December 17, 2020 – By Erika Seth Davies

Read the full series: Part 1Part 2

While we launched the work with the belief in the significance of creating more equitable access to capital markets, the disproportionate impact of COVID-19 on BIPOC communities compounded by the country’s racial reckoning in the wake of the murders of George Floyd, Breonna Taylor, and Ahmaud Aubrey, dramatically amplified the urgency of this project. If nothing else, the past 6 months have revealed the system is unfortunately working as it was designed as reflected in policy and practices that create economic inequity disproportionately in communities of color. 

How bad do things need to get before we aggressively make changes? The data shows us that the performance of diverse managers is just as strong as firms predominantly owned by white men. We also know that structural barriers and implicit bias mitigate opportunities for diverse firms to gain access to compete. Throughout the series of blogs and webinars, I have covered the landscape and addressed ways of taking a systemic approach to moving the needle on increasing access to capital markets for BIPOC managers. 


Watch Erika’s conversation with Bert Feuss & AJ Hernandez on this issue

Now that the racism in the room is no longer hiding in plain sight, it is time to act and be accountable for shifting the policies and practices that have held an inequitable system in place for far too long.  

  • Be intentional about transformational change for racial equity. Taking the same approaches to decision making will result in more of the same outcomes. As an advocate for racial equity, I am pleased to work in solidarity with a group of BIPOC managers to craft and share the Due Diligence 2.0 Commitment to set new norms and challenge the oft-cited criteria and risk-assessment frameworks that keeps less than 1.5% of assets with diverse firms. To achieve a change in outcomes, decision makers in the ecosystem must be willing to make changes to their assumptions and processes for identifying, evaluating, and hiring managers.
  • Seek out, engage, and invest with BIPOC managers. Diverse managers do exist with the ideas, networks, and capacity to deliver strong performance and expand the universe of investment opportunities. With the presence of affinity groups in the financial services industry as well as the recently-released Diverse Manager Directory from Emerging Manager Monthly listing over 100 firms, it is simply no longer acceptable to claim ignorance of where to find diverse firms. 
  • Hold every firm accountable for advancing diversity, equity,, and inclusion in the investment management industry. As recently shared in the Wall Street Journal, Yale University with one of the largest university endowments at $31B has put the asset management industry on notice that diversity in the ranks matters to performance and future opportunity with the institution. With resources like the Diversity Metric Score released by Lenox Park, there are ways of measuring the relative impact of diversity beyond firm ownership and considering the essential components of inclusion at all levels in the industry. Without large-scale commitment to increasing the presence of racial and gender diversity as a basic expectation for generating performance, simple inertia will allow the industry to continue moving under its current conditions and widen the gap between access and opportunity.

Equitable access to capital markets for diverse-owned asset management firms requires consistent, informed, and intentional decision making that must begin now. An industry that relies on hard data can no longer ignore the numbers, and must create lasting, equitable solutions for all.

Erika Seth Davies is a Fellow in Fair Finance at the Beeck Center. Follow her on Twitter

August 28, 2020 – By Angela Guo

The coronavirus pandemic has underscored the importance of the social safety net amidst historic losses and tragedies: mass unemployment, food insecurity, and uninsured healthcare, to name a few. And when it comes to race, a deep dive into the numbers is jarring: Black Americans are disproportionately affected by the coronavirus, both financially and health-wise — the Black and white unemployment gap widened to 5.3 percentage points in June and the coronavirus is killing Black Americans at a rate three times that of white people. This isn’t a coincidence.

The Black Lives Matter movement is radically changing how we look at our public institutions, personal actions, and historical relationships through the basis of race. The movement has led to the removal of confederate statues, discussions about representation in media, and legislation regarding police funding. These groundbreaking changes result from overdue analyses of how race is integrated into our systems and symbols, in ways many had never thought twice about. The social safety net system consists of welfare programs, such as the Supplemental Nutrition Assistance Program (SNAP) and Unemployment Insurance, that provide basic economic, food, and housing support to millions of low-income Americans. As one of our nation’s most prominent systems in a time of crisis, the social safety net must be examined in the context of race.

