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Through the summer, higher education has been called to reckon with a sore lack of diversity in all areas of college operations. Robert Raben has been focused on one group of employees in particular: endowment managers.

Raben leads a lobbying and consulting firm in Washington, D.C., and was an assistant attorney general in the Clinton administration. Now, he's founded the Diverse Asset Managers Initiative and is working to diversify the financial services industry. Over the past couple of years, Raben has reached out to dozens of colleges to learn more about the racial, ethnic and gender breakdown of the people managing their millions.

“We set up this initiative as an independent campaign to accomplish one easy-to-state goal -- which is to significantly improve the amount of capital and the amount of money managed by women and people of color,” Raben said.

With the help of Democratic representatives Emanuel Cleaver, Joe Kennedy and Bonnie Watson Coleman, as well as civil rights activist Reverend Al Sharpton, Raben has reached out to more than two dozen colleges with some of the largest endowments in the country. As of Tuesday, 23 colleges -- including Harvard University, Princeton University, the University of California and Georgetown University -- had responded with information about their endowment management teams and investments.

Cleaver and Kennedy sent letters to 25 colleges with questions based on data from a Knight Foundation study that examined ownership and diversity performance in the asset management industry. According to the study, in 2017, women and minority-owned funds accounted for about 5.5 percent and 3.9 percent of all mutual funds, respectively. In mid-2017, women and minority-owned hedge funds made up about 4.6 percent and 8.9 percent of their asset class. The numbers for real estate are dismal -- combined, women and minority-owned firms account for less than 4 percent of the industry, the study shows.

Colleges are no exception. In his role on the House Financial Services Committee, Cleaver has experience querying agencies for diversity information. His staff suggested vetting colleges because endowments have often been overlooked, he said.

“Lo and behold, what they came up with is one area of our education system that has remained essentially really white and male since their inception,” Cleaver said. “That is, the asset managers for billions and billions of dollars.”

The Knight Foundation study shows that minority-owned and women-owned firms were overrepresented in the top-performing quartiles for their asset class, meaning they perform well compared to the average investment firm. Raben and Cleaver both emphasized this point and stressed that colleges were losing money by not diversifying the people and firms in which they invested.

“In 2020, we have a very significant supply of talented women and people of color who know how to manage money,” Raben said. “You’re losing money by not working with the best talent. Why aren’t you?”

So far, most colleges have been cooperative, Raben and Cleaver said. Several -- including Harvard, Georgetown and the University of California system -- have been working continuously with Raben and the Diverse Asset Managers Initiative to diversify their endowment teams and investments.

The reported numbers are about what Raben predicted -- all of the colleges he surveyed have few Black and Latino managers on staff, and most have far fewer women managers than men.

The Knight Foundation study considers a fund diverse if it has 50 percent or more owners who identify as members of minority groups. Using that threshold, one-fifth of Princeton’s assets are managed by diverse U.S.-based firms. At Harvard, 18 percent of assets are managed by minority-owned U.S.-based firms. At Ohio State University, less than 5 percent of long-term investments and between 10 and 20 percent of intermediate investments are managed by diverse U.S.-based firms. Just 9 percent of the University of Texas system’s total assets are invested with diverse U.S.-based firms.

Few colleges provided a clear racial, ethnic and gender breakdown of their internal management team.

The University of California system considers nondiverse firms a risk factor, said Dianne Klein, chief of staff for investment services at the system. The university avoids investing in nondiverse funds because it doesn't consider them sustainable, mirroring an evaluation it's made for fossil fuels.

“If a company is not diverse, if it’s just a bunch of old white guys who socialize in the same settings and think the same way, you’re going to miss out on a lot,” Klein said. “You’re not getting the full advantage of what people know in different groups with different experiences.”

The system has currently invested 15 percent of its assets under management -- about $10 billion -- with diversely owned firms. In 2019, 60 percent of the UC’s endowment management team was not white, and 35 percent were women. About 10 percent of managers are Black and just over 8 percent are Hispanic. Since these data were released, Klein said the system has hired two more Black women.

Two universities haven’t responded to the congressmen’s letters yet. Columbia University has said it is still working on its response and will reply soon.

The University of Notre Dame was the only university the congressmen contacted that refused to provide information.

“As Notre Dame's fiduciary, our investment office works hard to find skilled firms to execute our investment strategy. As part of that search and diligence process, we have been very welcoming of minority and women-owned firms,” the university wrote to the congressmen. “However, we don't screen or target firms based on whether they are majority-owned by women or minorities.”

To Cleaver, Notre Dame’s response “could only be interpreted as, ‘How dare you,’” he said. “I was extremely disappointed with that response.”

Raben, Cleaver and their colleagues aren’t the only group working to diversify college endowment managers. On Thursday, the Intentional Endowments Network published a report on investing in racial equity. The report makes a case for investing in women- and minority-owned firms and hiring diverse managers.

“A clear commitment to diversity, equity and inclusion from Trustees, Boards and Presidents, across all sectors of the university including endowment management will lead to institutional resilience and relevance, as these issues directly affecting the lives of the majority of high school aged students today will affect the endowment performance and the business model of higher ed,” the report reads.

The Intentional Endowments Network report echoes Raben and Cleaver’s argument that diversely owned firms perform well. Such firms innovate to bring in new revenue at higher rates than nondiverse firms and are more likely to grow their market share, capture a new market and attract high-performing talent, the report states.

“Racial inequity poses a risk that has been hugely underpriced, whether that be to the economy or to endowments specifically,” said Jochebed Bogunjoko, founder at J Aduke Consulting and author of the report. “It’s a priority that can no longer be ignored, and it’s an opportunity that’s actually investable and there are concrete steps that fiduciaries can take to implement a racial equity priority.”

The report outlines concrete steps that colleges can take to audit and diversify their investments and management teams.

Raben had been working on his effort for two years before the congressmen got involved and colleges started responding. He’s hopeful that reporting such diversity numbers will become the new normal.

“I’m pretty confident that once the congressmen release the letters, or a release summary of the letters, then the dam will break and we’ll have a critical mass of universities reporting,” Raben said. “We have to get a couple thousand more to report, but that will happen. And then we’re going to move on to the more serious question, which is: Why aren’t you really working with Black people and Hispanics?”

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