If Culture Matters, Should Your Asset Managers’ Political Donations Matter?

Illustration by Jeremy Leung/II

Illustration by Jeremy Leung/II

Short answer: Yes. Long answer: Also, yes.

“Culture matters.”

How many times have you uttered this phrase when talking about your own company or your manager due diligence process?

Asset managers certainly recognize this and loudly tout their own cultures as being essential to their success. Asset allocators — and especially investment consultants — cling to this phrase as if it had totemic power, ascribing to a manager a mystical ability to generate alpha.

Willis Towers Watson, for example, writes, “In the competitive world of generating alpha, we believe culture is a unique ingredient and the bedrock on which a competitive advantage is sustained over the long term.” But in spite of its importance, the firm admits, “evaluating [a manager’s] culture is not easy. It can require countless hours speaking to a firm’s leadership and staff, in addition to data gathering and analysis to create a robust view of the firm.”

Which takes us, inevitably, to President Donald J. Trump.

In 2020 this data-gathering exercise should also include a search and evaluation of political donations made by a manager and its leadership to the president’s re-election campaign.


Michelle Goldberg recently wrote in The New York Times that President Trump “does indeed have a re-election message, a stark and obvious one. It is ‘white power.’”

She bolsters her claim by citing a handful of Trump’s recent actions—his tweet of a video of a man in The Villages, an affluent Florida retirement community, shouting, “White power!”; his tweet of videos of black people assaulting white people and his question “Where are the protesters?”; his threat to veto a $741 billion defense bill because a provision written by Senator Elizabeth Warren (D-MA) requires military bases honoring Confederates to be renamed. Others from across the political spectrum have made this same point, and still others have cataloged Trump’s history of racism more extensively.

The conclusion is undeniable: Trump is a racist and his agenda race-based, placing the social and political hegemony of white Christians at its core.

For those choking on this statement, I acknowledge that racism is detected, determined, and observed through partisan and ideological lenses — but I ask you to read the public record and then try to make a cogent counterargument (start with birtherism).

Which takes us back to culture matters: If an asset manager’s “principal assets are its people and the judgments they make,” then how people act in their private lives cannot be entirely divorced from and should be part of an allocator’s culture calculus.

Trump provides us with a new, valuable qualitative data point in the manager evaluation process: the political donations of the manager and its key employees.

The beauty of political donations is that they are public expressions of a person’s private views. Unlike participation in the Boogaloo movement (not all Hawaiian shirt wearers are guilty) or a subscription to the white-supremacist journal American Renaissance, records of a person’s political contributions are freely available online.

To be clear, I am not making the more general claim that all Republicans or supporters of Trump are racists. I’ll leave these topics to others. And I’ll even let the donors to Trump’s 2016 campaign off the hook, allowing that their actions could be attributed to ignorance or a visceral dislike for the Democratic candidate. My focus is squarely on donors supporting Trump’s re-election.

Let’s put this in the proper context: Every manager, consultant, and allocator will publicly state that they “stand against racism of any kind” (AQR), are “committed to racial equality” (BlackRock), and are “deeply disturbed by the awful acts of racial injustice our country has recently experienced” (Blackstone). This intolerance is confirmed in every employee handbook and value statement. Most recently, it was exemplified in Franklin Templeton’s termination of Amy Cooper, its white former head of insurance solutions, after her well-reported encounter with a black man, Christian Cooper.

Franklin Templeton president and CEO Jenny Johnson told Bloomberg that the company has a zero-tolerance policy on racism, and that Amy Cooper had violated that policy and was terminated.

Ms. Johnson continued and, as if she were reading the Willis Towers Watson white paper, said that culture “starts with leaders ensuring that discrimination is not tolerated and that we create an environment that absolutely feels inclusive for all employees.”

Zero tolerance . . . wait. What?

A Forbes article detailing donations by billionaires to Trump’s 2020 campaign shows that Ms. Johnson’s father, Charles B. Johnson, former chairman and CEO of Franklin Resources (NYSE: BEN), which operates as Franklin Templeton, donated $700,000 directly to Trump Victory and Trump Make America Great Again Committee, two fundraising committees supporting Trump’s re-election campaign. (According to a spokesperson, “Charles B. Johnson is retired chairman of the firm, and it would not be appropriate for us to comment on his personal political donations.”)

And though Mr. Johnson is no longer formally active in the firm, he remains its largest shareholder.

There are other investment professionals and firms that have donated specifically to Trump’s re-election. But one person stands head and shoulders above his peers not only for the amount of his donation but also for his unambiguous and unwavering support of Trump: Blackstone Group’s chairman, CEO, and co-founder, Stephen Schwarzman.

In addition to the $699,400 donation Forbes identified, the Center for Responsive Politics’ OpenSecrets.org database reports that in January 2020, Schwarzman gave $3 million to America First Action. (As of July 4, 2020, Schwarzman was the second-largest donor to this super PAC; a request for comment from Blackstone went unanswered.)

Schwarzman is an active and generous donor to many Republican causes and candidates. As of June 22, 2020, a search of data through OpenSecrets shows that in 2020 he has contributed $16.5 million to “solidly Republican/Conservative” causes — and none to liberal ones.

It is certainly his right as a citizen to participate in the political process. Today, however, let’s focus only on Schwarzman’s direct donations in support of Trump’s re-election. And, importantly, let’s recall that Schwarzman remains a trusted adviser to Trump.

We could try to rationalize his donations and role as an adviser by claiming that Schwarzman (and other donors, advisers, and voters) might be morally and humanly indignant about Trump’s actions and words but that he finds it necessary for his own self-interests to support him.

Such appeals to self-interest—or corporate interest—might be palatable on lesser issues like Medicare for all and defense spending, but when it comes to racism and the president whose ideal vision of America excludes millions of fellow citizens because of their race, religion, or sexual orientation, there is no middle ground.

In a 2017 email Schwarzman sent to his Schwarzman Scholars explaining why he chose to chair Trump’s short-lived advisory council, he wrote, “In life you’ll often find that having influence and providing sound advice is a good thing, even if it attracts criticism or requires some sacrifice. However, I have always believed one’s obligation is to work for the common good. To the extent you can help achieve this objective for other people, you have an obligation to do so even if there is a short-term cost.”

Racism certainly does not contribute to the common good. Quite the opposite: It destroys the common good by systematically disadvantaging members of an identified group.

It’s time allocators made managers pay the short-term cost for their support of a racist president. You can certainly ask them to explain their donations. After all, your fees pay for them.

Postscript: Recently, a group of investors banded together and asked specific companies to terminate business and public relations with the Washington, D.C., franchise of the National Football League if it does not stop using the name “Redskins.” Last week they succeeded.

If investors can act against the use of racist terms, then they should hold their managers to account for supporting a racist.