Overt to Covert: The History of the U.S. Social Safety Net

“I understand they’re going through a fraud situation, but that doesn’t pay my bills,” Karen Womack told The Washington Post. After Karen verified her identity for unemployment benefits with the state of Washington and the state’s unemployment office cut her aid anyway, she found herself caught up in a system that has institutionalized racism since its founding in 1935.

The U.S. government passed the Social Security Act of 1935 providing an early safety net for elderly, unemployed, and disadvantaged Americans, described by President Franklin Roosevelt as “some measure of protection to the average citizen and to his family.” Yet, lawmakers codified the first formal safety net with racism; unemployment insurance was a key component of that law, but agricultural workers and personal service workers were ineligible, leaving 65% of Black American workers without access to unemployment insurance, compared to 27% of white workers. Again, this isn’t a coincidence.

Racist sentiments have echoed throughout the years of discussion around social safety net policy. In 1976, Ronald Reagan leveraged the “welfare queen” narrative in his presidential campaign to describe a Black woman who used “80 names, 30 addresses, 15 telephone numbers to collect food stamps, Social Security, veterans’ benefits for four nonexistent deceased veteran husbands, as well as welfare.” This narrative further fueled racial animosity towards Black Americans and unfairly associated them with using fraud to exploit the safety net.


A Brief History of the Social Safety Net in the United States

Expand this timeline to full screen

Politicians today replicate the welfare queen narrative with a focus on preventing fraud instead of finding ways to effectively deliver benefits to vulnerable Americans. The Beeck Center’s Social Safety Net Benefits Research details the technological barriers in the social safety net imposed by, for example, the digital divide and remote identity proofing when accessing benefits. While current safety net policies don’t share the same overt racist language used to construct the first policies, structural racism compounded over decades still poses obstacles for Black individuals from equitably accessing the safety net. Not only does structural racism prevail in the social safety net, but it also presents itself in other institutions in the United States such as the criminal justice system, education system, and child welfare system.

Patterns of racism in our social institutions often go unacknowledged and unchallenged since they have become ingrained in our society. We must create and implement data and technology solutions that focus on eliminating the racial inequities found in the social safety net system and other public institutions. Working through the lens of anti-racism is a critical requirement for the work of social impact.

What We Can Do

After looking at the history of the social safety net in the United States, we can begin to go beyond the surface of the problems we aim to address. As leaders in the social impact space, we must:

  • Understand the institutionalization of racism in our systems and institutions while designing direct solutions. Without deepening our understanding of racism in the foundation of our social institutions, we may inadvertently scale ideas that are merely the modernized versions of the exclusionary practices from the past.
  • Constantly analyze the tools we use for social impact. We often see technological advances as efficient tools for advancing social impact. Ruha Benjamin’s book Race After Technology details the intersection of race and technology, and how emerging tech and data tools covertly leverage racism in design solutions. Though unintentional, there can be harmful effects on the populations they were meant to serve when we use tools that were historically meant to discriminate.
  • Emphasize process over product in our work. Product-oriented work often neglects the complexities of the problem itself, and the product instead becomes a blanket on the problem we aim to address through social impact. When taking more time to explore the process of our work, we can be better equipped with the methods and capabilities for achieving equitable and sustainable social impact through the lens of racial equity.
  • Evaluate the positions we hold, both personally and professionally. Are leaders in decision-making and social influence BIPOC (Black, Indigenous, People of Color)? Are we designing solutions with and for oppressed communities, or are we instead pushing them aside when making decisions?

This isn’t an exhaustive list of steps we can take in our role as social innovators. Anti-racism is an ongoing process that requires active learning coupled with meaningful action. By acting intentionally with a deep comprehension of the intricacies of structural racism in social impact, we can begin to break down the systems and patterns that perpetuate racism and exclusion within our systems and ensure that our social safety net is there to equitably serve all Americans when they need it.

