Pro-Palestinian demonstrators on campuses across the U.S. – including at the University of Illinois at Urbana-Champaign — are calling on their schools to divest from companies with ties to Israel.
One of the groups — Students for Justice in Palestine UIUC — wants the university to divest from weapon manufacturers and institutions; disclose all financial assets, including investments, endowments and other holdings; end all ties with “genocidal corporations”; and grant amnesty to all student protesters.
Student protesters camped out on UIUC’s Main Quad for nearly two straight weeks, until they decided to remove the encampment Friday, May 10. Organizers with SJP UIUC said in an announcement on their Instagram page that their demonstration is not over.
But what would divestment from Israel look like, and how difficult would it be?
Here’s a look at what we know — and what remains unclear — about the issue.
How much money are we talking about?
There are several factors that make it difficult or impossible to know exactly how much money the University of Illinois has invested in companies with ties to Israel.
The University of Illinois’ Office of Investment publishes annual reports disclosing how much is invested in various companies and stocks, including government bonds. The latest report summarizes investments from FY 2023.
Out of the $4.46 billion of investments managed by the U of I’s Office of Investment, nearly $164,000 went to the state of Israel, according to FY 2023 data on investments obtained via Freedom of Information Act requests.
The university also has investments in several companies that pro-Palestinian demonstrators have demanded the campus divest from because of their ties to Israel’s military. These include:
- BlackRock — $0.12 million
- Raytheon — $4 million
- Boeing — $5.6 million
- Caterpillar — $8.7 million
- Lockheed Martin — $1.6 million
- Expedia — $0.6 million
- Northrup Grumman — $1 million
- United Technologies $0.06 million
The total amount invested in these eight companies — and the state of Israel — is nearly $22 million, or roughly 0.5% of the total amount invested by the U of I’s Office of Investments.
But this number doesn’t give the complete picture of the U of I’s financial ties to Israel because additional money may flow to companies through hedge funds, index funds and mutual funds (more on that below).
And this $22 million figure does not include money that may be invested in these companies from the $2.73 billion endowment managed by the University of Illinois Foundation, which is a separate nonprofit corporation independent from the University of Illinois.
“It is important to note that the assets managed by the Office of Investments are distinct from those managed by the University of Illinois Foundation (UIF). UIF is a university-related organization with an independent board,” reads the U of I System’s Office of Investments website.
IPM News sent numerous emails seeking comment and responses to questions about the relationship between the U of I System’s investments, the U of I Board of Trustees, and the endowment managed by the University of Illinois Foundation.
UIUC spokesperson Robin Kaler said in an email that the campus doesn’t manage investments and that all investment-related questions should be directed to the U of I Foundation.
We reached out to the Foundation and received a reply from Sue Johnson, Assistant Vice President of Marketing & Communications for the Foundation, saying that all questions about investments need to be addressed by the University of Illinois.
How university investments work
The money invested by the University of Illinois System comes from two sources: the operating pool and the endowment pool, which is separate from the U of I Foundation endowment.
- The $3.43 billion operating pool consists of revenue from tuition and fees, state appropriations, student loan funds, grants, self-insurance programs, and hospital and auxiliary services.
- The $1.03 billion endowment pool consists of funding from donors and gifts.
The University of Illinois System’s Office of Investments manages the operating pool and endowment pool, totaling $4.46 billion. The office selects external investment firms, like BlackRock and Neuberger Berman, to actually invest the endowment and operating funds, according to the U of I System’s investment policy.
The University of Illinois Board of Trustees establishes the investment policy that the Office of Investment and external investment firms abide by. Through the investment policy, the Board of Trustees determines the amount of money that can be allocated to different asset categories.
These investments and information are posted in the annual investment report each fiscal year. The decisions about how to allocate the money — and which stocks to invest in — are made public.
As for the $2.73 billion endowment managed by the University of Illinois Foundation: The foundation also releases annual reports. But, unlike the U of I Investment Office’s report, the foundation’s report only offers a glimpse into how the endowment funds are invested.
The $22 million invested by the U of I System in FY 23 in the eight companies with ties to Israel listed above – and the state of Israel itself – only comes from the $4.46 billion managed by the investment office and does not include any investments from the U of I Foundation’s $2.73 billion endowment.
It gets even more complicated
The $22 million figure may not even be a complete picture of the University of Illinois System’s investments in companies with ties to the Israeli military within the $4.46 billion operating pool and endowment pool, according to Chris Marsicano, an assistant professor of educational studies and public policy at Davidson College in North Carolina.
He said most large universities with large endowments, like the University of Illinois System, have significant exposure to index funds — bundles of stocks from different companies that represent a segment of the financial market.
“The returns on index funds tend to be very good,” said Marsicano, whose research areas include higher education policy and finance. “But what it [index funds] makes it hard to do is to pick out specific companies within that index.”
The $22 million invested in the eight companies referenced above and the state of Israel would be easy to shed because these are direct investments, he said.
But there could be additional investments in these, and other companies, with ties to the Israeli military, hidden within index funds, he said.
Index funds not only make it hard to pinpoint exactly how much universities are investing in companies with ties to the Israeli military, but Marsicano said they also make it hard for universities to actually divest.
