Empowering Others, Investing in Equity

Empowering Others, Investing in Equity

By Victoria Sorg, former Senior Development Officer, The Dayton Foundation

The mission of the Dayton Foundation is to help you help others others through philanthropy and community leadership. This mission of empowerment extends beyond the donors, grantees and community members it serves. Empowerment flows through all areas of the Foundation, including in making investment decisions that support racial equity.

With this in mind, The Dayton Foundation has established a new racial equity investment portfolio in partnership with Morgan Stanley that is designed to address issues of diversity, equity and inclusion. Racial equity investing allows Dayton Foundation donors to leverage their charitable contributions by selecting a pool of investments screened through a racial equity lens.

A 2018 study released by Morgan Stanley’s Inclusive Innovation and Opportunity initiative found that people of color comprise only 29% of total U.S. business owners, yet represent 39% of the population. In addition, people of color run less than 4% of publicly traded funds. Racial equity investing creates an opportunity bridge this gap and address systemic racism through thoughtful investment decisions that advance historically disadvantaged groups, including African-American, Hispanic, Asian-Pacific and Native-American populations. Investment advisors who manage racial equity funds take measurable actions to promote racial equity through their investment decisions. The goal is to use race and ethnicity as a consideration when redressing areas of inequity and promote efforts to advance equitable opportunities by using investor capital as leverage.

Fund managers practicing racial equity investing have a specific investment policy statement tailored to their investment strategy. Investment policy statements outline the goals and stated objectives for a given portfolio and provide direction and parameters for the investment advisors. An advisor focused on racial equity investing may use some or all of the following considerations when determining the type of stock to invest in their portfolio, including choosing companies that:

» Include people of color in leadership, both at the board and executive leadership levels;

» Provide or produce products and services which benefit communities of color; and

» Embrace diversity and inclusive policies and procedures.

By rebalancing access and economic opportunities and empowering underrepresented populations across all public and private sectors, we can help to level the playing field while creating better financial outcomes for both investors and business owners alike.

Please note: The Dayton Foundation does not practice law or offer financial or tax advice. The Foundation recommends that people considering establishing funds or legacies through the Foundation consult their financial, tax or legal advisor.