During the months of April and May, students across the United States protested the spending of their respective college’s endowment through sit-ins, chants and campus occupations. It dominated headlines, bringing light to the question: what are endowments, and do students have a right to protest them?
Endowments are a collection of tax-exempt donations and investments. They can be used flexibly or endowed for a specific purpose, such as creating a new dining hall or funding research. For example, Harvard University stretches its $50.7 billion endowment over 14,000 individual funds, 30% of which is flexible and 70% endowed, spent at a rate of around 5% a year. Yet all endowment money can be invested to generate more money for an endowment that keeps on growing. They also work as a rainy-day fund for economic uncertainties, such as the COVID-19 pandemic. But even during the pandemic, some elite colleges like Stanford University enacted layoffs and budget cuts instead of delving into their multi-billion dollar endowments.
It doesn’t feel good for people shouldering piles of student debt to see billions resting on elite colleges through endowments. It doesn’t feel good for the students, faculty or alumni of over 100 small private colleges that had to shut down, merge with other institutions or cut off less profitable fields, such as humanities, since 2016. Endowments have become a savings account that for some colleges, aren’t being used when times are tough or for the benefit of the people. Most importantly, it enriches the super-wealthy or morally controversial causes.
For example, heavily endowed colleges use their endowments to invest in hedge funds and real estate, despite moral implications. Hedge funds manage investment money to gain positive returns while charging a 2% management fee and a 20% fee on profits. Despite being high-risk, high-fee, unregulated and market manipulators, the most successful hedge fund managers enrich themselves and their wealthy clients by the billions, widening the already drastic gap between the rich and the poor. Universities today have $130 billion invested in hedge funds. For example, Harvard invests 31% of its endowment in them, and, most notably, $2 billion in one managed by the multi-billionaire organization Baupost Group, which profits off of and owns $1 billion in Puerto Rican debt. Similar to hedge funds, the institution invests in exchange-traded funds, an investment fund traded on a stock exchange. Two of the seven ETFs they invest in include CoreCivic and GeoGroup, billionaire companies that operate private prisons that mistreat, underpay and abuse their prisoners and profit off of immigrant detention and mass incarceration. Harvard students have protested divestment from these causes, to no avail.
Lastly, endowments invest in real estate, tax-free for educational institutions. Yale University’s properties were valued at over $4.2 billion in 2022, which continues to increase and harm the local city with its tax-exempt status. Harvard spent $1 billion acquiring land across the world, half of which was spent in Brazil, fueling deforestation, violence and violations of indigenous land rights. None of these institutions have increased their student enrollment substantially since 2002, according to Columbia and Top Tier Admissions.
Colleges have wealth, power and influence. Their investments make political, financial and social statements and the tuition of students are funding them– students who may not agree with those statements. It’s only reasonable for students to do what they have always done: protest.
Protesting can be a way to raise awareness for a cause, make a difference, express student thought and hold colleges accountable for their investments.
Historically and rarely, students have changed where college endowment money goes. Over 100 colleges divested from fossil fuels, 30 colleges divested from tobacco and 110 colleges divested from South African apartheid – divestments which were initiated from the late 1970s to 2010s, according to Everytown Support Fund, The University of Alabama and Amherst College.
Presently, the stakes are higher as endowments become wealthier and more dear to colleges. At Columbia University, University of Chicago and over 60 other campuses, students protesting divestment from the Israel-Hamas war were shut down by police with riot gear, were arrested or faced withholdings or rescindings of degrees. Only one institution, The Evergreen State College, pursued divestment from the war. In retrospect, it’s hard to believe protesting would’ve worked anyway– it’s hundreds of student protesters versus the influence of billionaire fund managers and more powerful people behind the scenes. Unless it’s a universally agreeable topic of protest, money and power speak louder than ill-connected, “naive” students.
But it doesn’t have to be that way. Given they pay tuition, students should have a democratic seat on the investment board. They should be able to see investment records and communicate a student’s perspective on where investment money should go to ears that listen. Students wouldn’t have to unionize in mass numbers to find their voice. Conflicts could be resolved through long talks with student representatives and board members. For the first time, there would be an alternative to protesting– an alternative that would decrease disruption caused by protests, increase student safety and empower the youth.