{"id":341659,"date":"2022-12-16T05:28:56","date_gmt":"2022-12-16T10:28:56","guid":{"rendered":"https:\/\/knightfoundation.org\/?post_type=report&p=341659"},"modified":"2023-04-07T14:28:19","modified_gmt":"2023-04-07T18:28:19","slug":"kdamphilanthropy2022","status":"publish","type":"report","link":"https:\/\/knightfoundation.org\/reports\/kdamphilanthropy2022\/","title":{"rendered":"Knight Diversity of Asset Managers Research Series: Philanthropy 2022"},"content":{"rendered":"
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A study on the degree to which the endowments of the country\u2019s wealthiest philanthropic foundations are hiring asset management firms owned by women and racial or ethnic minorities<\/h4>\n<\/div>
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OVERVIEW<\/h2>\n<\/div>
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This study is Knight’s third review of diversity in asset management at the nation’s largest charitable foundations. We do this research to provide examples of diverse, effective investing to the broader market and to stimulate a conversation about how well leading philanthropies live up to the values of equity and inclusion.<\/p>\n<\/div>

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By now, you’ve likely heard our story. Twelve years ago, when we first looked at the percentage of our endowment that was managed by diverse owned firms, we were appalled at how low it was. Today, we are proud to have a high-performing endowment with over $1 billion managed by diverse owned firms.<\/p>\n<\/div>

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This transformation required careful planning, consistent effort, and a willingness to learn from our peers. Along the way, we’ve encouraged fellow foundations and other mission-driven organizations to learn with us and turn that learning into action. This year, we are excited that so many foundations are true leaders on this issue. We celebrate that the Robert Wood Johnson Foundation has the most invested with diverse owned firms at $1.64 billion and that several foundations have more than a third of their U.S. based assets invested with diverse owned firms.<\/p>\n<\/div>

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Overall, the data in this year’s study shows continued — but still incremental — progress. Since our last report, we’ve observed that the percentage of foundation endowments managed by diverse owned firms has slightly increased from 16.6% to 18.1%.<\/p>\n<\/div>

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It’s clear that foundations set a positive example in the investment world which remains overwhelmingly white and male. Their investments exceed the industry standard of 1.4% invested with diverse owned firms<\/a>. This group of sophisticated investors, who depend on their returns to fund their social investments, have seen the opportunity in diverse managers and are allocating their money accordingly. By diversifying investment decisions makers, they are consciously avoiding “group think” in investment decisions and expanding the range of their investment opportunities.<\/p>\n<\/div>

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But at the same time, progress remains slow and transparency is lacking. Similar to last year’s study, 15 foundations declined to participate or did not respond to our requests at all.<\/p>\n<\/div>

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Knight’s experience demonstrates that change is possible, but transformation begins with openness. Our field cannot inspire change unless we’re honest about our own shortcomings.<\/p>\n<\/div>

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Transparency and better data will be vital to assessing how well our field is positioned to meet the challenges and opportunities of tomorrow’s economy. We hope this study enriches your understanding of this important issue and renews conversations about how our field can honor its commitments to equity and inclusion.<\/p>\n<\/div>

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Ashley Zohn, Vice President\/Learning and Impact<\/strong>
Juan Martinez, Vice President\/Chief Financial Officer <\/strong><\/p>\n<\/div>

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EXECUTIVE SUMMARY<\/h2>\n<\/div>
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This study reports on the representation of women- and racial or ethnic minority- owned investment firms (\u201cdiverse-owned firms\u201d)1<\/a><\/sup> among those used by the country\u2019s wealthiest philanthropic foundation endowments. This is our third study of charitable foundations in the Knight Foundation Diversity of Asset Managers (KDAM)2<\/a><\/sup> series. In this study, we again evaluate the top 55 foundations, which collectively hold $329 billion in total assets.3<\/a><\/sup><\/p>\n<\/div>

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We observe: Increased investing with diverse-owned firms among study participants. Of the $78.86 billion in assets under management (\u201cAUM\u201d) with U.S.-based firms, 18.1% is invested with diverse-owned firms, up from 16.6% in 2021 and 16.2% in 2020.<\/p>\n<\/div>

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Greater participation and transparency. Thirty-five foundations participated in the study, up from 33 in 2021 and 26 in 2020. Twenty-one fully transparent foundations identified their U.S.-based assets and provided manager rosters for analysis, eight participated passively by including some or all of their asset manager rosters in their publicly available IRS Form 990\/990-PF tax returns, which we were able to extract and analyze, and six self-reported diversity figures from their own internal analysis using this study\u2019s definitions.<\/p>\n<\/div>

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We observe:<\/p>\n<\/div>

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