The ongoing controversy at Brown University over a potential upcoming vote to divest from companies tied to Israel exposes a growing trend: the weaponization of economic disruption against Israel and, by extension, its ally, the United States. At the heart of this issue lies a strategy aimed at destabilizing economic stability and prosperity by targeting university endowments — a crucial part of the venture capital ecosystem that fuels innovation and domestic economic growth.
This tactic, employed by groups like the National Students for Justice in Palestine (NSJP), seeks to pressure both Israel and the United States by urging divestment from companies perceived as ‘complicit’ in Israeli policies. While the rhetoric may be cloaked in calls for ‘justice,’ trustees should not be fooled: the underlying motives of the movement are discriminatory at best, and every such terrible decision could have real and devastating consequences on a number of different fronts.
Economic Terrorism: A New Battleground
Unlike violent forms of terrorism, economic terrorism focuses on disrupting financial systems and institutions to achieve ideological motives. NSJP’s campaign to target university endowments is a prime example. These endowments, key players in the venture capital ecosystem, serve as limited partners (LPs) in private investment entities, supporting the growth of innovative startups while diversifying their portfolios for long-term sustainability.
The structure of venture capital firms, which operate as limited partnerships, relies on a careful balance between General Partners (GPs) and LPs. GPs make critical investment decisions, manage funds, and provide strategic guidance to portfolio companies. Meanwhile, LPs, including university endowments, provide capital with the expectation of returns but without involvement in day-to-day operations. This arrangement supports entrepreneurship and innovation in the U.S. market while maintaining financial stability for academic institutions.
However, if university endowments deviate from their role as passive investors and succumb to activist pressures for divestment, they risk destabilizing this delicate structure. Attempts to withdraw investments could trigger broader market crises, exacerbate future liquidity challenges, and cause wealthy donors to pull back amid accusations of anti-Semitism.
The Broader Impact On Innovation And National Security
Disruptions to the venture capital model would have far-reaching consequences beyond financial portfolios. The ripple effect could impede the growth of technology — a sector designated as critical infrastructure by the Biden administration — undermining national security and economic vitality. As university endowments are instrumental in fueling the venture capital that drives tech innovation, any destabilization could weaken the U.S.’s competitive edge in critical technological advancements.
Moreover, calls for divestment often overlook Israel’s significant contributions to global innovation. Despite facing economic and geopolitical challenges, Israel’s economy thrives on innovation, with sectors like water sanitation, cybersecurity, and agriculture demonstrating its global prowess. Israel is our closest ally in the Middle East and our only reliable source of intelligence and cyber defense. Israeli-developed technology protects our citizens and troops at home and abroad. Our shared security interests include but are not limited to preventing nuclear proliferation, combating terrorism, containing Iranian, Turkish, and Russian expansionism, and promoting the rule of democracy. An attack on Israel’s economic stability will inevitably affect its ally, the United States, highlighting the deep economic and security interdependence between the two nations.
The Risk Of Divestment And The Legal Backlash
Brown University now finds itself in a precarious position. The recent warning from Attorneys General in 24 states highlights the potential legal and financial fallout if the university’s trustees vote to divest from Israel-tied companies. These top law enforcement officials have threatened to terminate state contracts, withdraw investments, and divest state pension funds from Brown’s holdings, citing potential violations of state laws against boycotting Israel. One trustee, Joseph Edelman, has already resigned in protest. This decision was not only morally correct, it was prudent.
Every decision a trustee makes should put the interests of the university first, above their own personal feelings or the interests of third parties (including disgruntled law-breaking student groups), and should reflect reasonable skill, care, and caution, in managing investments. Especially after they have been put on notice, university fiduciaries will be personally responsible for the massive losses likely to be caused by divestment, and will be in clear violation of both their duties of loyalty and of prudence. Such legal consequences underscore the broader implications of what we term an “Economic Intifada” — a strategy that seeks to leverage economic tactics to achieve political objectives.
