The pro-Palestinian protesters at Virginia Tech want the school to divest of any investments tied to Israel.
This will not happen.
Even if Virginia Tech wanted to do this, divestment from Israel is easier said than done.
Let’s look further at each of these.
The reason Virginia Tech will not divest from Israel is simple: politics. Technically, a public school’s investment funds are managed by a nonprofit foundation — in this case, the Virginia Tech Foundation, which is governed by its board. However, we all know that these foundations are closely tied to the universities they support. The foundation’s board includes the Tech president and the rector of the board of visitors, the gubernatorial-appointed board that governs the school. The board also includes three other top Tech officials. As a practical matter, the foundation is not going to do something the school doesn’t want. (That’s why the estrangement between New College Institute in Martinsville and its foundation is so unusual and so controversial and now involves the state attorney general’s office.)
Here’s why the Tech administration will not want to divest. The president of a state university may seem important on campus and even beyond, but he or she is not a king. Tech President Tim Sands is simply an employee who reports to the aforementioned board of visitors and that board is appointed by the governor — a high-profile employee, and a well-compensated employee, but an employee nonetheless.
At present, the 14-member Tech Board of Visitors is evenly split between seven members appointed by Gov. Glenn Youngkin, a Republican, and seven appointed by his predecessor, Democrat Ralph Northam. Come July 1, when the terms of five of those seven Northam appointees expire, all but two of the Tech visitors will be Youngkin appointees.
The details may vary at other state schools but at some point, they will all be governed by Youngkin appointees. This is critical to understanding the politics here, because Republicans have not been sympathetic to these campus protests at all. It would be fascinating to know what would happen in an alternative universe where we had a Democratic governor and college boards dominated by Democratic appointees. How interested would they be in divestment from Israel? In fact, that becomes a good question for our statewide candidates next year — how do they feel about divestment — but we’re getting ahead of ourselves.
For now our state schools are under Republican management, so divestment is a non-starter. Even if Sands wanted to divest, he couldn’t because I’m sure the board wouldn’t stand for it. What some might call “pressure from the board” others might call “good governance.” I have no idea if Sands has been pressured, but no pressure is really needed. He knows who his bosses are. One of the big criticisms of state college boards over the years is that they’ve often been considered rubber stamps for an administration, but legally these board members are the ones in charge of the school. I hate to sound cold and unfeeling about these things, but this is simply the law — and the politics at play. Ultimately, if you want Tech or other state universities to divest from Israel, you need to elect a governor in 2025 who supports that goal — and will base board appointments on that position (as opposed to simply rewarding big campaign donors).
Let’s suppose, though, that the Tech board decided it did want to divest. How would that work?
First, there are more than 10,000 details. That’s not hyperbole. That’s how many different funds the Virginia Tech Foundation manages. We think of “the endowment” as the big one, but there are also all those endowed professorships or scholarship funds. Going through all those funds to figure out just what they’re invested in is not impossible, but it is tedious.
The real problem is figuring out which investments are tied to Israel. It’s not as if Tech is investing directly in, say, Acme Enterprises of Tel Aviv. That’s simply not how university endowment investments work. The Christian Science Monitor recently reported that “of the roughly 9,000 companies traded on the major U.S. stock exchanges, only about 120 are Israeli. Thus, universities are likely to hold few, if any, Israeli stocks directly.”
Given those numbers, it’s possible that Virginia Tech doesn’t own any stock in Israeli companies directly — we just don’t know. Virginia Tech did not want to comment for this column and publicly available details on the foundation’s investments are virtually devoid of investment specifics. Other than real estate holdings (such as the Hotel Roanoke), there’s not a single specific investment mentioned in either the 2023 or 2022 annual reports. The focus is more on general categories of investment, such as treasury bonds, public equity, private equity and so forth. In the pandemic-era 2021 annual report, I did find a mention of one company: “The most significant return drivers were the fund’s technology investments and the co-investment in Moderna.”