Angela Guo was a Summer 2020 Student Analyst at the Beeck Center supporting the Social Safety Net Benefits Research Project. She is a senior at the University of North Carolina-Chapel Hill studying Economics and Public Policy.

A shorter version of this article appears in Fortune Magazine

July 2, 2020 – By Erika Seth Davies

READ PART 1: Hiding in Plain Sight: Racism in the Room Made Visible by COVID-19 and How to Create New Pathways

“I’m going to tell them there’s an African American man threatening my life.” – Amy Cooper

“I’m a tenant of the building; are you?” – Tom Austin

Amid the unrest, anger and outrage at the sheer injustice of systemic racism, Amy Cooper and Tom Austin are just two examples of white people using their privilege in an attempt to control Black people who dared to exert personal agency in shared spaces. After being called out publicly, Cooper lost her job, and Austin lost his office lease. Why point out these incidents instead of the thousands of other examples? Because while both apologized and stated “I’m not a racist,” they had tremendous influence in their leadership positions in finance.  There are real questions as to how these implicit biases influenced hiring, advancement, and access to capital.  Their actions in these moments provide a spotlight on the points of view informing their decision making within the institutional context.

The Kirwan Institute for the Study of Race and Ethnicity defines implicit bias as “the attitudes or stereotypes that affect our understanding, actions, and decisions in an unconscious manner.  These biases, which encompass both favorable and unfavorable assessments, are activated involuntarily and without an individual’s awareness or intentional control.” While both Cooper and Austin were both clearly conscious of their intentions, what were the underlying biases that drove their decisions, both large and small?


Join the Beeck Center and Common Future webinar, Wednesday, July 29, 3pm ET to discuss racism in the asset management industry. Register now and join the conversation.


In an industry overwhelmingly driven by personal networks and relationships, opaque decision-making processes, and dominated by pedigree, the personal quickly becomes (and remains) structural as a reinforcing system in which decision makers give preference to peers and managers who look like them.  This then conflates and reinforces the assumption that white managers are associated with low risk and strong performance. 

U.S. Census Bureau data shows that, as of July 2018, the U.S. population was 61% white (non-Hispanic or Latino), 18% Hispanic, 13% black, and 5.7% Asian, yet investors and players in the financial services industry do not reflect the racial and ethnic composition of the country. In the asset management industry, 88 percent of professionals in executive committee level positions and 86 percent of managing directors are white

pie charts of diversity in the asset management industry
Chart from Money Management Institute, “Ethnic and Racial Diversity at Asset Management Firms

Among 14 consulting firms representing $1.4 trillion in assets under management, Black and Latino representation was remarkably low across participating firms at 5.7 percent and 5 percent, respectively.

Lack of representation is far from the only problem in the industry. Research shows that a homogenous workforce leads to additional issues such as:

Bias informs decision making which becomes policy and practice which results in outcomes that reinforce and perpetuate bias. All of it benefits and advantages those who are white at the expense of opportunity, access, and economic growth for Black, Indigenous and other communities of color. This is how institutional racism works. Ironically, decision makers many times think they have to choose between performance or diversity.  In fact they might actually be undermining their fiduciary responsibility as highlighted in the Illumen Capital study which concluded that “…racial bias could potentially result not only in the unfair treatment of fund managers of color and their grantees, but also in leaving significant financial opportunities on the table, thus hurting the entire financial ecosystem.”  

So now what?

As Ibram X. Kendi has shared in his groundbreaking book, How to Be an Anti-Racist, claiming that you’re not racist is not enough. We must move in a way that is anti-racist and operate with intention to dismantle the barriers and structures holding the system in place. Here are a few more actions asset owners can take:

 Be uncomfortable. Anti-Black bias is a central feature of systemic racism, so take a minute to actually understand your bias by taking the implicit bias test. This is not a point of judgement. It is a point of awareness. If you value diversity yet every decision results in a predictable outcome of non-diverse firms collecting fees to build wealth, then we should be  questioning the validity of these choices.  This includes what questions are being asked?  Who is invited?  How are the questions being asked?  What are you weighting in the answers?

