Thread by @Marcelius_B

One demand students are calling for is Israeli divestment. Divestment is not a new request. In fact, it’s been asked for many times, most notably in the 80s to protest South African apartheid. What is less talked about is why colleges will resist divestment more than ever. 🧵/1

Colleges are resisting divestment more now than ever partially because they shifted their endowments from low risk assets to private equity and real estate hedge funds in the mid to late 80s. It caused endowments to soar and institutions to center big donors /2

Suddenly, you have hedge fund managers in the game promising big returns. The more money raised, the more returns. And this meant schools needed more money so they shifted to trying to fund fields that would produce wealthy graduates and donors (aka not humanities). /3

And one might think this would be a positive for the students and the schools, but the reality is that endowment isn’t often used for student financial aid or making tuition lower or funding staff/faculty. It’s used to increase ranking and selectivity. /4

I won’t get into all the tax implications, but there’s a tax game that wealthy donors and institutions can play. Wealthy donors can donate for tax advantages and institutions can largely avoid paying taxes because they are non-profit (capital gains) and get tax breaks. /5

So, you’re seeing wealthy donors get a lot of power because they can stipulate where the money goes (hence why you’re seeing so many threaten to stop their contributions), and you have institutions feeling obligated to them because there’s an arm race to increase endowment. /6

You have the cost of tuition increasing, college affordability decreasing, cuts in many fields of study, low pay for staff, GAs, and many faculty yet endowments grow and grow. And where is a lot of the money going? Fundraising and development for more endowment! /7

Hedge funds promise money and invest in anything that does regardless of morality. Universities want money in their endowments, so they accept it and pay BILLIONS in fees to hedge fund managers. And only a small % of the money goes to truly benefiting students/the school. /8

Israel divestment campaigns are picking up, but the changed landscape of hedge funds and endowment has made colleges more resistant, not simply because they care about Israel but because so many of their investments are tied to Israel (and the military industrial complex). /9

And because schools only use 4-5% of their endowment a year and they’re very restricted, they want more and more money. So, anything to jeopardize that will be ignored, dismissed, or rejected. And endowment is seen as a component of being elite just as “selectivity” is. /10

So in the end, colleges and hedge funds have an codependent relationship which is ultimately harming colleges and making them less financially stable. And colleges are forced to sacrifice their morality in favor of money. And students become less and less important to them. /11