Universities adopting a BDS (Boycott, Divestment, and Sanctions) strategy regarding Israel could result in negative financial implications in the billions of dollars, a new report by JLens published on Thursday has found.
As part of the Anti-Defamation League (ADL), JLens is the first network to properly quantify the risk of BDS-aligned investment strategies for universities.
By analyzing the historical performance of two hypothetical large-cap US equity portfolios—meaning those with a market value of over $10 billion—the report was able to provide detailed predictions for the endowments of the 100 largest universities if they were to invest based on BDS-aligned divestment strategies from 2023 to 2033.
Of the two hypothetical entities used in the study, one, such as Amazon, Lockheed Martin, or Microsoft, was tracked without BDS restrictions, while the other followed a BDS-aligned strategy.
Due to the effect of compounding interest, the percent performance gap between the two portfolios showed significant differences in returns over time.
The findings
According to the report, Harvard, Yale, Stanford, and Princeton are projected to collectively lose more than $8 billion in estimated returns on their endowments over the next decade. Conversely, Brown University, considering adopting the BDS strategy, could miss out on over $300,000,000 in returns.
If these 100 largest US university endowments adopt BDS-aligned investment strategies, they could collectively lose $33.2 billion in returns over the next decade.
“Calls for universities to divest from companies doing business in Israel are not only morally dangerous, but may also be financially dangerous,” said Jonathan Greenblatt, ADL CEO. “University investment committees have a fiduciary responsibility to prudently steward institutional resources.”
“Our research demonstrates that university endowments that divest from Israel could face significant financial consequences,” said Ari Hoffnung, JLens Managing Director and ADL Senior Advisor on Corporate Advocacy. “Lower investment returns could compromise a university’s ability to provide scholarships, fund research, and invest in campus facilities.”