In the fall of 1986, divestment was a hot topic on the campus of the University of North Carolina-Chapel Hill. The university endowment board had already pulled funds from companies doing substantial business with the all-white apartheid government of South Africa, but student and faculty groups demanded a complete divestment.

At the time, the university had invested about $7.5 million of its $100 million endowment in businesses with economic ties to South Africa. A year later, following ongoing student pressure, the UNC board agreed to sell the rest of its stock of companies that conducted business in the country.

Today, pro-Palestinian advocates — at UNC and colleges nationwide — call for colleges to similarly divest from Israel amid the Israel-Hamas war. However, significant shifts in endowment management over the past 40 years make it much harder for the public — and even the universities themselves — to know precisely where endowment investments go.

“I don’t think you could get that fact today,” said Holden Thorp, who served as chancellor of UNC-Chapel Hill from 2008 to 2013.

Since the 1980s, colleges have changed who invests their endowments and how. First, most large schools no longer manage endowments in-house but instead delegate this task to external firms. For example, the University of North Carolina System endowment is managed by a nonprofit called the UNC Management Company, which oversees more than $10.6 billion on behalf of the UNC System and its constituent institutions through the UNC Investment Fund.

Modern asset managers embrace an investing approach known as the Yale Model, which emphasizes modern private market assets — including private equity, hedge funds, venture capital buyouts and private debt — in addition to traditional stock and bond holdings.

“The whole idea behind the endowment model was that universities have infinite time horizon, and therefore they should be in assets that maximize return over much longer time periods,” Thorp said.

Divesting from long-term assets is trickier. North Carolina State University spokesperson Mick Kulikowski said it “would be very difficult” to divest from a country or industry given “the long-term duration of our portfolio and the highly diversified allocation of our portfolio.”

Adding to the challenge: Private market investments operate with less transparency. At NC State, Kulikowski said, “75% of our long-term portfolio is invested in the UNC Investment Fund for which we do not have insight to individual allocations.”

“UNC management would know for sure if they owned any (Israel stocks) directly,” said Brad Briner, a UNC Board of Trustees member who is running for state treasurer as a Republican and opposes the current divestment calls. “What they would not know is if one of their hedge funds owns them or trades them. The hedge fund won’t tell them. It’s part of trade secrets, according to that group.”

Universities could place restrictions on how asset managers can invest, like banning certain industries or countries, but the most reputable funds may balk at these terms says Greg Brown, a finance professor at the UNC Kenan-Flagler Business School.

“A top venture capital fund would probably not take a restriction that would prevent them from being able to make an investment on say an Israeli tech startup or something like that,” Brown said. Then there is a further complication of disentangling what constitutes an economic link to any given country in a global digital economy.

Investing in difficult-to-track assets is a “conscious decision,” Thorp points out, one universities take to maximize returns. They could stop doing this, but it would mean accepting less. When UNC, Duke University and many other colleges sold off stock with South Africa ties in the 1980s, they had a clearer sense of how these actions linked to the nation they were protesting.

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