Study Finds Most Foundations Committed to Diversity in Asset Managers

Study Finds Most Foundations Committed to Diversity in Asset Managers

The fifty largest foundations in the United States have an estimated $8.62 billion, or 13.5 percent, of their U.S.-based financial assets invested with women- and/or minority-owned firms, a report from the John S. and James L. Knight Foundation finds.

Researched and written by the Global Economics Group, the report, Diversity of Asset Managers in Philanthropy (21 pages, PDF), examined IRS Form 990 and investment firm data provided by a subset of participating foundations on $63.95 billion (out of a total of $290.3 billion) in assets under management. According to the analysis, $6.82 billion, or 10.7 percent of the assets included in the analysis, were managed by firms where the founder, co-founder, or at least half the partners are women, while $5.93 billion, or 9.3 percent, were managed by firms where the founder, co-founder, or at least half the partners are people of color. Of the combined $8.62 billion in assets under management by such "diversely owned" firms, approximately half was managed by firms that are both women- and minority-owned.

The analysis excluded the assets of twenty-four foundations that declined to participate in the study — in some cases due to contractual nondisclosure agreements — or whose assets were not investable. They include the Ford, Open Society, Hewlett, W.K. Kellogg, Packard, Moore, Simons, Margaret A. Cargill, Charles Stewart Mott, Conrad N. Hilton, Cleveland, and Irvine foundations, as well as the J. Paul Getty Trust, the Duke Endowment, and the California Endowment.

Of the twenty-six foundations included in the analysis, the share of assets managed by diversely owned firms ranged from 0 percent at the Tulsa Community/George Kaiser Family, Robert W. Woodruff, Wyss, and Ewing Marion Kauffman foundations to 35.3 percent at Casey Family Programs and 45.9 percent at the Knight Foundation. The mean average was 13.3 percent (10.8 percent in women-owned and 9 percent in minority-owned firms), while the median was 13.5 percent (10.9 percent and 7.9 percent), well above the 1.3 percent that, according to a 2019 Knight Foundation-funded report, prevailed across the $69 trillion asset management industry.

The report includes comments from the foundations about the study's methodology and its limitations and/or the foundation’s commitment to and ongoing efforts to support greater diversity in asset management.

"Change comes from knowledge. We hope these findings improve our understanding of who manages the financial assets of America's top charitable endowments and to demonstrate that there's a sizable interest among investors for investment manager diversity," said Knight Foundation CFO and treasurer Juan Martinez. "The goal of this study is to provoke discussion. We think that more data and improved transparency can lead to identifying opportunities for untapped returns and a more equitable distribution of the wealth generated by private foundation endowments."

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"Diversity of Asset Managers in Philanthropy." John S. and James L. Knight Foundation Report 02/12/2020. "Landmark Study of America’s Largest Charitable Foundations Finds a Commitment to Diversity in Asset Management." John S. and James L. Knight Foundation Press Release 02/12/2020.