In December, during her graduation ceremony at the University of Illinois at Chicago, Jenin Alharithi walked onto the stage and unrolled a banner with the colors of the Palestinian flag and a simple message: “U of I System, Divest from Genocide.”

Alharithi, vice president of the school’s chapter of Students for Justice in Palestine, is one of thousands of students across the country demanding their universities end investments in companies doing business with Israel and in weapons manufacturers. The yearslong divestment movement has had increased urgency since October, when Israel responded to a Hamas terrorist attack that killed 1,200 Israelis with a bombing campaign that has killed more than 22,000 Palestinians in Gaza, according to health officials there.

“We really are just watching the suffering through our phones and there’s only so much that we can do,” Alharithi said.

On the other hand, she said, “we’re here in America for a purpose. … We have so much political power, and we need to utilize that in ways that matter.”

Critics, including the Anti-Defamation League, say the divestment movement undermines the Jewish people’s right to national self-determination and discourages peace-building between Israelis and Palestinians. They say those who support it ultimately want Israel to be dismantled.

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But Wendy Pearlman, interim director of the Middle East and North Africa Studies program at Northwestern University, said students demonstrating for divestment are raising important questions about the ethics and politics of university endowments and where they are invested.

“They are forcing these conversations to the table,” Pearlman said. “Investments can be and should be discussed and defended, and are open to critique.”

Endowment funds are not “piggy banks”

At the center of the debate are billions of dollars given by donors to sustain universities in the long term. Northwestern’s endowment was valued at $14 billion as of June 2023, the University of Chicago’s at $10 billion. Both are private institutions. The endowment of the University of Illinois System, which includes UIC and is a public institution, was valued at $2.7 billion.

“I’ll start by saying what an endowment is not,” said Robert Kelchen, a higher education researcher at the University of Tennessee. “It’s not this giant piggy bank that colleges can use however they want. It’s a series of often thousands of small accounts, most of which are restricted to use for very particular purposes.”

Funds from an endowment are invested mainly in stocks, bonds and sometimes real estate, Kelchen said, and support just a small fraction of a university’s budget. According to the American Council on Education, universities spend investment earnings at a rate of about 4 or 5% of the value of the endowment each year to pay for scholarships, faculty positions and research. Endowments are meant to cushion a university from dips in tuition revenue and, for public institutions, public investment.

University trustees oversee their institution’s endowments, but Kelchen said they usually hire third-party managers to determine where the money is invested.

“Like we do with our retirement accounts,” he said. “There are relatively few colleges that do all their management in-house just because it’s such a specialized thing. And for the vast majority of colleges with small endowments, they don’t really have access to any exotic financial strategies.”

All of this makes it difficult to disentangle investments, Kelchen said, as demonstrated by efforts to divest from fossil fuels.

“If you’re not allowed to invest in oil companies, then if you have any index funds that track the broader stock market that has oil companies, do you need to get out of that [index fund]?”

Kelchen said the dilemma points to a larger question: “Is the duty of the endowment to grow as much as possible? Or is it to do good for the public? And those two can sometimes be in tension with each other.”

Drawing on history

There have been calls for divestment that have been successful. In the 1980s, after years and years of student protests, more than 100 American universities divested, to some degree, from companies doing business in apartheid South Africa.

Supporters of Israel reject any comparison to apartheid South Africa, but Northwestern professor Elizabeth Shakman Hurd said today’s pro-Palestinian student activists are looking to that movement for inspiration.

“People who are organizing right now … are definitely studying that and definitely consulting to see, ‘How did you do what you did,’ ” said Hurd, a professor in the university’s Middle East and North African studies department.

They’re also looking to the success of student climate activists, who’ve gotten a handful of universities, including Northwestern, to make public commitments to invest in more environmentally sustainable companies and limit investments in the fossil fuel industry.

But pro-Palestinian student activists face unique challenges in their fight for divestment, observers say, chief among them the political divide over the violence in Gaza and passionate support for Israel among some students, parents, donors and trustees.

When you layer on top of that competing priorities for a university’s endowment, Hurd said she doesn’t see how trustees would support divestment from Israel-related companies.

“If you ask the board of trustees, or you ask the upper-level administration, ‘Should the investments of the university be aligned with the university’s mission as an educational institution?’ They would say ‘Yes,’ ” Hurd said. “‘And part of that mission is to ensure the longevity — financially, economically, fiscally — of the institution. And therefore, we invest wisely and carefully and judiciously in the interest of not only preserving, but also expanding and growing our endowment.’ ”

So far university officials have shown reluctance to even discuss their institutional investments with students. In early November, 26 University of Chicago pro-Palestinian student activists staged a sit-in at their admissions building to demand a public meeting with leaders about the endowment. After the building hours ended, they were arrested by campus police for trespassing.

Officials from UChicago, known for its much-publicized commitment to free speech and neutrality, have said the institution does not take political stances in its investments. Officials from Northwestern and UIC did not respond to WBEZ’s questions.

Soha Khatib, who is part of the Students for Justice in Palestine at UIC, said the UIC chancellor met with their group, but only as part of a larger meeting with several student organizations.

“It just makes me feel lesser than, but also sparks a fire,” Khatib said. “Because it’s like, ‘Okay, well if you don’t listen to me when I talk, then I’ll yell.’ ”

Lisa Kurian Philip covers higher education for WBEZ, in partnership with Open Campus. Follow her on Twitter @WBEZeducation and @LAPhilip.