How to Invest in Diverse Managers

June 2, 2021 |
4 minute read

A U.S. capitalist system where approximately one percent of all capital is managed by women and people of color, who make up 70 percent of the population, perpetuates and increases inequality and drags down our whole economy.1  

Recently, Ford Foundation and Commonfund Institute hosted a discussion with peers who are at the forefront of the investing in diverse managers effort. The panel was moderated by George Suttles, Executive Director, Commonfund Institute and a member of the Commonfund Diversity, Equity and Inclusion office, with Ford Foundation trustee Gaby Sulzberger, Rockefeller Brothers Fund trustee Valerie Rockefeller, and trustee and interim CEO of the Nathan Cummings Foundation Rey Ramsey.

During this virtual session, panelists shared the experiences of their own institutions allocating capital to diverse managers, the benefits of investing in diverse managers, challenges they've encountered and resources they've found helpful. 

Watch the video below to view highlights from the conversation and read on for key takeaways.


Leadership Is Needed

Without a commitment from leadership—the board/investment committee—your institution will make little progress when it comes to investing in diverse managers. It starts with the board, in partnership with senior staff and any third-party investment partners. No matter the investment management model, it takes leadership to develop and implement a strategy to add diverse managers into your portfolio. In addition, the correlation between a lack of diverse boards, investment consultants, and OCIO firms2 —all of which make and influence institutional investment decisions—sheds some light on the importance of diverse leadership. Committed, diverse board and investment management leadership widens the aperture and can provide a more inclusive investment approach.

Convert Interest to Investment Action

There seems to be a growing interest in investing in diverse managers, but it has been slow to translate into significant increases in capital allocations to these managers. Even if there is willingness, it takes planning and implementation. During several convenings, conversations and surveys on diverse managers, it is apparent that the interest is there. In a 2020 Aon Institutional Investor Survey on Diverse Manager initiatives, more than 50 percent of institutions surveyed noted “some level of interest and increased engagement with diverse managers.”3 Increased interest and engagement are great, but they are not the same as actually investing. Leadership, coupled with action, is what is needed.

To read an extensive report that chronicles how Nathan Cummings Foundation has turned interest to action, please review their recently released report: Values Proposition: How and Why we Transformed Our Investment Model to Align Our Capital with Our Mission.

Do the Work

Ask the questions: Boards and investment committees who hire investment consultants or OCIO providers should ask more questions about how they are sourcing and allocating to diverse managers in their portfolios. In response to these questions, providers will, in turn, have to ask questions of fund managers regarding their own diversity practices. Remember, as much as investment consultants and OCIO providers are strategic partners, they are still service providers. Additionally, as much as fund managers are tasked with generating returns, they need investors to allocate capital to them. If your nonprofit institution is serious about investing in diverse managers, ask your investment management provider to reexamine their due diligence and risk management frameworks to help facilitate when and how they are going to increase the number of diverse managers in the portfolio.4  If after a certain period of time they cannot come up with a solution, find a partner that can.

Take the Time: In order to successfully allocate capital to diverse managers, you have to put in the time. Although the universe of diverse managers continues to expand, it is less a matter of supply (access to diverse managers across asset classes) and more about taking the time to identify and appropriately diligence them. Many who lag in this effort often state “if it isn’t broke, don’t fix it”, meaning that if traditional due diligence processes are in place and the portfolio is generating positive returns without diverse managers, why go through all the trouble to include them in the portfolio. Recent data shows that incorporating diverse managers into portfolios increases returns5, so taking the time is well worth it.

Consider setting targets: Once you develop and implement an investment strategy that includes diverse managers, the next step is to set up an evaluative framework to measure success. Some institutions set a percentage target while others set allocation targets. For example, the Rockefeller Brothers Fund recently set a new goal to invest 25 percent of its endowment holdings with firms majority-owned by women and/or people of color; as of December 2019, they have reached approximately 12 percent of their goal.6 Another example in the pension space is the Chicago Teacher’s Pension Fund, which in 2009 set, and continue to exceed, quantifiable goals to invest in diverse managers.7 Defining what success means for your institution and setting some targets, even if they are broad, significantly increases the likelihood for success and more importantly, accountability. Each institution should set sensible targets that are appropriate for their size, approach, and overall diverse manager strategy.


This discussion, although rich with insights, did not cover every consideration regarding this topic. Ultimately, a shift in mindset, from investing in diverse managers as a “trade-off” to investing in them as opportunities for growth and increased returns will be the primary driver of significant progress. Institutions that have the leadership, and racial and gender equity in their mission’s DNA have and will continue to fuel this movement and the hope is that the number of these institutions continues to increase.


