 So I was reminded the other day of the quote the future is already here. It's just not evenly distributed I think what you just heard right here has to be the future But obviously that's not what's happening in in the universe here yet So I wanted to make sure to follow that up with people who are leading And so the next group here is going to talk about a commitment that the Kresge Foundation made to Diversify its managers by 25% by the year 2025 I'm excited to welcome to the stage Rip Rapson president of the Kresge Foundation and Susan Taylor Batten president of Abfee for those of you who are waiting for Susan because she's the real attraction She's getting mic'd so Here we go, Susan Good afternoon. Hey, good afternoon everybody All right, so Rip and I are pleased to be here to continue this important conversation around diversity and asset management and We this was a good setup the the colleagues that spoke before us and we sort of set this up as An interview and I'm going to talk to Rip Who leads Kresge as you heard and is one of the leading foundations stepping out on this issue of Diversity and asset management But just by way of background for you all to know who we are and why we got into this work Abfee was founded in 1971 We were founded as the association of black foundation executives And our mission is to promote effective and responsive philanthropy in black communities and we've got a membership of just under a thousand around the country and our work really falls into Two big buckets if you will one is ensuring that black talent and black leadership Has the opportunity to lead in the foundation sector in this country? So we're always pushing around diversity and ensuring that the C-suite in particular is in fact diverse and Folks of African descent actually have the opportunity to lead But we also are also very focused on how money flows coming out of foundations and the extent to which Money is responding to the needs and the issues facing our kids our families our communities So in 2011, which was the 40th anniversary of Abfee we began really to look at the work of the organization to date and What was left to do and again always being a big proponent of issues of diversity and Equity in the field really focused on the issue of diverse asset management And I was telling Rip backstage prior to coming to Abfee I was with a very large foundation good foundation in this country that does great work around kids and families and I managed the work on diversity and equity there and I used to say this is about 12 years ago. I could walk down the hall and Know when I got to a meeting of the investment team because it would be the only room quite frankly That was all white and all male right We were making strides as a related to diversity in the C-suite at that foundation, but That one sort of team that one portfolio Was a tough nut to crack so I bought that to my work at Abfee when I got there 10 years ago and in 2011 as I said we started a body of work called smart investing and We got into this work to really push for opportunities for minority and women-owned firms to manage foundation Endowments and we got into this work really for three reasons one we knew that the data was on our side in terms of performance and You all know the data perhaps that minority and women-owned firms perform as well and sometimes outperform other Investment firms and organizations so we knew this was one about performance Two We are really concerned at Abfee about building and scaling black businesses in this country There's a lot of research that suggests that if we focus on scaling black businesses That's a real strategic way to address the racial wealth divide And so if we were making ways for for us in particular black investment firms to manage foundation Endowments, we were actually building wealth as relates to scaling black businesses But the third reason why we got into this work around diverse asset managers is because we did a quick and dirty study of black investment firms in particular and Saw that they were very philanthropic themselves, right? So when you looked at groups like Ariel investments out of Chicago, you can't overlook You know what John Rogers and the folks at Ariel have done around issues of education in Chicago and the south side of Chicago in particular If you looked in Baltimore and the work of Brown capital management, you know You have to recognize and lift up and really celebrate their philanthropy as well So we thought this was another way again to build black wealth and also facilitate giving in our communities. So we really began to push in 2011 and over the past five years We've been doing a number of things We've created the sector's first directory on minority and women-owned firms Because as we talked to foundations and particularly investment teams in foundations about this the first thing What they would say is that we don't know any right? So we wanted to take that sort of answer off the table and we created a directory That still lives on our website that we push out to our members in foundations around the country around the country We created a number of papers over the last couple of years and rip when I look at the titles of some of these Papers it actually speaks to the challenge of this work Investment manager diversity the hardest taboo to break was the paper that we co-wrote with the Silicon Valley Community Foundation In their work on this area another one was diverse managers Philanthropies next hurdle who manages the money how foundations can democratize capital That actually is the case study of the WK Kellogg Foundation's work on diverse asset managers So we're seeing some progress some Slow progress, but progress nonetheless since we've been pushing on these issues for the last eight years And one of the leading foundations is Kresge that actually has come out Publicly and said that we're gonna make this a priority for the foundation Kresge was the first Independent or private foundation to sign our diverse asset manager pledge that'll talk a little bit about later But we want to dive into a conversation with rip about why they took on this issue and what you're