The Black Lives Matter movement has prompted a national discussion on racial equity that is reaching all areas of society and the economy. People of color have long been underrepresented in, and neglected by, the financial services industry. The endowments of some educational institutions have been taking the lead in promoting racial equity, primarily by seeking minority-owned or minority-led asset managers, but also by considering how to deploy their assets in a way that both benefits minority communities and delivers appropriate investment returns. Two recent studies shed light on how endowments are approaching these critical issues. The first, the Racial Equity Investing Primer (Primer), issued by the Intentional Endowments Network (IEN), discusses the economic risks posed by racial inequality and offers a roadmap for endowments that seek to promote racial equity through their investments. The second is a report (Inquiry Report) issued by Congressmen Emanuel Cleaver II, Democrat from Missouri, and Joseph Kennedy III, Democrat from Massachusetts, on their inquiry of 25 premier colleges and universities about their endowments’ use of diverse asset managers. This article discusses the key takeaways from the Primer and the Inquiry Report, with additional insight from Kaede Kawauchi, program manager at IEN. See our four-part series on diversity: “Why Equal Representation Within Fund Managers Is Essential
” (Oct. 4, 2018); “Ways Fund Managers Can Promote Diversity and Inclusion
” (Oct. 11, 2018); “What Implicit Biases Are and Whether Interventions Are Effective
” (Oct. 18, 2018); and “How Constrained Decision Making, Along With Legal and Compliance Leadership, Can Help Reduce Fund Manager Bias
” (Nov. 1, 2018).