VCU chooses not to participate in asset manager diversity study

A university sign is on campus. Photo by Alessandro Latour

Andrew Kerley, Contributing Writer

VCU is one of 34 universities that chose not to participate in a recent study that was conducted regarding the diversity of employees managing their assets, according to the Knight Foundation.

The study was conducted by the Knight foundation, an American nonprofit organization seeking to support a “more effective democracy” by funding journalistic and scientific projects, according to its website

The mission of the study was to encourage greater transparency in the management of both higher education and philanthropic funding, with respect to the diversity of asset managers, according to Ashley Zohn, vice president of learning and impact at the Knight Foundation. 

The Knight Foundation conducted the study in tandem with Global Economics Group, which received all data gathered and calculated their statistics. The study was in partnership with New York University’s Stern Center for Business and Human Rights, which helped with university outreach. 

Global Economics Group and the Knight Foundation began assessing the degree to which the 25 wealthiest private and 25 wealthiest public universities and colleges hire asset management firms owned by women and racial or ethnic minorities in fall 2021, according to the Knight Foundation.

Of the 50 colleges and universities consulted, only 16 opted to participate, with 10 of them being private. University of Texas System, Harvard University, Stanford University and the 13 other schools that did participate collectively hold 54% of the group’s total assets, according to the Knight Foundation.

The 34 colleges and universities that opted not to participate collectively hold 46% of the sampling frame’s assets. Among them were VCU and University of Virginia.

“We are disappointed that only 16 out of the 50 universities that were invited to participate chose to share their information,” Zohn said. “Because of that, we weren’t able to aggregate statistics to create an industry-wide benchmark.”

The Knight Foundation measures diversity by the number of women and racial or ethnic minorities in a firm, being those who identify as Hispanic, Black, Asian or “other,” which includes Indigenous people and Pacific Islanders. The term “diverse owned” includes both women and racial or ethnic minorities, according to the Knight Foundation

“We have found that only 1.4% of U.S. based assets are managed by diverse owned firms,” Zohn said. “That disparity is very significant given how that number compares to the general population.”

People that identify as white make up 59.3% of the US population, according to the U.S. Census Bureau. 

“Finance is a field that a lot of college graduates are gonna go into, and it’s also a field in which a lot of people can build wealth for future generations,” Zohn said. “Therefore, we think that it’s important to increase the representation of women and people of color in the finance field.”

The Knight Foundation approached VCU about the study last year, according to Bruce MacDonald, chief investment officer at VCU Investment Management Company. 

VCU Investment Management Company, a nonprofit organization run by VCU, is exempt from taxes under Virginia law for some nonprofits, according to VCU Investment Management Company

“Our understanding of how the study was run is that we would have sent the names of our managers to the study directors and they would then determine the diversity of those managers,” MacDonald said. 

VCU Investment Management Company opted not to participate because they are binded by a nondisclosure agreement and another provision restricting the use of their names, according to MacDonald.

“We were concerned that by participating we would have been in violation of those agreements,” Macdonald said.

Of the 16 colleges and universities that participated, 12 allowed Global Economics Group to analyze them independently, while the other four chose to self-report their own data, according to the Knight Foundation

“It seemed like the self-reported data was more limited than the study data,” MacDonald said. “The main study showed the asset managers categorized as ‘women owned firms’ or ‘minority owned firms.’ However, the self-reported data only showed ‘diverse owned firms.’ To me, it made the participants seem like they weren’t cooperating.” 

The Knight Foundation’s preference is that they receive the full asset management roster, rather than self reported data, according to Zohn. If one university knows that a firm is diversely owned, and another university is using that firm, we make that data common across the study. 

The Knight Foundation reached out to VCU again in September, according to MacDonald. They emailed them back on Sept. 21, requesting to have a conversation in order to better understand how the data would be used. 

“I would like to understand how they would use the data, so that we would not be in violation of our legal agreements,” MacDonald said. “We want to find a way to participate, and we do believe in the mission, but we need to be able to engage with them.”

The Knight Foundation reiterated that they would be happy to see VCU participate in their ongoing study, which they are currently collecting data for. 

VCU Investment Management Company has the ability to share all the same data that the Knight Foundation would be finding in their research, according to MacDonald. The organization provided their self-evaluated data to The Commonwealth Times.

“We wouldn’t want to make it seem like we weren’t being forthcoming,” MacDonald said. 

29% of VCU Investment Management Company is minority owned, being those that identify as Hispanic, Black, Asian and Indigenous, according to MacDonald. The firm is 1% woman owned, bringing the total of diverse-owned managers to 30%. 

However, a portion of VCU Health System’s assets and all of the MCV Foundation’s assets are managed by an entirely different, third party service provider, according to MacDonald. No information regarding the diversity composition of that firm is known. 

“One of the biggest problems in the industry is that when we hire outside managers, there’s a smaller opportunity set for women and minority owned firms,” MacDonald said. “I think every participant in investment management has to play a role in changing that, and that means getting more underrepresented people in the industry.” 

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