(Bloomberg) -- Brown University voted to reject a proposal from a student group demanding that its $7.2 billion endowment exclude holdings tied to Israel, arguing that taking on political positions through its endowment would go against its core mission.
“Brown University will not divest from 10 companies described in a student-led divestment proposal as facilitating ‘the Israeli occupation of Palestinian Territory,’” the Providence, Rhode Island-based school said in a statement on Wednesday.
The decision was being closely watched by student groups, alumni and lawmakers after Brown’s President Christina Paxson earlier this year promised a formal vote from its governing board on the condition that pro-Palestinian student demonstrators clear an encampment ahead of graduation. The Ivy League school was one of a handful that negotiated with student groups that took over parts of campuses to protest Israel’s invasion of Gaza after the Oct. 7 Hamas attack on the Jewish state.
The agreement to hold the vote had for months roiled the university governing board, which is chaired by Brian Moynihan, chief executive officer of Bank of America Corp.
Perceptive Advisors CEO Joseph Edelman resigned in protest in September, saying the decision to even hold a vote reflects a troubling stance toward rising antisemitism on campus.
It also faced opposition from students and alumni including billionaire real estate investor Barry Sternlicht, who warned in advance of the vote that students will blame alumni if it fails.
In August, two dozen attorneys general warned Brown of financial penalties if the school’s trustees vote in favor of a measure calling for divestment. Many states including Rhode Island have laws banning discrimination against Israel, although the state’s measure doesn’t apply to private institutions such as Brown.
The Corporation of Brown University voted on Tuesday to support a recommendation from an advisory committee against divestment. They noted that the university’s exposure to the 10 companies identified in the divestment proposal “is de minimis, that Brown has no direct investments in any of the companies targeted for divestment and that any indirect exposure for Brown in these companies is so small that it could not be directly responsible for social harm,” they said in the statement.
Moynihan and Paxson wrote that the board also focused on the fact that divestment would have a significant impact on the ability of Brown to fulfill its mission to discover, communicate and preserve knowledge.
They received more than 3,700 contributions from students, faculty, staff, parents, alumni, elected officials, nonprofits and others around the world with a wide range of views.
“Brown’s mission doesn’t encompass influencing or adjudicating global conflict,” they wrote. “Our greatest contribution to the cause of peace for which so many members of the community have advocated is to continue to educate future leaders and produce scholarship that informs and supports their work.”
Brown Divest Coalition called the decision a “moral stain” on the university.
“This decision is a moral and ethical failure of unimaginable magnitude, compounded by the untransparent, undemocratic, and frankly disgraceful manner in which the Corporation voted in secret,” the student group said in an e-mailed statement.
Colleges have largely dismissed calls to exit holdings tied to Israel, with Wesleyan University rejecting such a proposal in September. Williams College, the richest US liberal arts college, did the same in June. The University of Virginia’s Board of Visitors finance committee reiterated its longstanding position against divestment from companies tied to Israel at a meeting last month.
Brown’s endowment returned 11.3% for the year ended in June, second only to Columbia University’s 11.5% gain. Brown’s fund has posted the best returns in the eight Ivy League schools over the last three, five and 10 years as of June 2023. The gains have enabled Brown expand its budget for financial aid and salary increases.
“Brown has a strong history of directly tackling difficult questions, and this process sustains Brown’s enduring commitment to encouraging open discourse on challenging, and even divisive, issues,” Paxson said in the statement.
(Updateswith input from alumni in 10th paragraph. An earlier version corrected the number of trustees.)
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