Endnotes and Resources:

Mission Investors Exchange, Diversity in Asset Management: Research and Practice

Intentional Endowments Network (IEN): Invest in Diverse Managers Resource Library

Inside Higher Ed, “New Push to Diversify Endowments and Their Managers”, Emma Whitford, August 2020

Markets Media, “From the Markets: Investment Consultants Still Mostly White and Male”, Results reported from the 3rd Annual Investment Consultant Survey”, Diverse Asset Managers Initiative, 2020

Diverse Asset Managers Initiative (DAMI)

Fortune, “The Investment industry claims to support diversity, but the numbers don’t add up”, Robert Raben, 2020




  1. US Governance Accountability Office, Report to Congressional Requesters: Investment Management-Key Practices Could Provide More Options for Federal Entities and Opportunities for Minority and Women owned Asset Managers, 2017
  2. Commonfund, What is an Outsourced Chief Investment Office (OCIO), 2016
  3. Aon Institutional Investor Study: Diverse Investment Initiatives, 2021
  4. Due Diligence Commitment 2.0, 2021
  5. The Other Diversity Dividend, Harvard Business Review, Paul Gompers & Silpa Kovvali, 2018
  6. Rockefeller Brothers Fund: Our Commitment to Support Diversity in the Investment Sector, 2020
  7. Middle Market Growth, “Chicago Teachers’ Pension Fund Raises Class of Diverse Managers”, Benjamin Glick, 2019
George Suttles


George Suttles

Executive Director

Stay connected with the Insights Blog

Popular Blog Posts

Market Commentary | Insights Blog

Chart of the Month | The Surprising Relationship Between Money Supply and Inflation

The potential for rising inflation is becoming a top concern for many investors and consumers. Many believe that inflation is already here as evidenced by price increases in commodities, homes,...
Perspectives | Insights Blog

The Case for Using the Higher Education Price Index® (HEPI) to Define Inflation for Colleges

When calculating return targets for an endowment portfolio, a conventional piece of the equation is often the Consumer Price Index (CPI). CPI plus 5% is the common short-hand formula for institutions...
Governance And Policy | Insights Blog

Endowment Management and the Three Primary Responsibilities of a Board

The fourth blog in the “Six Ps of Investment Stewardship” series addresses People, specifically how boards function within an organization. To learn more about the first four principles in the series...


Certain information contained herein has been obtained from or is based on third-party sources and, although believed to be reliable, has not been independently verified. Such information is as of the date indicated, if indicated, may not be complete, is subject to change and has not necessarily been updated. No representation or warranty, express or implied, is or will be given by The Common Fund for Nonprofit Organizations, any of its affiliates or any of its or their affiliates, trustees, directors, officers, employees or advisers (collectively referred to herein as “Commonfund”) or any other person as to the accuracy or completeness of the information in any third-party materials. Accordingly, Commonfund shall not be liable for any direct, indirect or consequential loss or damage suffered by any person as a result of relying on any statement in, or omission from, such third-party materials, and any such liability is expressly disclaimed.

All rights to the trademarks, copyrights, logos and other intellectual property listed herein belong to their respective owners and the use of such logos hereof does not imply an affiliation with, or endorsement by, the owners of such trademarks, copyrights, logos and other intellectual property.

To the extent views presented forecast market activity, they may be based on many factors in addition to those explicitly stated herein. Forecasts of experts inevitably differ. Views attributed to third-parties are presented to demonstrate the existence of points of view, not as a basis for recommendations or as investment advice. Market and investment views of third-parties presented herein do not necessarily reflect the views of Commonfund, any manager retained by Commonfund to manage any investments for Commonfund (each, a “Manager”) or any fund managed by any Commonfund entity (each, a “Fund”). Accordingly, the views presented herein may not be relied upon as an indication of trading intent on behalf of Commonfund, any Manager or any Fund.

Statements concerning Commonfund’s views of possible future outcomes in any investment asset class or market, or of possible future economic developments, are not intended, and should not be construed, as forecasts or predictions of the future investment performance of any Fund. Such statements are also not intended as recommendations by any Commonfund entity or any Commonfund employee to the recipient of the presentation. It is Commonfund’s policy that investment recommendations to its clients must be based on the investment objectives and risk tolerances of each individual client. All market outlook and similar statements are based upon information reasonably available as of the date of this presentation (unless an earlier date is stated with regard to particular information), and reasonably believed to be accurate by Commonfund. Commonfund disclaims any responsibility to provide the recipient of this presentation with updated or corrected information or statements. Past performance is not indicative of future results. For more information please refer to Important Disclosures.