Pro-Palestinian signage at Yale University in New Haven, Conn. (Joe Buglewicz/Bloomberg)
(Tribune News Service) — As the latest war between Israel and Hamas enters its seventh month, students at Yale University and on dozens of other college campuses across the country have called for their universities to divest from defense contractors they say are contributing to — and profiting from — civilian deaths in Gaza.
The details of what protesters want have varied from school to school. At Yale, the student group Yalies4Palestine put out a statement on April 19 calling for the university to “disclose their investments in and divest from military weapons manufacturers.”
“The university holds thousands of shares invested in index funds with exposure to defense contractors/weapons manufacturers that facilitate the genocide in Palestine,” the statement said.
That came two days after Yale’s Advisory Committee on Investor Responsibility updated its investment policy, divesting from certain assault weapons manufacturers due to concerns over gun violence but not from companies that make military weapons.
“This manufacturing supports socially necessary uses, such as law enforcement and national security,” the university said in a statement.
Advocates have vowed to keep pressing the university to divest.
But how does divestment work? And what would it mean, in practical terms?
What is an endowment?
Many universities and other nonprofits have large investment portfolios called endowments that help support their missions.
An endowment is similar to a wealthy person’s taxable investment portfolio, according to R. Paul Herman, CEO of the socially responsible investing company HIP Investor.
But unlike an individual’s investment portfolio, Herman said, a nonprofit’s endowment is tax free.
Yale reportedly had the second largest university endowment in the country at the end of fiscal year 2022, coming in at over $41.3 billion — second only to Harvard, which had $50.8 billion.
Unlike the modest endowment of a small college or a local church, Herman said, these massive university endowments can hold investments in forests, agricultural land, startups and other private companies alongside more traditional investments like stocks, bonds and mutual funds or index funds.
“It’s a very large, multibillion dollar investment portfolio that is widely diversified,” he said.
Is Yale’s endowment supporting the Israel-Hamas War?
The United States has sent hundreds of millions worth of weapons to Israel since Oct. 7, when the militant Palestinian group Hamas launched a surprise attack that killed roughly 1,200 people and took hundreds of hostages, many of whom are still thought to be held in Gaza.
The Gaza Strip is one of two Palestinian territories, along with the West Bank, that Israel captured in the 1967 Six Day War. Israel withdrew from Gaza in 2005 but maintains a blockade. Hamas has controlled the strip since it seized power there in 2007.
The Yale Endowment Justice Coalition used publicly available tax filings and records from the federal Securities and Exchange Commission to find that the university is invested in funds that include major U.S. defense contractors like Boeing, Lockheed Martin and Raytheon.
The coalition said those companies’ weapons have gone to support Israel’s military actions in Gaza, launched in response to the Oct. 7 attack. Over 30,000 Palestinians have died in the Gaza Strip since the war began, according to the most widely accepted figures — including roughly 10,000 fighters from Hamas and other militant groups, though that number is disputed. Authorities in Gaza now say it is no longer possible to accurately track deaths, as its health care infrastructure has collapsed.
Connecticut generally ranks among the top states for defense spending, and the state is home to major defense manufacturers.
The full extent of Yale’s investments in the defense industry remains a mystery.
Yale is a private, nonprofit corporation — not a public university. And like many private institutions, it doesn’t disclose the details of its investment portfolio. Only about $130 million of Yale’s over $41.3 billion endowment — or less than 1% — is traceable through public filings, the coalition said in a statement on its Instagram page.
More information could be available at a public university through records requests, Herman said. But unlike UConn and other public institutions, Yale and other private institutions are not subject to the state’s Freedom of Information Act.
While the public doesn’t know what investments Yale has, Herman said, the university almost certainly has a clear picture.
That’s especially true because large institutional investors like Yale tend to invest “for generations,” according to Herman. Unlike some forms of short-term trading, the money in an endowment tends not to move from minute to minute or even from day to day, he explained.
“It would be a surprise if Yale did not know everything that it owned,” he said.
Has Yale divested before?
Yale has a long history of divestment and shareholder activism. The university divested from 17 companies that did business in apartheid South Africa in the early 1990s, after activists occupied the plaza in front of Beinecke Library — a tactic repeated during last month’s protests over the war in Gaza.
The university moved in the 1990s to use its shares in tobacco companies to push for proxy resolutions that would curtail the harm caused by tobacco products, particularly to minors.
In 2006, Yale divested from fossil fuel companies that did business in Sudan over human rights concerns.
In 2014, the university said it would support shareholder resolutions that call on fossil fuel companies to address climate change and provide more transparency around their climate impacts. The university established a set of principles in 2021 for identifying fossil fuel companies it would fully divest from. That list now includes major oil and gas companies like Chevron, ConocoPhillips and Exxon
Yale made a similar pledge of support for shareholder resolutions to address the social impacts of private prison companies in 2018, and it fully divested from the two largest private prison companies, CoreCivic and GEO Group, in 2021.
Finally, as already noted, the university divested from retail companies that sell assault weapons in 2018. It expanded that rule to assault weapons manufacturers that “engage in retail activities to the general public” in 2024.
What’s stopping Yale from divesting now?
Yale hasn’t gone into detail about why it rejected students activists’ calls to fully divest from the weapons industry and other defense contractors.
The university referred a request for comment from CT Insider to a statement it released on April 17 after its Advisory Committee on Investor Responsibility decided not to recommend divestment.
That statement said only that the committee determined that “military weapons manufacturing for authorized sales did not meet the threshold of grave social injury, a prerequisite for divestment, because this manufacturing supports socially necessary uses, such as law enforcement and national security.”
Yalies4Palestine was quick to respond on its Instagram account.
“Does the death of 34,000 Palestinians not constitute ‘grave social injury,’ “ the group wrote on its own annotated version of Yale’s statement.
In general, Herman said, there are several reasons why institutions are sometimes reluctant to divest from a particular industry. But those reasons tend to be more financial or political than logistical, he said.
“Universities and large institutional investors can, if they choose, be specific” about what is in the funds they invest in, Herman said.
That means that, unlike average retail investors who often pour their funds into large group holdings such as mutual funds over which they don’t have much control, large institutions like Yale have more freedom to pick and choose.
In some instances, Herman said, there may be political concerns about divestment — for example, from alumni, major donors or even trustees who disagree with the activists making the divestment push.
Indeed, some alumni raised concerns about a panel discussion on Gaza, cosponsored by Yalies4Gaza, in November that some described as anti- Israel, with at least one alumnus saying he would no longer donate to the university.
Meanwhile, over 2,300 Yale alumni, parents and graduating seniors have signed a letter pledging not to donate to the university “until the administration makes a public statement committing to divest from all weapons manufacturing companies contributing to Israel’s assault on Palestine.”
“It’s very choppy waters, where you have Republicans and Democrats, liberals and conservatives, who have different political preferences, different social preferences and different portfolio preferences,” Herman said. “And you have this historical culture in portfolio management that’s ‘make money however you can.’ “
That last part may be one of the biggest reasons why institutions are often reluctant to divest, no matter the underlying social cause, according to Herman.
Over 18 years with HIP Investor, Herman said that he’s found socially responsible investing to be safer and more stable.
But many large institutional investors take a fiscally conservative approach that involves investing over decades, he said. That makes them reluctant to change their approach — especially if that approach has been profitable in the past.
“The traditional ways need to evolve,” Herman said.
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