaker 1 (06:29):
It's complicated. And I don't think colleges see their endowments
as a means of social change. They see it as
a way of paying their bills and trying to pay
for increased financial aid. An endowment has nothing to do
with tuition, and I think it's you know, the way
universities are financed might be confusing. For example, at Harvard,
the endowment funds thirty seven percent of their entire operating budget,
(06:51):
and that is what makes university run. And a lot
of financial lead, for example, comes from endowment investing. So
maybe a misconception that tuition payments that fund how the
operation of the school. Tuition payments do not fund the endowment,
its gifts and investment returns.
Speaker 2 (07:11):
And you're saying that universities don't see these funds as
agents for social change.
Speaker 1 (07:15):
No, not at all.
Speaker 2 (07:17):
Could that change?
Speaker 1 (07:18):
No, I don't think so.
Speaker 2 (07:20):
And when it comes to specifically targeting investments that touch Israel,
a movement known as boycott, divestment, and sanctions. Colleges and
universities have long rejected these efforts as anti Semitic because
they call into question the legitimacy of the Jewish state.
There are also laws on the books in more than
half of US states which discouraged this type of action.
Speaker 1 (07:39):
Largely they're viewed is anti Israel ways to protest Israel.
So keep that in mind that there's no support for this.
Speaker 2 (07:48):
But there have been moments in the past where other
divestment movements on college campuses have been extraordinarily successful. In
the nineteen eighties, protesters called on universities to divest from
companies that did business and see Africa in protests of
the country's policy of apartheid on a lot of canvases.
The pressure worked, but this time Janet says there's little appetite.
(08:09):
This month, Harvard, which has the largest US endowment, made
clear that it opposes calls for a policy of boycotting
Israel and its academic institutions, and Brown refused to acknowledge
divestment demands. During an eight day student led hunger strike.
When we come back, we go to one university in
California to see how the effort has expanded there. We're back.
(08:37):
Bloomberg reporter Eli Yahou Camisher went to the UC Berkeley's
protest site to see how the protests there have unfolded
and what could come next.
Speaker 4 (08:45):
Students in Berkeley. They have four main demands. One of
them is to divest from the UC's investment fund, which
is about one hundred and sixteen nine billion dollars investment fund,
from assets that are tied to Israel. Many assets are
kind of index funds that might invest in companies like
Boeing or Airbnb that they say have kind of a
(09:08):
relationship to arms manufacturing and or work within Israel or
Israeli settlements. They want to divest from companies like Boeing
or Lockheed Martin or raytheon that might involved in arms
manufacturing and might have ties to Israel, but the UC
system doesn't have any direct holdings in those companies. The
(09:32):
U see investment fund, So what they've targeted are black Rock,
which holds most every public equity in the world essentially,
and then they've also looked at some other index funds
like an SMP five hundred fund that holds companies like Boeing.
Speaker 2 (09:49):
Can you tell us about the BDS movement.
Speaker 4 (09:52):
So in the UC system, the boycott investment sanctions movement
has been very active for over two decades, I would say,
and they have a lot of success in getting student
bodies to vote in favor of divesting, but that really
hasn't moved any of the UC system wide investment, which
(10:14):
is controlled by a board of regents that is majority
appointed by the California governor. And so even though like
student bodies at the majority of the UC's ten campuses
have all voted in favor of divesting multiple times over
the past decade, it hasn't been any indication that the
UC regents are taking up their demands. And so the
(10:37):
calls that we're seeing on the UC system campus now
are really the same calls for devestment that we've been
seeing for many years now that have been at the
center of campus you know, really rock as campus divisions,
and there isn't an indication that the UC system is
changing it's policy. A spokesman for UC Berkeley told me
(10:58):
that they have no plans to change any of their
investment policies. But what is new now is that the
devestment demands are being tied to an encampment that is
on the campus, and they're saying we are not going
to leave sprou Plaza, which is a center for campus life,
until their demands are met. There's definitely a new intensity
to the demand and there's more tension on it, and
(11:20):
I think it is gaining more attension amongst students on campus,
but not from the administrators or the governing board of
the UC system.
Speaker 2 (11:31):
There's also an ideological opposition to these movements on the
part of university leaders and lawmakers. Why is divesting from
Israel so fraud?
Speaker 4 (11:40):
That's been at the center of the devestment debate for decades.
