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

As COVID-19 moves through the United States, our divisions are cast into stark relief. We are separated by politics, geography, race and class. Against this backdrop, higher-education institutions can be their communities’ strongest anchors, keeping people moored to a space – physical or virtual – in which they interact and find what they share, instead of what divides them.

Next week, we launch “Impact In Action: Profiles of Higher Education,” a series exploring how three innovative higher-education institutions, Rowan University, Stillman College and University of Virginia-Wise, help produce impact-centered economic development in low-income and overlooked communities. “Everything boils down to resources,” Ali Houshmand, the president of Rowan University, told us. “Our first instinct is survival. Once we survive, we want to do better. How do we turn an institution that was reactive into one that is moving forward?”

“That, to me, is fundamental.”

These three profiles,

contain ideas and context for impact investors looking for trusted partners and high-leverage opportunities in the current fraught environment. They also offer higher education decision-makers insight into their peers’ actions to support low-income and overlooked communities while establishing new partnerships that help maintain institutions’ financial bottom lines. Collectively these post-pandemic stories underscore the three lessons featured in our Assets For Impact Insights Report.

“A ‘no’ for me does not burn a bridge. I look at it as just ‘not yet.’”  

“A ‘no’ for me does not burn a bridge. I look at it as just ‘not yet,’” said Shannon Blevins, Associate Vice Chancellor, Economic Development & Engagement at UVA-Wise. “Even if someone is late to engage with you on a project, make room for them at the table.”

This project began before the pandemic and, obviously, ended in a different place because of it. We set out early in the year to look at the role of higher-education institutions working in an area that has been a media lightning rod: Opportunity Zone development. Tax breaks passed in 2016, under the Trump Administration, have been used by wealthy developers to create projects that likely could have been financed in the private markets.

Yet, a deeper narrative has evolved in Opportunity Zones – one that is missed in the politicized media. Some communities are turning the legislation to its overt purpose to propel development in low-income communities. In many cases, higher education institutions are at the center of those positive developments. We are, for instance, seeing OZ projects evolve slowly, with the help of higher education institutions, in Baltimore, Kannapolis, North Carolina and Merced, California, as well as the highlands of Appalachia, the West Side of Tuscaloosa, Alabama and in Glassboro, New Jersey. The latter three are covered in this series of profiles, produced as a collaboration between Lumina Foundation and the Beeck Center for Social Impact + Innovation, with research and writing by Times of Entrepreneurship.

The Beeck Center was a leader in establishing the Guiding Principles and Reporting Framework for Opportunity Zones. These guiding principles include: community engagement, equity, transparency, measurement, and outcomes. Successfully investing requires careful attention to existing community assets, needs and priorities. Lumina Foundation is an independent, private foundation in Indianapolis committed to making opportunities for learning beyond high school available for all. Times of Entrepreneurship explores the way deep innovation can propel communities and individuals.  For all involved, a clear approach guided by a shared set of principles and implemented through a common and flexible framework is critical. 

At the Beeck Center our goal is to capitalize on the investment and work to-date to catalyze non-traditional partnerships within our network of influential investors, community intermediaries, government officials and foundations to help scale efforts and develop guiding principles, tactics and resources to empower businesses and organizations to align their assets to respond to the immediate community needs as well as to ensure an equitable economic recovery and sustained community investment post COVID-19.

As the pandemic evolved, we felt responsible to look deeper into higher education institutions’ role as anchors in low-income communities. The pandemic and the economic recession are devastating the most vulnerable people. Institutions cannot afford to put their own futures at risk. The role they play in those selfsame communities is too important.

Thus, the focus of our profiles became how these three leading institutions innovate to find paths forward that benefit the low-income communities that rely on them. These profiles are not about trade-offs. They’re about long-term strategy even in the face of short-term pressure. The long-term strategies usually rely on partnerships that benefit low-income communities and strengthen the institutions. The institutions’ well-being is tied deeply, then, to the health of low-income communities that are part of its world.

As Cynthia Warrick, the president of Stillman College, told us: “it’s hard to turn your back on poor children.” 

These institutions didn’t – and find themselves stronger because of those decisions.