After a Minneapolis police officer kneeled on the neck of George Floyd for nearly ten minutes and killed him, Southern New Hampshire University president Paul LeBlanc did what most college leaders did — he issued a statement recommitting the school to diversity and inclusion.
“I also pulled in other leaders in the university — people of color — and said, 'OK, what are we doing? How do we respond to this beyond the memo?'” LeBlanc recalled.
Leaders of SNHU, based in mostly-white Manchester, asked whether the university could reassign part of its endowment to address structural racism by investing in venture funds and start-ups founded and managed by Black and brown executives. The school moved a total of $11 million into five Black-owned funds.
That's about 4% of the university’s $300 million endowment — but, a year after Black Lives Matter protests swept the country, SNHU is one of a few colleges shifting a fraction of their endowment dollars to investment funds owned by Black and brown people.
“The access to capital has been one of the most critical factors in perpetuating wealth inequality in generational poverty,” LeBlanc said. “It's harder and more expensive for young, smart Black entrepreneurs to access capital if they want to grow their business.”
The University of Chicago, the University of Rochester and the University of California system had already taken a similar approach. Other leading schools, like Yale, are becoming more vocal about making diversity a priority through new initiatives. Fordham University is moving to join them.
College leaders, social activists and Black fund managers see this trend as in sync with higher education's stated mission of increasing access and opportunity at a time when the Brookings Institution estimates just 10% of Black families inherit any money, compared with about 30% of white families.
The goal, they say, is to address systemic racism in the financial industry and beyond.
“A financial statement is a statement of values,” said Daryn Dodson, managing director of Illumen Capital, one of the Black-owned funds SNHU has invested in.
Based in Oakland, the private equity firm provides capital to companies focused on reducing racial disparities in education and health care.
“We’re in the field of impact investing,” Dodson told GBH News.
So is the investment from SNHU just a token contribution, or will it make a real difference? Dodson is optimistic.
“If you think of what it means for a university endowment to step in against the flow of racial bias within the field of asset management, that's an extraordinary moment in history and a big deal,” he said. “It's a step, but it's a really important step.”
Dodson points to research his firm conducted with Stanford University that finds white men own nearly 99% of asset management companies.
“Fifty years after Martin Luther King was assassinated, still we have this huge disparity and imbalance in the asset management business,” he said.
The Stanford research also found the higher that Black male portfolio managers perform, the more bias they face.
“When equal managers at the highest end of performance — one Black and one white — are being evaluated by asset allocators, the asset allocators’ minds — with everything being equal — imagine stories about the Black manager being able to raise less capital,” Dodson explained.
So far Southern New Hampshire is the only university that has invested in Illumen’s portfolio. Dodson sees its $4 million contribution as a challenge to other colleges that are hearing students and faculty urging divestment from harmful industries, like oil and gas, and investment instead in ones aiming to have a positive social impact.
“When we look back at history, it’s not those that have discussed, but those that have acted, that helped to change the course of things,” he said.
At this moment in history, other colleges are taking a second look at their investments.
At Fordham University in the Bronx, Martha Hirst, the school's chief financial officer, has been charged with increasing the diversity of its asset managers.
“We are seeking out minority and women-owned firms and assessing their success,” Hirst said, adding that Fordham could do much better.
Of the 45 firms that the Jesuit university is already invested in, three are led by women or people of color.
“When we seek out investments, we have an array of criteria that we use, and among them will be diversity and inclusion criteria,” Hirst said.
Specifically, Hirst said, Fordham is looking for firms that grow and support a new crop of managers who will then become leaders in the field and change the face of an industry dominated by white men.
Dodson, of Illumen Capital, said that a handful of colleges are making a good start. But they're still playing catch up.
“If we were playing a basketball game and the score was one to 70 trillion — we have 1%t of $70 trillion that are managed by women- and people of color-led funds — then we would say we're losing that game,” he said. “We’re not making much progress.”
With college endowments holding more than $600 billion, Dodson and other Black fund managers said higher education could help to make the score less lopsided.
Kwame Anku, founder and CEO of BlackStar Fund, said the Black-owned fund will take the $1 million investment from SNHU and capitalize Black technology companies.
The biggest chasm fund managers like him face, Anku said, is between a private individual and institutions.
“As Black fund managers, we've got a chicken and egg problem because we're (the) first generation of fund managers,” he said. “So, theoretically, you'd never get an institutional investor simply because you didn't have a track record to prove that you worthy of the funds.”
Anku predicted more colleges will follow SNHU's lead.
“We're at the dawn of a new movement of investments,” he said. “There's an awakening where people are starting to say, 'Let's start to invest in this group, and let's look at equity investment as a way of transforming communities and transforming lives.'”