I think people that oppose divesting from Israel see it
as singling out to one Jewish majority country, and some
within the devestment movement I think expressed that there Israel
doesn't have a right to exist, And I think there's
that division between criticizing Israel, Israel's policy and government, and
(12:04):
then criticizing the country's existence. So people see that second part,
I think as an anti Semitic They point to, like,
you know, why aren't there boycott a boycott campaign against
Russia or Saudi Arabia, and they think Israel shouldn't be
kind of singled up. I think the opponents of bds
would say this is a political action and that it's
(12:28):
non violent, and that Palestinians, you know, have and Palestinians
and their supporters should be able to take nonviolent protests
the campuses and they should be listened to.
Speaker 2 (12:40):
So, Ellie, what are you watching for next?
Speaker 4 (12:43):
I think what I'm looking to next is, you know,
there's May fourteenth through sixteenth, there's going to be a
meeting of the UC regents, the governing board, and how
are they going to respond to what's happening in the campus.
Are they going to indicate some sort of you know,
increasing kind of inclination to hear these students on these
issues they have not before, or how are they going
(13:05):
to respond? So that'll be interesting to watch next month.
Speaker 2 (13:15):
Thanks for listening to the Big Take podcast from Bloomberg News.
I'm Sarah Holder. This episode was produced by Thomas lu,
Alex Sugiura, Julia Press, and Jessica Beck. It was edited
by Caitlin Kenney and Pratish Narayanan, who was mixed by
Veronica Rodriguez and fact Check by Adrianna Tapia. Naomi Shaven
is our senior producer. Our senior editor is Elizabeth Ponso.
(13:36):
Nicole biemsterbor is our executive producer. Sage Bauman is Bloomberg's
head of podcasts. Please subscribe and review The Big Take
wherever you listen to podcasts. It helps new listeners find
the show. Thanks for listening. We'll be back next week.
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:10):
In the past few weeks, college campuses across North America
have reached a boiling point. Protests against the war in
Gaza have spilled out over Columbia's Lawn where protesters have
set up tent encampments, to the University of Texas at
Austin Emory University, Emerson College, and the University of Minnesota,
where police have arrested protesters this week. Many of the protesters,
(00:31):
from students to faculty, are asking for an immediate ceasefire
in Gaza. Some protesters have threatened Jewish students or expressed
support for Hamas, which is designated as a terrorist organization
by the US. Across the country, one demand has been
repeated again and again, from Columbia's South Lawn to Yale's
Binicky Plaza to UC berkeley Sprowl Plaza. Disclose and divest.
(01:02):
Campus activists say that they want their universities to be
more transparent about where their school's endowment money is going
and for these institutions to exit a range of investments
that they say are tied to Israel and weapons that
fuel the war in Gaza.
Speaker 3 (01:16):
We're asking for financial transparency because we don't even know
the extent to which the investments go.
Speaker 2 (01:23):
That's student nor Shallaby, who we talked to on Columbia's
campus today. Not far from her, they're already bleachers set
up for the university's commencement ceremony.
Speaker 3 (01:32):
In general, the plan would be not to leave until
they divest. So I guess if that means disrupting graduation,
then that's what's going to have to happen.
Speaker 2 (01:41):
Bloomberg's Janet Lauren has covered higher education finance and endowments
for fifteen years. She says both disclosure and divestment are
more complicated than they look.
Speaker 1 (01:51):
It's not really clear because colleges are famous for not
sharing what they're invested in. I would love to know
what they're invested in, Believe me, for fifteen years, I
would like I've been.
Speaker 2 (02:02):
Trying today on the show what these calls to divest mean,
how colleges and universities invest their money, and why universities
are operationally and ideologically opposed to these efforts. I'm Sarah Holder.
This is the big take from Bloomberg News.
Speaker 1 (02:28):
So we're starting to see encampments pop up at campuses
across the country. Starting with Columbia, Harvard, Yale, Texas, University
of California, University of Texas at Austin. And what these
colleges have in common is the students are asking, they're
demanding for changes to the endowments. And an endowment is
(02:49):
money that is stemmed from donations and those donations are
invested and every year, for example, Harvard will give the
school about two billion dollars in investment returns, and that
is what makes university run.
Speaker 2 (03:04):
And the way these gifts are invested is what campus
protesters have their eye on changing. Jenet says, students have
used publicly available data to find out what investments might
have ties to the current conflict, and they've identified investments
they want their schools to divest from.