“To try to get rid of [a specific company within an index fund] you have to sort of get rid of the entire index and so that would be very difficult for most universities to do in terms of divestment,” he said.
And while the direct investments in companies can be shed fairly simply, he said, “they may just go directly into an index fund that has a similar level of investments in those, or similar, companies.”
Since university investment boards have to act as fiduciaries — acting in the best interests of the university — it can be hard to monetarily justify divestment from certain companies.
But that doesn’t mean divestment is impossible, said Charlie Eaton, an associate professor of sociology at UC Mercer.
“It is shown that investment funds can yield healthy returns while taking ethics into account,” Eaton said.
He mentioned UIUC’s fruitful investmentment in environmental, social and governance index funds that focus on sustainability.
Campuses did divest from apartheid in the ‘80s. But things are different now
In 1987, the University of Illinois Board of Trustees divested $3.3 million dollars from apartheid South Africa after a push from student protesters on the Chicago and Urbana-Champaign campuses.
Students on campuses today note similarities between themselves and those protesters from the ‘80s.
While there may be similarities between what pro-Palestinian demonstrators are demanding today and what protesters in the ‘80s wanted, Marsicano said university investments work completely differently now compared to back then.
“The problem is, it’s a lot more difficult to divest today than it was 30 years ago,” he said. “The investment options are just more complicated. In the 1980s, divesting was selling shares from a very specific company that you had an intention to buy at one point. Now,… you don’t easily know if you have shares in that company because these index funds and ETFs [Exchange Traded Funds] and, and hedge funds are all so complicated.”
The sheer amount of companies that do business in Israel, Marsicano said, also makes it hard to draw the line between the companies that have acceptable relationships with Israel and the ones that don’t.
Cutting off all financial ties with Israel would mean cutting off ties with major companies like Amazon and Google, he said.
“Divesting entirely from companies that do business in Israel means divesting from the global economy,” Marsicano said.
But if student protesters narrow their ask to specific types of investments, Marsicano said, divestment would become more feasible.
This is the approach Brown University students took to bring a divestment measure to the university’s investment corporation board, according to NPR. The measure calls for divestment from 11 defense companies.
Students at UIUC are hoping to take a similar approach. An organizer with Students for Justice in Palestine UIUC said they want the university to divest from companies supplying the Israeli Defense Force with military equipment, like Boeing or Lockheed Martin.
“If we leave any meeting with even a small divestment, that would be a huge win,” she said. “It just takes one school to divest for the rest to follow.”
The organizer said what makes divestment important is not just the financial aspect, but the symbolic act of showing Palestinian students at the University of Illinois that Palestinian people matter to them.
Marsicano echoed the symbolic importance of divestment. In the case of fossil fuels and South Africa, the money didn’t make a difference; it was headline after headline of these universities divesting, he said.
“The act of divestment doesn’t genuinely cripple the economies of wherever you’re trying to divest from,” Marsicano said. “But what these efforts have done is put increased pressure on both the companies and the politicians to make changes.”
The university’s ties to some companies go both ways
Several companies with ties to the Israeli military, including U.S. defense companies like Lockheed Martin and Northrop Grumman, have seen their stocks rise since the Israel-Hamas war broke out. And the ties between the University of Illinois and these companies go both ways, in many instances
Caterpillar
The University of Illinois System has at least $8,716,761.99 invested in Caterpillar, an American engineering equipment manufacturer. According to the Business and Human Rights Resource Center and Amnesty International, the company’s bulldozers have been used to demolish homes and carry out other human rights violations in occupied Palestinian territories. The University of Illinois Urbana Champaign also has ties with the company beyond investments. For example, Caterpillar is a corporate affiliate of The Hoeft Technology & Management Program, a competitive undergraduate minor degree program. In an article from the University announcing this partnership, Caterpillar’s Chief Technology Officer and Vice President, Tom Bluth, said the program was a continuation of the company’s decades-long relationship with the University.
Boeing
The University of Illinois System has at least $5,603,267.62 invested in Boeing, an aviation and defense company. According to the Seattle Times, Boeing has connections with Israel stemming back to the country’s birth and has supplied the Israel Defense Force with aircraft and bombs.
Raytheon
The University of Illinois System has at least $4,003,842.29 invested in Raytheon, a United States defense contractor. Raytheon supplies the Israeli Defense Forces with equipment like missiles and radars. A report from Amnesty International found fragments of bombs produced by Raytheon in schools, playgrounds, hospitals and people’s homes in Gaza.
Lockheed Martin
The University of Illinois System has at least $1,649,335.39 invested in Lockheed Martin, an aerospace and defense company. Lockheed Martin has partnered with Israel since 2004 and supplies the Israeli Defence Force with a variety of military equipment, including fighter jets, radars, rockets and guidance systems. Amnesty International reports found bombs made by the company killed civilians in Gaza.
Northrop Grumman
The University of Illinois System has at least $1,048,475.65 invested in Northrop Grumman. The company has worked with Israeli defense companies and has supplied the IDF with weapons and aircraft for years.
Expedia
The University of Illinois System has at least $643,562.77 invested in Expedia. Expedia is on a list the United Nations posted of companies involved in Israeli settlement actions that have led to human rights violations for Palestinian people.