MSU faculty and staff group lays out 15% of cash and investments they want school to divest from

Updated February 18, 2025 at 9:01 p.m.

Michigan State University students and faculty are continuing to pressure administrators to divest from financial holdings in Israel due to its continued military actions in Gaza.

Earlier this month, President Kevin Guskiewicz and the Board of Trustees committed to attending a meeting with students about divestment later in the spring.

A group of faculty members has also put together a report laying out what specific investments it wants the school to pull away from. It's called "The Cost of Complicity" and identifies about 15% of the school's cash and investments as potential targets for divestment.

Those include sovereign bonds from Israel and Saudi Arabia, corporate bonds from weapons manufacturers, funds invested in some Israeli corporations as well as certain investment pools.

"We believe that a public university should not be investing in companies that basically gain money off of violence and death," James Madison College Associate Professor Jennifer Goett said. She helped write the report with the group MSU Faculty and Staff for Palestinian Rights.

"If the university were serious about reflecting its values in its investment portfolios, it could actually develop a plan of ethical investment with engagement from the university community and set out sort of a phased plan over time," she added.

WKAR's Sophia Saliby spoke more with Goett about the report, the campus climate and alternatives for the school to invest in.

Interview Highlights

On the types of investments the faculty and group wants MSU to divest from

On alternative investments the school could consider

On recent decisions the board made to move some investment decisions to administrators

Interview Transcript

Sophia Saliby: Michigan State University students and faculty are continuing to pressure administrators to divest from financial holdings in Israel due to its continued military actions in Gaza.

Earlier this month, President Kevin Guskiewicz and the Board of Trustees committed to attending a meeting with students about divestment later in the spring.

A group of faculty members has also put together a report laying out what specific investments it wants the school to pull away from. James Madison College Associate Professor Jennifer Goett helped write this report and she joins me now. Thank you for being here.

Jennifer Goett: Thank you for having me.

Saliby: This report is called "The Cost of Complicity." Can you share what that title means to you?

Goett: One of the things that the group of faculty that came together to research and write this report very strongly believes is that the events taking place in Gaza right now are linked to wider structures of power. So while, clearly, the genocide is being committed by the Israeli military, we understand too that there are other entities that are, in some ways, complicit or implicated in the violence that is unfolding in the region.

So for instance, the report notes that the U.S. government has played a central role in aiding and abetting the genocide by supplying weapons as well as diplomatic cover to the State of Israel, particularly at the UN Security Council. But on top of that, there are all of these different smaller entities than the U.S. government, but quite large investors in the United States and around the world that make it possible for these weapon manufacturers to continue to produce weapons and continue to drive militarization around the world.

So although you do mention that we're advocating for divestment in the State of Israel, the State of Israel is actually just a very small part of what we're asking for divestment in. The vast majority of the investments that we're asking for divestment of are actually related to the production of military weapons and defense contractors in general. So, that's actually our central divestment target, yeah, and we believe that a public university should not be investing in companies that basically gain money off of violence and death.

Saliby: The report lays out 15% of the university's total cash and investments to divest from. You know, that's not an insignificant amount. So, what would you say to people who say that's not feasible or that's not financially responsible for the school to do that?

Goett: Yes. Well, there's different categories of divestment, and if the university were serious about reflecting its values in its investment portfolios, it could actually develop a plan of ethical investment with engagement from the university community and set out sort of a phased plan over time.

One of the things that we'd like to see happen is we'd like to see the university divest from sovereign bonds, particularly sovereign bonds in the State of Israel and the Kingdom of Saudi Arabia. Sovereign bonds are bonds that are issued by an actual government to maintain debt or to fund government spending. I believe we have four of them right now. The two that really raise red flags for us are Israel and the Kingdom of Saudi Arabia, particularly because Saudi Arabia has such an atrocious record of human rights, both domestically but also internationally.

So that would be, for instance, really high value kind of meaningful divestment targets. And those are really a tiny fraction, you know, less than a tenth percent of our overall investments. And we're talking about cash and investments, so not just endowment investments, but also the university has a good deal of cash that's invested in largely bonds, and I believe that those sovereign bonds are part of the cash holdings of the university.

On top of that, we're also invested directly in corporate bonds, a series of corporate bonds with Boeing, for instance, or Northrop Grumman, which were also fairly small percentages of the cash and investments, but would be fairly easy to sell over a secondary market.

Saliby: You mentioned ethical investments. So, what would these alternatives be to fill in this 15% in whole or in part?

Goett: Well, the vast majority of the 15% comes from the category of investment pools. So, they are exchange-traded funds, primarily, that are public securities bought and sold on the stock market, generally, the kinds of funds that you might invest in for your retirement account. And there are some funds that have fairly high percentages of weapons investments in them, particularly funds that have more than 2.5% and 4%, higher than 4% are the funds that we've flagged as particular concerns. There are other funds by the same investment houses that are financially profitable that one could invest in that would have very, very low investments in weapons manufacturers to the point that they would be significantly less of a concern for us and not flagged by some of the different databases that measure the level of investment in weapons manufacturers in various different funds.