Speaker 1 (03:18):
There is some public information available in securities filings, for example,
they're called thirteen F filings, and they give a snapshot
of public stocks that college endowment told at this particular
moment of time. And as they look in, they see
they're in mutual funds, index funds ETFs, and they see
(03:38):
for that filing date what colleges hold, and they see
stocks like Amazon, or they see stocks like Google. They
would like the colleges to divest themselves of those funds
invested in those individual stocks. Why because Amazon may have
a contract with their cloud computing service. Google may have contracts,
(04:02):
and what their concern is is that they're tied to
the war between Hamas and Israel.
Speaker 2 (04:08):
But Janet notes that what students can see in these
filings is just a fraction of a much larger investment picture.
Speaker 1 (04:14):
Schools. You know, they are some of the most sophisticated
investment managers you know in the world. Instead of investing
in US stocks and bonds which are easily sold, their
asset allocations include private equity, which are typically investments made
in funds that are held for ten years or so
hedge funds where you know, you give your money to
(04:35):
a manager and they may be buying and selling an equity,
and they may be holding it for as little as
five minutes, and they're trusting their money to outside people
to manage it. They don't have a direct control over
how those managers are doing, and they enter contracts with
companies and there's confidentiality and also competitive advantage.
Speaker 2 (04:57):
Well, how much of these schools money is kinggled up
in these companies and industries specifically.
Speaker 1 (05:02):
Well, if you're looking at again these filings called thirteen DEFs,
we're talking about say in a forty billion dollar endowment,
it might be a couple of million dollars, maybe a
little bit more.
Speaker 2 (05:14):
That amount of money can seem small when you're talking
about billions in endowments. According to reporting by Janet and
her colleagues, almost seven hundred institutions hold about eight hundred
and forty billion dollars in endowment assets.
Speaker 1 (05:27):
So it's a very small share.
Speaker 2 (05:29):
And so what would it look like for these colleges
and universities to start a divestment process. How would they
begin to do that?
Speaker 1 (05:35):
Well, I think it's easier to understand when they were
just held in US stocks, that would be a pretty
simple decision of selling a stock. We don't really know
what the holdings are in these endowments, Unlike when they
were invested in plain old vanilla stocks and bonds thirty
forty years ago, it was easy to see what they had. So,
(05:56):
for example, in South Africa, when students were protesting divestment,
the way colleges invested their money was very different. They
held US stocks, That's how they invested stocks and bonds
and when students were protesting. Michigan State University was actually
the first school, the first large university to say we
(06:17):
are going to sell our shares of US companies that
are doing business in South Africa, buy and sell.
Speaker 2 (06:23):
So you're saying it's not so easy to change the
way this money is invested.
Speaker 1 (06:29):
It's complicated. And I don't think colleges see their endowments
as a means of social change. They see it as
a way of paying their bills and trying to pay
for increased financial aid. An endowment has nothing to do
with tuition, and I think it's you know, the way
universities are financed might be confusing. For example, at Harvard,
the endowment funds thirty seven percent of their entire operating budget,
(06:51):
and that is what makes university run. And a lot
of financial lead, for example, comes from endowment investing. So
maybe a misconception that tuition payments that fund how the
operation of the school. Tuition payments do not fund the endowment,
its gifts and investment returns.
Speaker 2 (07:11):
And you're saying that universities don't see these funds as
agents for social change.
Speaker 1 (07:15):
No, not at all.
Speaker 2 (07:17):
Could that change?
Speaker 1 (07:18):
No, I don't think so.
Speaker 2 (07:20):
And when it comes to specifically targeting investments that touch Israel,
a movement known as boycott, divestment, and sanctions. Colleges and
universities have long rejected these efforts as anti Semitic because
they call into question the legitimacy of the Jewish state.
There are also laws on the books in more than
half of US states which discouraged this type of action.
Speaker 1 (07:39):
Largely they're viewed is anti Israel ways to protest Israel.
So keep that in mind that there's no support for this.
Speaker 2 (07:48):
But there have been moments in the past where other
divestment movements on college campuses have been extraordinarily successful. In
the nineteen eighties, protesters called on universities to divest from
companies that did business and see Africa in protests of
the country's policy of apartheid on a lot of canvases.
The pressure worked, but this time Janet says there's little appetite.
(08:09):
This month, Harvard, which has the largest US endowment, made
clear that it opposes calls for a policy of boycotting
Israel and its academic institutions, and Brown refused to acknowledge
divestment demands. During an eight day student led hunger strike.
