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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, 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.
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.
We're asking for financial transparency because we don't even know the extent to which the investments go.
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.
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.
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.
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.
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.
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 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.
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.
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 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, and what their concern is is that they're tied to the war between Hamas and Israel.
But Janet notes that what students can see in these filings is just a fraction of a much larger investment picture.
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 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.
Well, how much of these schools money is kinggled up in these companies and industries specifically.
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.
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.
So it's a very small share.
And so what would it look like for these colleges and universities to start a divestment process. How would they begin to do that?
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, 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 are going to sell our shares of US companies that are doing business in South Africa, buy and sell.
So you're saying it's not so easy to change the way this money is invested.
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, 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.
And you're saying that universities don't see these funds as agents for social change.
No, not at all.
Could that change?
No, I don't think so.
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.
Largely they're viewed is anti Israel ways to protest Israel. So keep that in mind that there's no support for this.
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.
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.
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.
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 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 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.
Can you tell us about the BDS movement.
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 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 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 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 I think it is gaining more attension amongst students on campus, but not from the administrators or the governing board of the UC system.
There's also an ideological opposition to these movements on the part of university leaders and lawmakers. Why is divesting from Israel so fraud?
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
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 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.
So, Ellie, what are you watching for next?
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 to respond? So that'll be interesting to watch next month.
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. 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.