In the wake of the ongoing Israel-Hamas conflict, student protests have erupted on college campuses, sparking clashes with police in riot gear and drawing widespread attention. The protests have not only angered billionaire donors, but they have also resulted in the cancellation of graduation ceremonies. At the heart of these demonstrations is a resounding call for college endowment funds to divest from Israel and American companies that engage in business activities with the country.

The protestors argue that by divesting from such entities as Google, Amazon, Boeing, and Lockheed, universities can take a stand against what they perceive as the unethical practices associated with the Israel-Hamas conflict. Alison Taylor, a clinical associate professor at New York University's Stern School of Business, highlights the opacity surrounding college endowments, making it difficult to obtain information about the allocation and utilization of these funds. This lack of transparency has become one of the key demands of the students.

Nevertheless, putting divestment into practice poses significant challenges for universities. While the University of California, Berkeley, has agreed to review their investments, many other institutions have chosen to ignore the calls for divestment. Witold Henisz, a professor of management at The Wharton School, University of Pennsylvania, explains that universities are generally hesitant to divest from any issue as it may impact the returns on their endowments. Lower returns could potentially hinder their ability to cater to the future needs of students.

The reluctance to divest stems from the desire to protect the financial stability of universities, ensuring there are ample funds available for various purposes. This includes tuition assistance and covering the operating costs of the institution, benefiting both current and prospective students. Henisz warns that introducing greater risk or reducing returns in endowments could have long-term repercussions for universities, limiting their ability to support education.

The issue of divesting from Israel and companies engaged in business there is complex, with numerous factors to consider. The article above delves deeper into how divestment would work and its potential impact on the tens of billions of dollars at stake in college endowment funds.

As student protests continue and the debate surrounding divestment intensifies, universities face a difficult decision regarding their financial considerations and their responsibility to address student concerns.