  • Address institutional accountability through a race-informed investment policy statement. Your policy is a statement of purpose that will orient you towards equity. Then hold yourself and your decision making body accountable by using metrics and adding quarterly or annual reporting requirements to the Investment Committee/Board/staff regarding diversity. This might include the demographic composition and ownership of all firms, the number of firms with majority BIPOC ownership, how many meetings you are taking with diverse firms, and how much funding is allocated across your portfolio. 
  • Know who you’re doing business with. Include diversity performance and metrics in your consultants’ scope of work and require regular reporting on your decision maker’s progress towards meeting these goals. Require your consultant to provide information regarding internal diversity and inclusion policies and practices as well as asset manager selection.
  • Change the environment, including where and how you spend your time. Attend, sponsor, and speak at diverse manager events, and invite those managers to speak at industry events in your sector. 
  • Pursue relationships with different industry affinity groups (NASP, NAIC, AAAIM, NAA, Opportunity Hub, etc.) to establish regular contact and connection with diverse managers and add to your media list (Emerging Manager Monthly, The Plug, etc.)
  • Make the allocation!

Erika Seth Davies is a Beeck Center Fellow and Founder of the Racial Equity Asset Lab. She has extensive background in racial equity advocacy and launched the first field-wide philanthropic initiative designed to incorporate a racial equity lens in foundation endowment practice. She authored white papers promoting policies and practice in support of this approach, including Foundation Investment Management Practices: Thoughts on Alpha and Access for the Field and Diverse Managers: Philanthropy’s Next Hurdle.


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Note: This post originally appeared in the Boston Globe. It is shared here with permission.

Radical transparency in policing would be an important departure from the status quo. Here are five data sets departments should start sharing widely.

June 15, 2020 – By Clarence Wardell and Denice Ross

Prompted by the recent police killings of George Floyd and Breonna Taylor, protestors are demanding a wide range of changes to policing, including abolition, shifting funds to other community services, and more tactical reforms. A common thread across these demands is that American policing must be held accountable to the communities it serves. Accountability, however, requires transparency — and transparency is a concrete step that local leaders can take right now.

After Michael Brown was killed by police in Ferguson, Mo., in 2014, the Obama administration launched the Police Data Initiative as part of a detailed national response to racialized police violence. At the time, few if any police departments in the country published data about their own actions in sufficient detail for community members to check for evidence of bias.

These days, information about police officers’ actions in addition to the arrests they make is more commonly released. But most of these data sets still lack key details and crucial context, such as corresponding body-camera footage, or published policies on what is allowed (and not) when officers use force. In most cases, the commitment to releasing data isn’t mandated by law; it depends on what leaders want to do. The Boston Police Department, for example, stopped publishing its annual data on stop-and-frisk incidents after 2016. It took months of public calls for transparency, public records requests, and finally a subpoena to restore the flow of data just last month. BPD’s excuse for the three-year gap in publishing data? Nobody had asked for it.

Americans shouldn’t have to beg for data from agencies that have such extraordinary powers. As Art Acevedo, then the police chief in Austin, Texas, and now the chief in Houston made clear five years ago: “This isn’t our data, it’s the people’s data.”

“This isn’t our data, it’s the people’s data.”

– Art Acevedo, Former Police Chief, Austin, Texas

Governments should lean into the idea of being held accountable by their community members in ways that would represent a radical departure from the status quo. It is necessary for both legitimacy and trust. Leaders can start immediately by ordering the release of these five data sets:

