MIE curated its signature Investment Forum at SOCAP in 2019, focused on how foundations and intermediaries partner to advance racial equity in asset management. MIE's Investment Forum uses a specific discussion format to pair asset owners with different partners that can examine a deal or project from distinctly different angles. As the two voices come together, a holistic picture emerges. The brief case study below walks through how Silicon Valley Community Foundation began evaluating and changing who was managing their assets, in partnership with Colonial Consulting, in their commitment to greater diversity and racial equity. Visit the links below for details on these topics.
Silicon Valley Community Foundation, asset owner
Colonial Consulting, investment advisor
Silicon Valley Community Foundation (SVCF)
Silicon Valley Community Foundation (SVCF) is the largest community foundation in the world at $9 billion in assets. They are also the largest non-commercial provider of donor advised funds. Like most community foundations, they partner with donors to help them achieve their philanthropic goals. As a grantmaker, they also address social problems in the Silicon Valley region through grantmaking, research, and advocacy for public policies that address core systemic issues, with a focus on increasing access to affordable housing and transportation, protecting the safety and security of immigrants, financial inclusion, and closing education achievement gaps and accelerating student success.
SVCF believes that hiring women- and minority-owned asset managers is aligned with their core value of inclusion, and their fiduciary duty to diversify and prudently manage investments. "There is no contradiction between maximizing returns and championing diverse asset managers," the foundation notes. While diversity in asset management is rooted in the foundation's core value of inclusion, it is also driven by fiduciary duty to maximize return by ensuring that qualified people of color and women managers are not excluded due to hidden biases.
The foundation made asset manager diversity a priority, because diversity wasn’t happening on its own. By having intentionality, a senior champion in the organization, setting up a transparent process, having accountability for results, integrating thinking into daily practices, SVCF went from having $52 million deployed to diverse-owned managers in 2013 to $190 million as of 2018, representing 20% of non-cash assets advised by Colonial Consulting. These assets are deployed across 14 managers.
Each year, SVCF requires their investment consultant to report on three metrics, to measure progress year over year.
The number of diverse managers their firm has met with during the year
The number of diverse managers they have recommended to all their clients
The number of diverse managers hired across all their clients. We also track the number of diverse managers recommended and hired by SVCF.
To seek out diverse managers on behalf of SVCF and other clients, Colonial Consulting (Colonial) increased meetings with diverse managers from 59 in 2015 to 202 in 2018. Over that same period, Colonial increased assets deployed to diverse firms from $0.7 to $2.2 billion. "Success is not a target number of managers or assets," Colonial notes. "Rather, it’s common knowledge of the existence of numerous high performing diverse managers that are seamlessly considered and valued by institutional investors."