At SVCF we believe there is no contradiction in seeking to maximize investment performance while championing investment manager diversity. This belief is firmly rooted in the value we place on diversity and inclusion, and it is also driven by our fiduciary duty to maximize return by ensuring that we are not excluding qualified people of color and women managers due to hidden biases.
In 2014, SVCF began challenging itself and its investment consultant to confront biases in our investment process and explore how to better engage more diverse-owned asset management firms across its investment portfolio. We were among the first community foundations to undertake this challenge. We made a commitment to share our progress and experiences, and have done so since 2016.
In 2020, SVCF completed a search for a new investment consultant and hired Cambridge Associates as a result of the search. Cambridge Associates has continued driving progress toward creating world-class investment portfolios and contributing to a more inclusive financial industry.
SVCF's goal in sharing this information is to encourage other foundations and institutional investors to embrace the entirety of their fiduciary responsibilities, ask critical questions, confront biases and take action toward more inclusive investment practices.
Before we launched this effort in 2014, SVCF employed three minority- and/or women-owned asset management firms (also referred to as "diverse-owned" firms), with whom we had invested $52 million. As of June 30, 2021, we have deployed $319 million to diverse-owned firms. This amount represents over 30 percent of total non-cash assets advised by our investment consultant.
The information below summarizes findings from a 2020 report from the Knight Foundation about the extent to which diverse-owned asset managers were represented among those managing investments for the biggest charitable foundations in the country. A link to the Knight Foundation report is in the "Resources" section of this page. SVCF is proud both to be performing according to our values, and to be consistently still leading the field in this regard, as shown by the results below.
Our measure of success is not a target number of managers or assets. Rather, it is confidence that talented diverse managers are not being overlooked or screened out. We will consider ourselves successful when the industry widely recognizes that there are numerous high performing, diverse-owned asset management firms that are valued and seamlessly considered by institutional investors. The chart below shows SVCF's own progress over time.
We invite our peer foundations and other institutional investors to consider the following actions to assess manager screening and selection process to eliminate bias:
Ask key questions - How many manager searches were conducted last year, how many were women and minority firms, and how many were hired?
If no people of color or women were recommended, then that is a red flag to be discussed with your consultant and/or staff. If no diverse managers were hired from those recommended, then that is a red flag to have a candid discussion about bias that may exist with the investment committee.
Engage - Address implicit biases by discussing the importance of diversity, inclusion, transparency and accountability with your trustees, staff and consultant.
Measure - Ask your investment consultant on an annual basis how many managers of color or women they have evaluated, recommended to their other clients, and how many were hired.
- Report - Share your progress and experience with the field.
SVCF's Investment Consultant's Process
Cambridge Associates has committed to the following process and targets to increase coverage and hiring of diverse managers.