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What is divestment? And why do Penn students want it?

Pro-Palestinian groups are calling for colleges to divest from companies benefiting Israel’s military and government

The pro-Palestinian encampment at the University of Pennsylvania
The pro-Palestinian encampment at the University of PennsylvaniaRead moreAlejandro A. Alvarez / Staff Photographer

The calls for colleges to divest their financial holdings from issues that some find objectionable have been made for decades on college campuses.

The targets have differed: Tobacco, fossil fuels and most recently Israel and its military effort and government. Thousands of students across the country are staging encampments, holding protests and clashing with their campus administrations, largely in the name of divestment.

» READ MORE: The pro-Palestinian encampment at Penn has become a game of cat and mouse between protesters and administrators

Here’s a look at what that really means.

What is divestment?

It means selling off or getting rid of investments in companies that advocates find objectionable or harmful. The idea is to cause financial harm to the firms perpetuating the targeted acts, but also to make a statement about the target of the divestment.

It’s been a popular tactic used by protesters for decades, including against South Africa for apartheid.

What does divestment mean in connection with the college campus pro-Palestinian protests?

At the University of Pennsylvania, protesters have called for the university, which has a $21 billion endowment, to first disclose its investments and then divest from corporations “that profit from Israel’s war on Gaza and occupation in Palestine.”

The calls have been similar on other college campuses across the country where encampments have been set up.

What companies might that include?

Some of the companies targeted, according to The Chronicle of Higher Education, are Lockheed Martin, Boeing, BAE Systems, and Raytheon, which have supplied Israeli Defense Forces with airplanes, missiles and other products.

Who is responsible for Penn’s investments?

Penn’s Office of Investments is responsible for investing the school’s endowment and pension assets, according to its website.

The vast majority of Penn’s endowment is invested in the Associated Investments Fund (AIF), “a pooled investment vehicle in which the many individual endowments and trusts hold units,” its website said.

During fiscal year 2023, distributions from the endowment supplied $976 million toward the university’s budget.

Who votes on divestment at Penn?

The board of trustees has “sole responsibility for all investment decisions, including establishing university policy on all investment-driven social responsibility issues that may be raised by members of the Penn community,” according to the university’s website.

What criteria must be met for divestment to occur at Penn?

Penn’s policy lays out four considerations.

A “moral evil” must exist “that is creating a substantial social injury,” the policy, created in 2013, states. A specific company or companies must be identified as opposed to an industry or activity. The company “must have a significant, clear, and undeniable nexus to the moral evil.”

And the proposal to divest must have “the support of a broad and sustained consensus of the university community reflected over a sustained period of time.”

Will Penn consider divesting from Israel?

“The University of Pennsylvania strongly opposes sanctions, boycotts, or disinvestment targeted against Israel,” a Penn spokesperson said. “We have been clear about this issue for more than a decade. Divestment focused on Israel is also against the law in the Commonwealth of Pennsylvania.”

The university referred to a 2016 law that prohibits the state from entering into contracts with any entity that boycotts or divests from Israel.

    Susan Snyder
    I cover issues and trends affecting colleges. If it happens on campus, I'm interested.