Saliby: The last time we talked at the end of last year, the board removed a clause from its governing documents saying the university should exhibit what's known as "social conscience" in its investments. The school said, or many of the administrators at the time said that term was too vague.

And at the time, you said your group was taking a wait and see approach to see how that change might impact things. And now that we're a few months in, do you see a change, or has this changed anything for your efforts?

Goett: Well, we have a series of concerns about the revisions to the BOT 607 investment policy that include not just the change in the language. With these revisions, the Michigan State University Board of Trustees has essentially relieved themselves of the fiduciary responsibility to exhibit social conscience in their investment strategy and replaced it with a very, very low bar. That low bar is that the chief investment officer of the university has the go ahead to invest in any vehicle that is legal by law.

Now I think many of us know that everything that is financially legal by law in the United States is not ethical and is unlikely to be in keeping with the university's own stated mission and values, which is very clearly spelled out on MSU's website and in MSU's strategic plan to uphold the dignity of all people, to promote equality, to make the world a better place, etc. So, lowering the bar to anything that's actually legal is troubling for many of us.

On top of it, we've noticed a pattern within these revisions to BOT 607, that basically distance the board from any direct decision making about not just ethical investment or investment strategy but also the decision about whether or not to divest. They do acknowledge that there may be extraordinary circumstances which might indicate a reasonable situation that the board might want to consider divestment, but the procedure to consider that has been changed, so now the board cannot get together and make that decision.

Basically, the president of the university needs to appoint by his own will and choice, as far as I understand, a committee from stakeholders on campus. It's not clear exactly who those people would be or how they would be chosen, and that committee would review whether or not this is a good thing for the university to do. If the committee makes a determination that indeed the university should divest, they then need to hand that decision to the president, and the president has been granted unilateral power with the BOT 607 investment policy revisions to veto that and reject it and not pass it on to the Board of Trustees.

Meaning that, ultimately, the Board of Trustees has given the president of the university the ability to decide whether or not the university will divest, and we view that as a troubling kind of abdication of the board's actual responsibilities as our democratically elected officials.

We have an amazing system in Michigan that most public universities don't have, whereby our Board of Trustees are elected by the people, and we think that's good, right? That's democratic process, something that we want to protect and something that we cherish, and the idea that the board themselves would agree and sign on to policies that actually disempower them and remove their decision-making responsibilities granted to them by the people of Michigan and give them to administrators who are far less accountable to the people of Michigan than they are. We find very troubling, and that's something that we did raise to the Board of Trustees at the February 7 meeting.

Saliby: To end this conversation, I think for maybe a lot of people in East Lansing as part of the MSU community might feel like this is all very theoretical. These are very large sums of money we're talking about.

This issue might seem very far away for some. So, what effect does where MSU invest this money have on the actual campus community?

Goett: It has a lot of different effects. For one, we're a public institution, and we have a growing endowment that has reached the billions of dollars. As our endowment has grown, we have begun to participate, actually, in a trend that is nationwide of increasing investment in hedge funds, private equity, real estate, in investment vehicles that are completely nontransparent.

And as that has happened, you've seen more and more investment professionals, our own CIO is a former hedge fund manager coming into the university setting and maintaining much more control and decision making power over how these public monies are invested. And we've seen as a result of that, less transparency, which is fundamental to an open democratic society, particularly in relationship to public universities.

We've seen an increasing unwillingness to disclose where the monies are going. And in fact, we have really no idea where 50% if not more of MSU's endowment monies are being invested because they're simply not transparent. This was not the case 20-25 years ago, the public would be able to know basically all of the different entities that the university, this public university, is invested in.

So, we see it as a matter of democratic investment that the people of Michigan have in our public universities, an ability to influence and participate in decision making is absolutely dependent on transparency, and I think the other thing that we see happening is we see an increasing financialization and privatization of public universities. As these endowments grow, as decisions are made by former hedge fund managers, investment professionals, as increasingly large sums of money are given by private donors, decisions about how the university's money is going to be handled and used and spent are increasingly removed from people and put into the hands of a small select group of very wealthy people.

And that's why you see many folks who are invested and engaged in public education higher ed across the university calling our big institutions hedge funds that might have other research or teaching aspects to them, but they're fundamentally sort of working around goals and ethics that are shaped by profit maximization rather than public good. And that's the fundamental concern right there.

We want our universities to be transparent, democratic, participatory, and we want them to promote the public good, both here in Michigan, nationally and internationally. We feel that it's the basic foundation of a free and democratic society.

Saliby: Jennifer Goett is a part of the group MSU Faculty and Staff for Palestinian Rights. Thank you for joining me.

Goett: Thank you.

This conversation has been edited for clarity and conciseness.