While charitable foundations regularly leverage grantmaking to advance their missions, the potential impact of their investments is not always similarly scrutinized.
To begin exploring your foundation’s effect on Black, Indigenous and communities of color in the U.S., here are three questions you should ask your investment manager:
1. Who is managing my portfolio’s underlying investments?
Only 1.3% of assets in the U.S. are managed by firms that are majority owned by women, or Black, Indigenous and people of color. How does your portfolio fare? Are the managers diverse?
We suggest working with your investment advisor to consider specific percentage targets for your portfolio that you’d like managed by minority-owned firms or persons. Your investment advisor should be able to counsel you on existing opportunities, and the appropriate timelines to pursue these targets.
2. Do the companies I’m invested in reinforce systemic racism?
Black, Indigenous and people of color face significant barriers climbing the corporate ladder and filling high-ranking positions across corporate sectors. Consider, only three CEOs of Fortune 500 companies are Black.
As asset owners, foundations can help influence the companies they invest in through shareholder engagement.
For example, foundations can work with their investment managers to urge companies to disclose their diversity workforce data. Ultimately, shareholders can insist that companies improve their diversity, equity and inclusion metrics (such as representation of Black, Indigenous and people of color, pay equity and promotion/retention rates).
3. How are my investments affecting Black, Indigenous and communities of color?
As a high-level starting point, investments that hurt Black, Indigenous and communities of color include private prisons, immigration detention centers and payday lenders. Investments that could potentially help include companies that advance access to quality education, affordable housing, business loans and home financing, and upward career mobility.
Foundations can invest in funds or companies with the core focus of advancing the well-being of Black, Indigenous and people of color, or tackling barriers to tools and resources for economic self-sufficiency and well-being.
Ready to learn more about how your foundation can weave diversity and inclusion objectives into your overall investment goals?
Read our report on Racial Equity Investing and register for Racial Equity Investing: Opportunities for Foundations webinar where we’ll dive deeper into this research, discuss practical applications, and answer any questions you may have.
Glenmede is an independent and privately held investment and wealth management firm.