Diversity of Asset Managers in Philanthropy

For a decade, Knight Foundation has been intentional about identifying high quality, diversely-owned asset managers when investing its endowment. In response to frequent questions from a variety of stakeholders into the performance of the charitable sector regarding this issue — the questions arising from the general lack of data — Knight Foundation asked Global Economics Group to assess the representation of diverse asset managers among foundations.

The study assessed the representation of women- and racial or ethnic minority-owned investment firms (“diversely-owned firms”), among investment firms used by the country’s top 50 charitable foundations. The study analyzed available endowment investment data for 26 of the top 50 foundations (“Participating Foundations”) and included only endowment investments managed by investment firms based in the United States, amounting to $63.95 billion in invested assets (“Analyzed AUM”). The study found:

• $8.62 billion (13.5%) is invested with diversely-owned firms.
• $6.82 billion (10.7%) is invested with women-owned firms, and $5.93 billion (9.3%) is invested with minority-owned firms, as defined below. Approximately 50% of the $8.62 billion is invested with firms that are both women- and minority-owned; thus, the sum of the two figures is greater than $8.62 billion.5
• The average foundation invests 13.3% of its assets in diversely-owned firms, 10.8% in women-owned firms and 9% in minority-owned firms. The median foundation invests 13.5% in diversely-owned firms, 10.9% in women-owned firms and 7.9% in minority-owned firms.
• As the histogram below shows, all but four of the 26 Participating Foundations invest some portion of their assets with diversely-owned firms. Over half invest more than 10% of their assets with such firms. Two foundations invest more than 30% of their assets with diversely-owned firms, with the maximum invested amount equal to 45.9%.