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Last week, Brown, Northwestern, and the University of Minnesota struck deals with small but loud groups of Israel-hating students: take down your disruptive protest encampments, and we'll agree to consider divesting from companies doing business with Israel. As corporate law professors who were involved in the successful campaign to reverse Ben & Jerry's Israel boycott, we see the universities starting to head down the same perilous path as the ice cream maker. The further they go, the more likely they will face the same kind of damaging backlash as Ben & Jerry's and its parent Unilever, or worse.
The Ben & Jerry's debacle started about a decade ago. The Vermont-based firm was harassed for years by local members of the Boycott, Divestment, Sanctions (BDS) movement, whose aim is to destroy Israel as a Jewish state. Ben & Jerry's finally caved in 2021. The reaction to the announcement was swift and harsh. Lawsuits were filed, members of Congress, the Senate, and numerous state governments condemned the actions. The stock price fell.
More than 35 states have anti-BDS laws that bar the state from investing in firms that boycott Israel or buying their services. State pension funds thus dumped hundreds of millions of Unilever stocks and bonds. Other large investors registered disapproval. In the end Unilever was forced to give the Israeli licensee all the rights he needed to continue operating his business, a profound failure for the BDS movement. Shortly after that, the Unilever CEO stepped down.
The universities should keep in mind that the morality of Israel-hating students is not shared by most Americans, including residents of their own states. Most Americans see boycotting Israel as immoral if not antisemitic. That's why the vast majority of states—including the three universities' home states of Rhode Island, Illinois and Minnesota—refuse to do business with entities that boycott Israel.
That moral judgment runs so strongly against that of the student divestment demands that 14 states (including Illinois) increased their investments in Israel as a sign of solidarity with the country after the Oct. 7 massacre, though the anti-BDS statutes require no such action.
Ben and Jerry's seemed to think that it could buy itself peace by caving into demands of a small Vermont BDS organization. But it only bought itself trouble. The evidence is everywhere that the weight of moral judgment runs in Israel's favor, and that universities divesting from Israel will face substantial pushback. The universities are making the same mistake the ice cream maker did: vastly overweighting the view of the protesters they happen to see every day, and insufficiently considering the views of all their stakeholders.
Even before the divestment issue was raised, current and prospective students began reevaluating where they attend school, parents and alums were furious and pro-Israel donors were already withholding contributions because they see universities as aiding and abetting antisemitism. Brown lost at least one major donor over the university's agreement to discuss divestment alone. There are likely to be more. The further universities move in the direction of boycotting Israel in any respect, the further donations will fall.
Even donors and alumni who care little about Israel may be annoyed that the universities' have too readily dangled the keys to the endowments before the same students who have caused so much harm and have threatened to cause more, not least by disrupting this spring's graduations. Endowment returns fund many university costs, including financial aid for students. Shaping investments to satisfy radical students reduces returns and increases management fees. Perhaps students demanding divestment should volunteer to be the first to forgo aid.
Congress already has elite universities in its sights. Even before Oct. 7 there was substantial interest in taxing endowments or otherwise restricting university non-profit status. If universities start singling out Israel for unfavorable treatment, these ideas are more likely to become legislation, with Israel-boycotting universities singled out for the worst treatment.
Because donors have been withholding contributions, universities' ability to issue more debt has become more critical. Divesting from Israel will also immediately trigger state anti-BDS laws, which could prohibit these states from buying debt issued by an Israel-boycotting university or buying services from it. Perhaps not surprisingly, since campus unrest began, bond prices for both Brown and Northwestern debt have plummeted. These counter-boycotts, combined with a falloff in donations, will make it harder for universities to finance themselves, further harming all aspects of university operations.
Ben & Jerry's and Unilever learned the hard way that the cost of boycotting Israel far outweighs the cost of being harangued by a small group of Israel-haters. The universities should not make the same mistake.
Jesse M. Fried is the Dane Professor of Law at Harvard Law School, and co-founder and board chair of The Deborah Project.
David H. Webber is the author of the critically-acclaimed book, The Rise of the Working-Class Shareholder: Labor's Last Best Weapon, and a professor at Boston University of School of Law, as well as a Paul M. Siskind research scholar.
The views expressed in this article are the writer's own.