  1. Use of force, including shootings by officers. Is force more likely to be applied in communities of color, adjusting for other factors? What are the results from internal investigations into whether the force was justified? Seattle Police Department’s use-of-force data is updated automatically in near real-time, and Orlando’s officer-involved-shooting data includes detailed review letters from the State Attorney for each incident.
  2. Complaints against officers. What complaints are people filing about police officers? How are these complaints against officers resolved? The Citizen Complaint Authority in Cincinnati helps the public understand this data in graphs, charts, and maps, making it easier to devise better policies.
  3. Police force demographics. Does the police force look like the community it serves? Are they failing to retain women and people of color? Wallkill, N.Y., publishes an annual spreadsheet that details rank, years on the force, gender, and education levels of the 120 people in their department.
  4. “Stop-and-frisk.” Which populations are police most often stopping in the field, and for what reasons? The Boston Police Department’s newly liberated data includes the name of the officer and their supervisor. NYPD releases annual data with demographic details and the reason for the stop.
  5. Traffic stops. Are people of color disproportionately likely to be pulled over? Are police actions biased, whether they let someone off with a warning or ask to search the vehicle? The San Diego Police Department, in accordance with the California Racial and Identity Profiling Act of 2015, releases demographic details on the people stopped, as well as reasons for the stops and any actions taken by the officers.

Numbers alone won’t tell the whole story, though. Radical transparency will require police and other government agencies to publish complementary records and documents, such as the department’s policy handbook (including the rules on the use of force), police union contracts, prosecutorial and review board decisions, and internal disciplinary records. Departments should promptly make body-worn camera footage available when an incident is being reviewed to clarify, for example, whether a person “tripped” or was actually pushed by officers.

We need to also ensure that all data are released responsibly, protecting privacy so that victims of crimes and police misconduct feel comfortable reporting. Greater transparency will also, in some communities, require revisiting outdated laws and obstructionist police union contracts that are holding back data to which the public is entitled. Leadership is essential to breaking these logjams.

The lack of transparency has not only left our law enforcement apparatus unchecked and unaccountable to the community, but it also has made it harder to understand what actually works to reduce police violence. After the death of George Floyd, we learned Derek Chauvin had at least 18 citizen complaints filed against him. Accountability starts with transparency. We must face the difficult truths hiding in the unopened vault of police data.

Clarence Wardell is director of City Solutions for What Works Cities at Results for America, a research organization that advises governments.

Denice Ross is a fellow at the National Conference on Citizenship and Georgetown’s Beeck Center for Social Impact and Innovation. They co-founded the White House Police Data Initiative in 2015.

June 9, 2020 | By Tyler Kleykamp

As the world becomes increasingly digital, what’s become clear for both the public and private sector is that data needs a leader. Since 2010, states have been establishing Chief Data Officer (CDO) roles and most major cities and large federal agencies have them as well. As the number of CDOs has grown to over 25, and the size of their teams have increased, the role has evolved and matured from being primarily focused on open data, to ensuring data is shared and used effectively across their states.

The COVID-19 pandemic and recent protests against police brutality highlight the unique role the state government plays and how it directly impacts people’s lives. Data is already in the spotlight and will play a critical role in how states recover from the pandemic and address systemic racism if leveraged properly. For years, Connecticut has been collecting traffic stop data in an effort to determine whether drivers are being stopped due to racial profiling. A growing number of states are providing COVID-19 case data broken out by race, illuminating the disproportionate toll the virus has taken on communities of color. States must also recognize that years of systemic and structural racism has resulted in overrepresentation of racial and ethnic groups within their data systems. With their ability to engage across agencies and departments, the CDO will be a hub for state governments moving forward.

cover of report: The Evolving Role of the State Chief Data Officer
Read the full report

The goal of the State Chief Data Officers Network is to surface and scale best practices and opportunities for collaboration across states. We also aim to support states in the creation of a CDO role. This means we need to better define what the CDO roles and responsibilities are. While there are case studies and playbooks to support CDOs in various levels of government, most aren’t geared toward the unique challenges states face. City CDOs are often focused on open data and analytics. Federal CDOs roles are generally defined by the Foundations for Evidence Based Policy Act. To help states improve their use of data, the State CDO Network created a core framework to guide them in structuring effective data programs.

