Building a Portfolio

Driving Diversity and Inclusion at University Endowments

As tens of thousands took to the streets this spring to protest police homicides of Black Americans and other racial inequities embedded in the status quo, the topic of diversity and inclusion reached new heights in public discourse.

For its part, the asset management world has historically failed to achieve meaningful representation of marginalized groups. Although the California Public Employees’ Retirement System (CalPERS) started tapping “emerging asset managers” in 1991 and adopted a dedicated program in 2000, the use of asset management firms owned by women and people of color is dismally low among institutional investors. Research by the Knight Foundation found that little more than 1% of the invested assets in the US were under management at a firm with diverse leadership, despite comparable investment track records than their peers.

Some may expect endowments at universities known for encouraging a broad spectrum of perspectives to counter the broader trend. Yet a 2018 study by the National Association of College and University Business Officers (NACUBO) and asset manager TIAA found that only 4% of the 802 schools polled had an endowment management team that had a diversity and inclusion policy. Furthermore, among the 104 survey respondents overseeing more than $1 billion in endowment funds, zero had such a policy.

Both findings were featured in an October 2019 letter from six US representatives calling on NACUBO to raise the profile of the issues surrounding a lack of diversity and inclusion. It concluded that “progress on this matter is both a fulfillment of this nation’s highest ideals of equal opportunity, and an extension of the strides colleges and universities have already taken to create opportunity for students, faculty, and those fulfilling core business needs.”

Advancing Diversity and Inclusion in University Endowments

To address these shortcomings, a number of groups have formed to provide guidance and support for endowment leaders actively seeking to elevate diversity and inclusion efforts. Through a variety of tactics and approaches, the following initiatives are helping advance the conversation among administrators and investment professionals at some of the most prominent schools in the US.

Diverse Asset Managers Initiative

Founded in 2014 by public policy expert Robert Raben, the Diverse Asset Managers Initiative (DAMI) has amassed a brain trust of financial service professionals, institutional investors, board members of corporations and philanthropic organizations, and trade organization officials. It has built its efforts around more robust institutional reporting and greater transparency and accountability through legislation and hearings. It also emphasizes engagement with investment consultants, who commonly play a gatekeeper role between endowments and investment managers.

DAMI explicitly focuses on colleges and universities with its Endowment Watch, a reporting portal that solicits asset management information.


To learn more about investing for diversity and inclusion, read Racial Equity Investing: Opportunities for Impact & Alpha.


NYU Stern Center for Business & Human Rights

The Stern Center for Business & Human Rights is targeting the dearth of information available about the use of diverse asset managers among university endowments. To set a baseline, it has approached the 30 largest university endowments in North America to compile data around how many employ diverse asset managers to oversee any part of their investment portfolio.

In subsequent research, the school plans to dig into how capital allocation decisions, hiring practices, and talent pipelines can affect the development of diversity and inclusion efforts. Ultimately, it aims to develop a guide to diversified portfolio management for endowment boards and chief investment officers.

The Intentional Endowments Network

Developed by the Crane Institute of Sustainability, the Intentional Endowments Network‘s (IEN) membership model facilitates collaborative solutions from endowment fiduciaries, senior administrators, and chief investment officers. Through peer connections and partnerships, network members share processes and procedures to recalibrate an endowment’s traditional trajectory.

Through its Diversity, Equity, and Inclusion Working Group, IEN aims to improve diversity efforts in school endowments by informing investment manager decisions, promoting inclusive endowment staffing, aiding impact measurement and management, and supporting access to financial and investment education for diverse students.

Putting Policies in Action

While initiatives and plans like these are shaping critical conversations and building valuable tools, some endowments have already taken action. Institutions that have bucked decades of legacy to make progress include:

  • University of California: UC Investments, which oversees the University of California endowment, reported to the California Legislature that the diversity strategy it started following in 2019 includes “Diversified Returns,” a program dedicated to increasing investment in asset management firms owned by women and people of color.
  • University of Chicago: Since committing to expanding its exposure to diverse asset managers in 2011, the University of Chicago has more than tripled its allocation to such firms, reaching about 11% of its endowment’s assets in 2018.

As attention to disparities spreads, such proactive efforts and disclosures are growing in importance. Adding pressure are leaders such as civil rights advocate Al Sharpton, who recently called on Harvard, Cornell, Yale, Princeton, and the University of Michigan to disclose their respective levels of investment with African American investment managers.

Like many conversations occurring in the wake of recent challenges to systemic racial inequities, advancing diversity and inclusion initiatives in higher-learning endowment circles will likely lead to uncomfortable discussions. Yet amid increasingly heightened awareness of the widespread damages that these disparities have caused, “because we’ve always done it this way” is indefensible.

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