It is also worth noting that a vote in favor of the Boycott, Divestment, Sanctions (BDS) movement cannot be considered even a ‘socially responsible investment’ decision. In fact, it is the opposite. BDS proponents often use classic anti-Semitic tropes in their materials, including, but not limited to: false accusations of Jewish conspiracies; blood libels; portraying Jews (not just Israelis but caricatures of religious Jews) as Satanic, demonic, and evil (at times even using actual Nazi propaganda), accusing Jews of dual loyalty, and engaging in Holocaust denial and Holocaust inversion. And those are easy examples; the truth is that saying Jews are not a people while calling for the destruction of the world’s lone Jewish state, along with the ethnic cleansing and/or the genocidal extermination of its millions of Jewish inhabitants, is also anti-Semitic. And these calls should not be taken lightly given the terrifying and undeniable fact that the nonprofit umbrella group for US-based BDS organizations funnels money to terrorist organizations; that more than 30 of its leaders are actual violent terrorists; and the well-documented evidence that the anti-Semitism some BDS leaders spout often breaks through the “nonviolent” veil, leading to innocent people getting hurt.
Nor is this in any way a partisan issue: both the Republican and Democratic parties have consistently denounced BDS in their platforms. Nor is it only a federal issue; in 2017, the governors of all fifty states signed onto a statement affirming their opposition to BDS, noting that “[t]he goals of the BDS movement are antithetical to our values and the values of our respective states[,]” and reiterating that BDS’s “single-minded focus on the Jewish State raises serious questions about its motivations and intentions.
For the record, anti-BDS bills, like the ones cited by the 24 AG’s, are fully constitutional. It is well within their rights for states to protect their own interests, and the interests of the United States, by removing state funding for discriminatory actions. SJP and its allies remain free to say whatever they want however abhorrent about Jews or the Jewish State; there is a fundamental difference between a state suppressing free speech and a state simply choosing how to spend its dollars. Spending (especially with accompanying legislative findings) in this context is government speech, and “as a general matter, when the government speaks, it is entitled to promote a program, to espouse a policy, or to take a position. In doing so, it represents its citizens and it carries out its duties on their behalf.” Walker v. Tex. Div., Sons of Confederate Veterans, Inc., 576 U.S. 200, 208 (2015)
In fact, the Supreme Court has continually refused “[t]o hold that the Government unconstitutionally discriminates on the basis of viewpoint when it chooses to fund a program dedicated to advance certain permissible goals, because the program in advancing those goals necessarily discourages alternative goals.”Id. In the case of these and all similar statutes, the government does not even seek to fund a controversial program, it merely seeks not to fund a program that discriminates on the basis of ethnicity or national origin. While people remain free to engage in hateful actions, that does not make them less hateful, nor does it mean that the State must agree to subsidize those actions. To quote one governor, “To argue otherwise would be to suggest that [a] state is constitutionally obligated to support the BDS [M]ovement, which is not only irrational but also has no basis in law.”
A Call For Strategic Decision-Making
As Brown University and other institutions weigh their next steps, they must recognize that the stakes extend far beyond campus politics. The interconnectedness of the global economy means that destabilizing one part can have cascading effects elsewhere. Any decision to divest should be made with a clear understanding of the broader economic and legal landscape and the potential consequences for innovation, national security, and university financial health. Especially in light of the clear repercussions, such a decision would represent a shocking abdication of appropriate corporate governance and responsibility, exposing the university to material self-inflicted diminution, and its trustees to potential litigation and legal sanctions. And all to support a movement that is deeply anti-Semitic.
In essence, the move to weaponize university endowments as a tool of economic warfare poses a grave threat, not only to both Israel and its allies, but to the very bodies taking these ill-conceived votes. This moment calls for strategic thinking and a commitment to preserving the stability and collaboration that underpin global economic prosperity. As the pressure mounts on universities to take sides, it is imperative that they do so with a full appreciation of the complexities and stakes involved.
Brown’s trustees are at a crossroads, facing a decision that could set a precedent for how universities across the nation navigate the intersection of law, politics, and finance in an increasingly polarized world. A decision to divest would be unjustified and bad for business, and Board members should think long and hard about liability for violation of their fiduciary obligations before they allow their schools to submit to extortion. Their choice will also likely resonate far beyond their Ivy League campus, shaping the future of university governance and its role in supporting innovation and economic growth.
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Professor Anat Alon-Beck teaches corporate law and governance at Case Western Reserve University School of Law.
Dr. Mark Goldfeder is Director of the National Jewish Advocacy Center, and teaches at the Touro Law Center.
The views expressed in this piece are those of the author and do not necessarily represent those of The Daily Wire.
