Why UW campus protesters’ rallying cry to divest from Israel faces resistance

Pro-Palestinian protesters at the University of Wisconsin-Madison and UW-Milwaukee have been clear from the beginning: The tents will stay until their demands are met.

The slogans and chants of "DIVEST!" seem simple enough. But satisfying the protesters' primary demand of divesting from companies with connections to Israel could be difficult for universities, one expert said. That's because their investments are managed by private foundations with few public reporting obligations and a fiduicary duty to make as much money as possible.

Adding to the complexity is the ongoing status of negotiations, and shifting demands as demonstrators learn about the realities of universities' diversified endowment portfolios. In the nearly two weeks since the encampments began, UWM protesters have met with campus officials twice and protesters at UW-Madison have met several times. Neither have struck deals. While chancellors have urged an immediate end to the encampments, citing increasing safety risks, protesters said they are in it for the long haul if their demands go unmet.

Here's what to know:

Why are college students protesting?

The encampments are part of a national movement calling attention to the plight of Palestinians in Gaza. Local health officials say the Israel-Hamas war has killed more than 34,000 people in Gaza, two-thirds of them women and children.

The tents also put pressure on universities. UW-Madison and UWM have said they support students' right to protest, but the way in which they are doing it runs afoul of state law, which bans camping on campus grounds.

Have UW schools faced previous divestment demands?

In the 1970s and 1980s, student activists across the country pushed their universities to divest from firms that supported or profited from South African apartheid. The campaign was successful, with 155 colleges divesting, at least to some extent.

Five schools completely divested. Most others partially divested, which meant keeping some contracts or investment in companies doing business in South Africa, but getting rid of others considered particularly problematic.

UW-Madison partially divested from South Africa in 1978, several years before most schools.

More recently, students have demanded colleges divest from fossil fuels and companies contributing to climate change. Other schools, including the University of California System, University of Illinois and Georgetown University, have taken steps to divest, but the UW Foundation has resisted the demand.

Do divestment campaigns work?

There's little evidence to suggest the South African divestment campaign made much economic impact, but it played an important role in the overall movement, said professor Chris Marsicano of Davidson College, North Carolina. Marsicano has studied the topic.

"The political push (and) continued ability of the protesters to grab the headlines and the attention of key stakeholders is what could have a political effect" in achieving a ceasefire in Gaza, he said.

Why is it so hard for universities to divest?

Stocks, bonds and investments were much less complicated in the 1980s. Divestment nowadays is "exceptionally hard" to do because university investments are bundled together, often in private equity or index funds, Marsicano said.

Nationally, today's protesters' divestment demands have fallen into three buckets: divestment from weapons manufacturers, from Israeli businesses and from any companies that do business with Israeli businesses.

The first two are "difficult but not impossible" demands, Marsicano said, while the third is "really hard" to achieve because it would require divestment from major corporations. Amazon, for example, provides web services to the Israeli government. Microsoft provides software to the Israeli miltiary. Pepsi bought SodaStream, an Israeli company that sells machines to make sparkling water at home.

"It becomes very, very difficult to divest from the global economy and becomes even more difficult to divest from a bunch of different companies that have contractors who have contractors who have contractors cooperating with Israel," Marsicano said.

Another complicating factor is foundations' legal obligation to maximize donors' returns. Divesting from thriving corporations is a hard argument for an investment manager to make, Marsicano said.

What are UW-Madison protesters' divestment demands?

Initially, UW-Madison protesters demanded the university and its foundation divest from all companies on the American Friends Service Committee list. The committee's website said companies from Boeing to Caterpillar have provided Israel with weapons and other military equipment to Israel that was used in the attacks on Gaza.

More recently, protesters demanded UW-Madison divest from arms manufacturing, operations in occupied territories and management of private prisons.

The UW Foundation doesn't take directives on how to invest donor money from outside parties, spokesperson Tod Pritchard said.

What are UWM protesters' divestment demands?

At UWM, protesters have broadly asked for the university to divest from companies with ties to Israel, including weapons manufacturers and organizations that "profit from or supports the occupation of Palestine." Protesters have not released a list of specific companies it seeks the foundation to divest from.

Asked how far the divestment demand extends, UWM senior Kayla Patterson said Wednesday that protesters are planning to provide more details at a later date. The overall criteria, she said, is focused at companies on the ground and contributing to the violence against Palestinians. Two examples of companies she said the university should divest from were Caterpillar and the Oak Creek-based Astronautics.

The UWM Foundation said it can't divest from specific companies in its mutual fund investments. It also said it doesn't have investments in weapons manufacturers.

Why don't foundations want to disclose investment information?

How much UW-Madison and UWM are invested in Israel is unclear. The foundations' annual reports do not spell out which stocks and funds it invests in across the thousands of accounts that make up each of their endowments.

That's why protesters have also demanded disclosure of investment holdings. UW-Madison protesters asked for adoption of an "ethical investment strategy" that includes independent third-party auditing to ensure divestment criteria would be met.

There's little incentive for foundations to comply with disclosure demands, Marsicano said. Part of it is protecting the foundation's investment strategy.

Another factor at play: Having a handle on what's in the funds is complex, even for the foundations themselves. Because of how quickly stocks are traded, foundations would need daily reports, he said. This would lead to a level of red tape and cost that most foundations argue is better spent on financial aid or other university priorities.

Lastly, the more disclosure foundations provide, the wider the door opens to even more scrutiny.

Today, it's Israel, he said. The students of tomorrow could set their sights on a new place and new divestment demands.

Contact Kelly Meyerhofer at kmeyerhofer@gannett.com or 414-223-5168. Follow her on X (Twitter) at @KellyMeyerhofer.

This article originally appeared on Milwaukee Journal Sentinel: Campus protests highlight difficulty of divestment for universities