The question of how equitable the engagement of higher education institutions with private equity firms and other investment management groups is a difficult one to answer. The reason for this is that there is an incredible lack of transparency in identifying what money managers many higher education institutions are using to steward their endowments.
The Knight Foundation’s 2021 report that sought to examine the diversity of the asset managers for the wealthiest 50 public and private universities had 34 of the institutions decline to participate. These institutions have a combined $273 billion under management. The key question is, who is managing these assets?
The fact is that many higher education institutional endowments and pension plans more broadly have significant percentages of students and personnel of color that pay into these vehicles on a regular basis. Many of these institutions hand out these funds to investment firms across the country. These funds do not equitably go to Black and Hispanic owned firms. It seems that people of color are good enough to put their money into the system, but they aren’t perceived as being good enough to manage the assets. 
Dr. Marcus Bright
One result is that Black and Hispanic owned firms are frequently not able to raise funds that are as big as their counterparts. Thus, many are denied greater opportunities to increase their capacity to make meaningful investments in communities that they have direct connection to.
There is also the false narrative of having make a tradeoff between diversity and performance. Multiple reports have found that there is no evidence of being a reduced level of performance in utilizing diverse money managers. Diversity has been shown to be an enhancer of performance in many cases.
New pipelines of opportunity for diverse investment managers are needed to break into areas where little to no diversity has historically existed. The aforementioned report from the Knight Foundation cited some reasons for why asset manager rosters can be slow to change including “asset managers’ intentionally long-term investment objectives and processes, established relationships with current managers, low manager turnover and the need for extensive due diligence before hiring new managers.”
