The nation's largest foundations showed increased investing with diverse-owned firms in 2021 as compared to 2020, a report from the John S. and James L. Knight Foundation finds.

Designed by the Global Economics Group and conducted by the Knight Foundation, the report, Knight Diversity of Asset Managers Research Series: Philanthropy (32 pages, PDF) is based on investment data compiled and analyzed for thirty foundations — either by accessing the data through publicly available sources (IRS Form 990 or 990-PF) or through direct voluntary submissions — and includes only endowment investments managed by investment firms based in the United States ("analyzed AUM"), amounting to $66.73 billion. In comparison to data collected in early 2020, the study revealed increased investing with diverse-owned firms overall among the twenty-five foundations that participated in both studies as well as higher foundation participation, with five new foundations engaging in the study revealing an additional $11.03 billion in invested assets under management.

In all, the study found $11.07 billion (16.6 percent) is invested with diverse-owned firms; $6.24 billion (9.3 percent) is invested with women-owned firms, and $6.70 billion (10.0 percent) is invested with minority-owned firms. In addition, the average foundation (in terms of a simple average) invests 16.3 percent of its assets in diverse-owned firms, and the median foundation invests 16.0 percent in diverse-owned firms. All but three (90 percent) of the thirty participating foundations invest some portion of their assets with diverse-owned firms, with nineteen (63.3 percent) investing more than 10 percent and four foundations (13.3 percent) investing more than 30 percent.

Among the foundations included in the analysis, the share of assets managed by diverse-owned firms ranged from 0 percent at the Bill & Melinda Gates Foundation, to 7 percent at the JPB Foundation, 22.4 percent at the Robert Wood Johnson Foundation, 34.4 percent at the Silicon Valley Community Foundation, and 35.9 percent at Casey Family Programs. In a footnote, the Gates Foundation noted that its investments are managed in-house by the Bill & Melinda Gates Foundation Trust, with limited use of external asset managers. It added that the foundation "strongly supports initiatives that increase diversity, equity, and inclusion in the investment community and will continue to push to advance" such causes.

Of the top fifty-five foundations, which collectively hold $300.34 billion in total assets, fourteen elected not to disclose diversity statistics or data at all, including the Ford, the William and Flora Hewlett, Simons, and David and Lucile Packard foundations.

"There are many ways to consider how values of diversity, equity, and inclusion can manifest in the management of an endowment," Knight Foundation vice president and CFO Juan Martinez wrote in the forward to the report. "We believe the question of diverse ownership, while not the only factor, is an important one. In finance, firm owners reap great dividends from the value they create, and it is owners who have the greatest influence on how the capital they manage is invested and on the makeup of their investment teams. Finance is fundamentally about equity — that is, who owns the capital. And our values argued for a more equitable distribution of the equity, so we resolved to do that."

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