Through the insights collected from state CDOs since November, and drawing upon resources from the Pew Charitable Trusts and Results for America, six core elements of a successful state data program have emerged:

  • LEAD – Designate an executive level data leader as the Chief Data Officer
  • PLAN – Create a strategy, governance structure, and inventory of data
  • BUILD – Increase the capacity of stakeholders to effectively use data
  • SHARE – Establish clear and predictable processes for data sharing
  • ANALYZE – Provide mechanisms and platforms to enable data integration and analysis
  • SUSTAIN – Ensure ongoing support exists for data efforts

To implement this framework, we’ve created two tools states can use. The Evolving Role of a State Chief Data Officer will help policymakers and state CDOs alike shape the role and responsibility of a CDO. State Data Policy Options is a guidebook with examples of effective legislation from states that can be used to support efforts to implement this framework. The policy options will grow over time as states continue implementing effective solutions.

States don’t need to implement this framework all at once. Rather, it should be used as a roadmap to help them mature in their use of data over time. Just as the CDO role has evolved since its inception, it’s likely this framework will too. These tools will help get states moving in the right direction.

Tyler Kleykamp is a Beeck Center Fellow and Director of the State Chief Data Officers Network. Follow him at @tkleykamp.

May 27, 2020 | By Erika Seth Davies

Historic discriminatory policies and practices intentionally designed to eliminate access to economic opportunities for Black, Indigenous, and other people of color (BIPOC) have ensured that everyone doesn’t enter a level playing field when it comes to the world of finance. Less than 1.5% of the $70 trillion handled by the asset management industry each year is overseen by BIPOC and women managers. That’s a problem.

Although it has long been touted as a system built on meritocracy and market-driven performance, access to capital markets, like all other facets of American society, is influenced by the same policies, practices and cultural representations that accumulate advantage and disadvantage along the lines of race. We haven’t “found ourselves” in this predicament. The disparities in access and opportunity are the result of intentional decision making. Dismantling the barriers that have resulted requires equal intention and naming the difficult truth of institutional and structural racism in the room. In this unprecedented moment of crisis, we have the opportunity to learn important lessons and move differently to advance a system that generates shared prosperity.

Racial literacy is crucial in the age of COVID-19. We do not stand a chance of advancing shared prosperity for all unless and until we address the racism in the room. As James Baldwin said, “Not everything that is faced can be changed, but nothing can be changed until it is faced.” Fundamentally, this pandemic puts the racism inherent in the structures of the American economic, political, media, and social systems on full display. From disproportionate rates of infection and death, the lack of funding to businesses owned by people of color, the rhetoric regarding reopening state/local economies, and violent attacks are deeply rooted in the structures of U.S. society and a basic language for describing it matters deeply to advancing change.

The time has come to reframe and redefine risk to challenge commonly held beliefs. We are witnessing what happens when we view risk through a binary of winning and losing, protecting and mitigating loss, but we are not weighing the risk of inaction. When we allow the status quo to remain, when we don’t change what is clearly not working, our economy and social fabric face an even greater risk of failure.

Over the coming weeks, the Equitable Access to Capital Markets project will explore the intersections and implications of placing the invisible influence of institutional racism on display through an analysis of common policies and practices, governance structures, and the role of implicit bias in generating current outcomes.

We’ll share insights and more importantly, offer solutions for owners of asset capital to transform their processes and approaches to engage overlooked and expand access to opportunity. Ideas like understanding and mitigating implicit bias in your process, why “color blind” policies and practices result in racialized outcomes and how to be more intentional, why equitable access requires a systems approach, and what are frameworks for race lens investing to shift capital. But this won’t work unless an open dialogue exists about this issue, so in July, we are partnering with Common Future for a series of conversations with people working to deliver systemic change. The longest journey begins with a single step, and we look forward to you joining us on this one.


*UPDATE*


 

Erika Seth Davies is a Beeck Center Fellow and Founder of the Racial Equity Asset Lab. She has extensive background in racial equity advocacy and launched the first field-wide philanthropic initiative designed to incorporate a racial equity lens in foundation endowment practice. She authored white papers promoting policies and practice in support of this approach, including Foundation Investment Management Practices: Thoughts on Alpha and Access for the Field and Diverse Managers: Philanthropy’s Next Hurdle.


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