Divest Now? Understanding Calls for Divestment in U.S. Institutions of Higher Education

Abstract Divestment represents an internal policy to activate an organization’s investments for purposes beyond financial returns. For leaders of higher education institutions, calls for divestment raise complicated questions about the appropriateness, feasibility, and effectiveness of such policies. Divestment reflects one facet of socially-responsible investing and accompanies broader controversy over making investment decisions based on Environmental, Social, Governance considerations. While divestment is not solely relevant for nonprofit organizations, demands often target private, nonprofit colleges and universities in the United States due to endowment wealth, as well as public counterparts who typically manage endowments through nonprofit entities. This policy brief details how divestment works, the related challenges, and whether divestment is effective from a financial or policy perspective.