Foundations Focus on Hiring Diverse Managers as Donors Push for Racial Equity

Community foundations are prioritizing diversity and inclusion in their investment portfolios and grant-making, according to investment consulting firm NEPC.

Soichiro Koriyama/Bloomberg

Soichiro Koriyama/Bloomberg

Nearly three quarters of community foundations will take action over the next year to hire women- and minority-led asset managers, according to a survey by NEPC.

The investment consulting firm surveyed foundations whose charitable efforts focus on supporting local communities across the U.S. Roughly a third of the survey respondents had more than $1 billion in assets, while 61 percent managed between $100 million and $1 billion.

These foundations’ efforts to hire more diverse investment managers come as racial equity goals play a larger role in their charitable operations. Ninety-one percent said they had increased their grant-making efforts in support of racial equity and racial justice causes “as a direct result of recent events.”

These “recent events” may refer to the anti-racism protests that swept the U.S. last summer after the death of George Floyd in police custody last May, as well as the sharp increase in anti-Asian hate crimes that have been recorded since the beginning of the Covid-19 pandemic. The Center for the Study of Hate and Extremism at California State University, San Bernardino, reported that hate crimes against Asians in the 16 largest U.S. cities spiked by 149 percent in 2020, even as overall incidences of hate crimes dropped 7 percent.

Last week, eight people including six Asian women were killed in a series of mass shootings at three spas and massage parlors in Atlanta.

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In the wake of these events, community foundations expect to see increased donations in support of racial equity causes, with 87 percent of survey respondents expecting such donations to increase over the next 12 months.

Overall, foundations reported that donations went up in 2020 compared to 2019, with 46 percent reporting a spike of 10 percent or more. On the other hand, 19 percent said their donations decreased by at least 10 percent during the pandemic year. NEPC reported that community foundations with more than $1 billion in assets disproportionately benefited from the surge in foundations, with not a single sub-$250-million foundation reporting a donation increase of 10 percent of more.

In addition to making more racial equity grants, community foundations reported they had increased their charitable contributions tied to health care goals. Eighty-three percent said they had increased grant-making for health-related causes, while 4 percent said such causes fell outside of their charitable mission.