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