When we come back, we go to one university in
California to see how the effort has expanded there. We're back.
(08:37):
Bloomberg reporter Eli Yahou Camisher went to the UC Berkeley's
protest site to see how the protests there have unfolded
and what could come next.
Speaker 4 (08:45):
Students in Berkeley. They have four main demands. One of
them is to divest from the UC's investment fund, which
is about one hundred and sixteen nine billion dollars investment fund,
from assets that are tied to Israel. Many assets are
kind of index funds that might invest in companies like
Boeing or Airbnb that they say have kind of a
(09:08):
relationship to arms manufacturing and or work within Israel or
Israeli settlements. They want to divest from companies like Boeing
or Lockheed Martin or raytheon that might involved in arms
manufacturing and might have ties to Israel, but the UC
system doesn't have any direct holdings in those companies. The
(09:32):
U see investment fund, So what they've targeted are black Rock,
which holds most every public equity in the world essentially,
and then they've also looked at some other index funds
like an SMP five hundred fund that holds companies like Boeing.
Speaker 2 (09:49):
Can you tell us about the BDS movement.
Speaker 4 (09:52):
So in the UC system, the boycott investment sanctions movement
has been very active for over two decades, I would say,
and they have a lot of success in getting student
bodies to vote in favor of divesting, but that really
hasn't moved any of the UC system wide investment, which
(10:14):
is controlled by a board of regents that is majority
appointed by the California governor. And so even though like
student bodies at the majority of the UC's ten campuses
have all voted in favor of divesting multiple times over
the past decade, it hasn't been any indication that the
UC regents are taking up their demands. And so the
(10:37):
calls that we're seeing on the UC system campus now
are really the same calls for devestment that we've been
seeing for many years now that have been at the
center of campus you know, really rock as campus divisions,
and there isn't an indication that the UC system is
changing it's policy. A spokesman for UC Berkeley told me
(10:58):
that they have no plans to change any of their
investment policies. But what is new now is that the
devestment demands are being tied to an encampment that is
on the campus, and they're saying we are not going
to leave sprou Plaza, which is a center for campus life,
until their demands are met. There's definitely a new intensity
to the demand and there's more tension on it, and
(11:20):
I think it is gaining more attension amongst students on campus,
but not from the administrators or the governing board of
the UC system.
Speaker 2 (11:31):
There's also an ideological opposition to these movements on the
part of university leaders and lawmakers. Why is divesting from
Israel so fraud?
Speaker 4 (11:40):
That's been at the center of the devestment debate for decades.
I think people that oppose divesting from Israel see it
as singling out to one Jewish majority country, and some
within the devestment movement I think expressed that there Israel
doesn't have a right to exist, And I think there's
that division between criticizing Israel, Israel's policy and government, and
(12:04):
then criticizing the country's existence. So people see that second part,
I think as an anti Semitic They point to, like,
you know, why aren't there boycott a boycott campaign against
Russia or Saudi Arabia, and they think Israel shouldn't be
kind of singled up. I think the opponents of bds
would say this is a political action and that it's
(12:28):
non violent, and that Palestinians, you know, have and Palestinians
and their supporters should be able to take nonviolent protests
the campuses and they should be listened to.
Speaker 2 (12:40):
So, Ellie, what are you watching for next?
Speaker 4 (12:43):
I think what I'm looking to next is, you know,
there's May fourteenth through sixteenth, there's going to be a
meeting of the UC regents, the governing board, and how
are they going to respond to what's happening in the campus.
Are they going to indicate some sort of you know,
increasing kind of inclination to hear these students on these
issues they have not before, or how are they going
(13:05):
to respond? So that'll be interesting to watch next month.
Speaker 2 (13:15):
Thanks for listening to the Big Take podcast from Bloomberg News.
I'm Sarah Holder. This episode was produced by Thomas lu,
Alex Sugiura, Julia Press, and Jessica Beck. It was edited
by Caitlin Kenney and Pratish Narayanan, who was mixed by
Veronica Rodriguez and fact Check by Adrianna Tapia. Naomi Shaven
is our senior producer. Our senior editor is Elizabeth Ponso.
(13:36):
Nicole biemsterbor is our executive producer. Sage Bauman is Bloomberg's
head of podcasts. Please subscribe and review The Big Take
wherever you listen to podcasts. It helps new listeners find
the show. Thanks for listening. We'll be back next week.
Hosts And Creators
Sarah Holder
Saleha Mohsin
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