Because of that, when people talk about universities divesting from Israel, they’re generally talking about divesting from companies that do business with Israel. That’s obviously a much, much broader list of companies. Here’s where we run into a new set of complications — a change over the years in how universities invest their money. “Whereas schools tended to own stocks in the 1970s and ’80s, when the South Africa divestment movement was active, many now own mutual funds,” the Christian Science Monitor reports. “Some of these funds hold dozens, even hundreds of companies. So if a Vanguard stock fund owns shares of Alphabet (Google’s parent company), which has come under fire for supplying the Israeli government with computing services, should the university divest from the entire fund?”
That raises this question: How much business must a company do with Israel before it becomes offensive to those who want to divest? Should the percentage be zero? If so, that’s going to exclude a lot of companies, given how closely tied Israel’s economy is to the West — and how closely tied the whole global economy is. “Nearly every major American multinational company does business in the country,” Time magazine reports. Google has offices in Israel that earlier this year employed 2,000 people, according to The Times of Israel, before some layoffs. Should divestment advocates not use Google as their search engine? Meta has offices in Israel. Should protesters avoid posting on Facebook and Instagram? McDonald’s operates 225 outlets in Israel. Are you complicit with Israeli military operations if you order a Big Mac in Blacksburg? Moderna, from which Tech profited in 2021 (at least), supplied COVID vaccines to Israel. It also supplied vaccines to Palestinians. How does that relationship score?
I ask these questions not to be flip but to illustrate the complexities involved here.
There are some mutual funds that specifically exclude fossil fuel companies or weapons companies, but it will be much more difficult — although not necessarily impossible — to find mutual funds that don’t include any firms doing business with or in Israel. The Nation, a liberal publication, reported a curious finding earlier this year: Many climate-focused mutual funds popular with environmentally conscious investors have invested in defense-related industries, likely for the very simple reason that they make a lot of money. “For example, American Century Sustainable Equity Fund has over $20 million invested in Lockheed Martin,” The Nation reported. “Lockheed, the world’s largest military contractor, provides the Israeli Air Force with F-16 and F-35 warplanes, an essential component of Israel’s ongoing bombardment of Gaza.”
In other words, your green investment is helping to kill people in Gaza (or maybe somewhere else). A big military contractor such as Lockheed Martin might stand out on a list of investments, but other companies may not. The Nation went on to report about “the increasingly close relationship between climate and military technology.” That’s not the Venn diagram you expected, but a lot of civilian technology has military applications, and vice versa. An article on LinkedIn last year by the CEO of an Israeli-based climate-focused investment firm explored those dual uses of climate tech and military tech: “Defense and climate technologies share many similarities, which makes them partner so naturally,” wrote CEO Ofir Gomeh. “Both defense technologies and climate needs are very hardware intense, both share the need to integrate many different technologies into one working solution and are thus based on robust system integration capabilities. Additionally, advanced sensing attributes (optics, chemistry, etc.) play a dominant part in both, as well as the need to combine hardware and software with advanced nanomaterials.”
That means it’s possible to invest in a climate tech company saving the planet — and find out later you’ve also invested in a defense contractor that’s involved in Israel.
All this is a long way of saying that divestment from companies with Israeli ties is complicated at best. At best, a university could make a statement by divesting from some high-profile defense contractors (if it owns any) — although that wouldn’t hurt those companies since somebody else would simply buy the stock. David University professor Chris Marsciano, who has studied finances in higher education, suggested to The Washington Post that divestment advocates try a different tack: Invest in those defense contractors and then become “activist shareholders” pushing for different corporate policies from the inside. Otherwise, he told Time, divesting from Israel is a “near impossible task.”
That raises a delicate, and likely unpopular, question for divestment advocates, especially those in Virginia where state university boards will soon all have Republican majorities: Are these advocates wasting their time calling for divestment? Might there be other political avenues to pursue that would be more likely to produce the results they desire? Or is it sufficiently satisfying to raise the issue, even if nothing comes of it?