Supporting Foundations Seeking to Align their Endowments with Racial Justice: An Exploratory Dinner Conversation

Our Project on Racial Justice and Finance

Racial justice, long a defining social justice issue in the United States, is now more than ever a priority. Fundamental as it is, the struggle for racial justice has so far been limited in its access to certain tools; in particular, it has not intersected with one of the main drivers of racial injustice: the allocation of capital.

Yet investment decisions affect racial justice dramatically. To address systemic racial inequity, we need to focus on the root causes that are actionable right now, such as how capital, which is rarely race neutral, affects communities of color.

Transform Finance’s work on racial justice and finance explores the intersection of capital with the needs of the racial justice movement. As holders of capital, foundations committed to racial justice in their programmatic work, in particular, are increasingly inquiring into how to align their endowments in furtherance of racial justice.

What are the different ways that investing in these sectors affect outcomes of racial equality?

What are the different ways that investing in these sectors affect outcomes of racial equality?

But how exactly does race manifest in finance, and how can the effects of capital allocations be shifted to favor racial justice?

This was the theme of a dinner conversation that Transform Finance hosted for participants at Mission Investors Exchange’s 2018 Mission Forward Conference, the premier event for the leadership role for philanthropy in impact investing.

This dinner mirrored the convening of racial justice practitioners that kicked off this project in July 2017, which grounded our project's approach in the movement for racial justice and its needs and aspirations with respect to capital. We explored these themes from the perspective of the investor, structuring the conversation around the following questions:

  • How do you think about the effect that your investments have on racial justice? Have you implemented any strategies or approaches to align your investments with racial justice?

  • What areas of your portfolio are particularly amenable to a new strategy centered around racial justice?

  • What are your major obstacles to adopting new strategies? E.g. lack of knowledge on how racial justice is impacted by investments, lack of available products, difficulty in embracing new strategies.

  • What would be most useful for you to develop racial justice across your portfolio? Examples include a framework of analysis by asset class, questions to ask your fund managers, or examples of positive and negative investments.

Key Points

The ensuing discussion over three leisurely hours helped us gathered several points that will continue to inform our research:

  1. There is active interest, especially on the part of smaller and more nimble foundations, to explore a deeper alignment of their portfolio with racial equity.

  2. Similarly, some asset managers and advisors are starting to explore explicit racial justice approaches. However, to date, no approach exists that parallels, say, a climate focus or a gender lens. Client demand will drive the development.

  3. Much progress has been made in allocations to direct investments in communities of color for projects that explicitly aim to drive racial justice outcomes, such as the work spearheaded by the Boston Ujima Project. Less has been done in other contexts and asset classes.  

  4. Diversity and inclusion is the principal mode of analysis, with organizations pushing for racial justice (shout out to Zevin Asset Management) by engaging and holding accountable publicly traded companies around issues such as the racial wealth and income gap and prison reform.

  5. Foundations and other fiduciaries are actively pursuing diverse and emerging manager programs, which aim to provide pathways for historically underrepresented managers.

  6. Many of the racial justice implications of investments are not obvious on their face. They affect, rather, the racial disparities in wealth, health, job quality, place, and other issue areas where finance plays a part.

  7. Those disparate impact areas require a multi-faceted approach, built on a deeper analysis of the ways in which capital allocations affect communities of color.

  8. Some relatively easy interventions can take place in underexplored areas and asset classes. For example, municipal bonds are a staple of a balanced portfolio, but play an important role in outcomes of racial equity in cities. Building on the work of Activest, we are encouraging investors to consider their investments in local governments, and how these can align with the needs of communities of color. Participants highlighted the need for an analysis of that sort for every asset class, from public equities to real assets.

  9. Foundations are especially well situated to pursue novel approaches as they can rely on the vast body of knowledge around the consequences of capital flows that is held by their program officers and grantees.

  10. This work requires a progressive approach, as investment officers become familiarized with the issues and trustees establish a mandate for a more intentional review of racial justice implications.

  11. Down the road, an intentional approach to racial justice may require a different allocation among asset classes.

  12. Another opportunity revolves around the investor’s ability to improve practices of their investees – essentially seeking to invest actively with the aim of supporting better practices. The investor “delta” is a concept that we at Transform Finance apply to every issue area and every investment, asking investors: how can your investment decisions improve job quality, management equality, and sustainability measures? This approach is especially suited to private (debt and equity) investments.

  13. Dinner participants agreed that foundations are privileged in terms of their position of influence beyond their investment dollars. We encourage them to think about how their access can be put to work to advance racial justice in finance. For example, the Opportunity Zones program, which holds promise for investments in communities of color as well as meaningful risks of further extraction and the erosion of the tax base, is an area where foundations could raise a unified voice around how the program should be operationalized.


Beyond our convened dinner, we were thrilled that racial equity was a key area of focus at the conference as a whole. Other participants made it clear that the lens our project is taking is critical to both the racial justice movement and for impact investing. We hope to involve even more stakeholders in this space as the project continues – please make sure to get in touch at 

Dinner Participants

Andrea Armeni, Transform Finance
Andrew Brower, W.K. Kellogg Foundation
Craig Metrick, Cornerstone Capital
Ellis Carr, Capital Impact Partners
Erin Harkless, Cambridge Associates
Graham MacMillan, Ford Foundation
Greg Neichin, Ceniarth LLC
Laura Campos, Nathan Cummings Foundation
Lorenzo Bernasconi, Rockefeller Foundation
Lori Bezahler, Edward W. Hazen Foundation
Mark Paley, Hyams Foundation
Oronde Miller, W.K. Kellogg Foundation
Renaye Manley, SEIU Capital Stewardship
Sayer Jones, Meyer Memorial Trust
Shuaib Siddiqui, Surdna Foundation