learning and how we get more people to join this movement, so rip I'm gonna just start And not assume that people know just a little about Kresge And they can just share just high level about what's going on the foundation sort of your areas of focus before we dive in Thank you Kresge is based in Detroit, which is why I'm wearing a suit. I didn't want to be mistaken for a Californian And it was started in 1924 by Sebastian Kresge who founded the five and ten cent dime the dime store Essentially the precursors of Walgreens and so many other things and and over the time it grew and grew and grew It became Kmart Kmart became too big for the family. They sold and created the Kresge Foundation, but we're based in Detroit We work across the country We have about four billion dollars of assets So we give out a couple hundred million dollars a year and we focus on opportunity in cities pretty much pure and simple Whether that's in the realm of human services environmental stewardship health community development or the like and We have also developed sort of side-by-side with our programmatic interest a sort of a deeper and deeper commitment to social and impact Investing which is maybe the tie-back into the conversation tonight Mm-hmm, and again before we move to the work around diverse asset managers I know Rip that Kresge also is thinking about equity broadly across the foundation issues of diversity and equity So I just wanted you to by way of context talk about that a bit Well, it's hard to be a foundation focused on opportunity among low-income people in cities and not Internalize as fully as you possibly can issues of racial equity ethnic equity and other forms And so for the better part of the last four or five years We've done what I think so many institutions of our kind have which has really gone deep in three or four domains One we've tried to diversify our staff about 40 45 percent of our staff or people of color We've sought to just learn a common vocabulary begin to sort of understand what the issues are so they can be held Across the enterprise We've begun to ask hard questions about vendors and contracting and how we can make sure they represent The communities we serve and we've and we've also done a lot of work Trying to figure out how every program sort of elevates explicitly even though it's implicit that we would always be focusing on People of color and low-income folks, but we actually explicitly sort of ask ourselves How are grant-making and how our social investing advances issues of equity opportunity and justice? Well, we do a lot of Trainings and advising as you know with Foundation boards and staff and I think we had almost half of your staff at our last Training while we were ensuring whether you're good. Yeah, they were there. So so on the issue of diverse asset managers Why is this important? I Sang the Susan Before we came on I feel redundant because in many ways the case has been made so effectively through the course of the conference and certainly by the previous panel Rob Manila many of you may have seen our chief investment officer Yesterday made the argument or whenever it was yesterday I think made the argument that it's about returns that when you diversify your managers when you diversify your own staff you make better decisions and The evidence is crystal clear is the previous panelist talking about And Rob wanted to make sure that I repeated that and repeated that and repeated that so let me contradict him a little bit My sense is that it is about returns. There's no question that firms owned by women and people of color can return every bit as well as Firms who are are not it just defied as common sense to think that wouldn't be the case But I but I actually think that for an institution like ours and Institutions like ours are more and more common committed to issues of social justice social opportunity It becomes crazy to have one part of your operation Not be consistent with the rest of your operation and so the alignment of purpose around institutional purpose has been really important to us and I think third We have done what I think not quite as many foundations have done which is to completely integrate our investment Team with our program teams. They serve on our committees. They help develop strategies We don't let them out of the building. We don't send them down the street We don't let them work in New York They've got to be part of our ongoing infrastructure and I think it's made a huge difference on both sides of the ledger I think our programs staff are much more Sophisticated about markets and finance and I think our investment team is much more attuned to the kind of work that the Institution is trying to advance and so it sort of comes more naturally It seems to me to them to think about the same kind of issues the rest of the foundation is thinking about and we've got 105 employees. We're not terribly big but 13 of those are investment professionals And so it's really important to me that 15% of our staff be on the be on the bus You know that is actually a model just for the sector You're right. Not many foundations do that at all There's this firewall between the program side and the investment side matter of fact I actually joined the the foundation that I worked for for many years because I wanted to learn how to grow and manage Endowments and I was there for nine years and never once actually was in a conversation around investment management So just that one Structural change that you're talking about is huge. That's huge Can I jump the shark because I know you have a whole set of questions. Yes, sorry. I Actually think that in the philanthropic community This is a very big deal as we begin looking at mission related investment more seriously as we begin looking at the diversification of our portfolios the hegemony that our investment staff has I Think we need to step back and look at it It's I Can't tell you how many stories I've heard from my Counterparts and major foundations in America say well, I would do it except our chief investment officer won't let me do it I said say what? Mm-hmm, but often they report to a separate board The president of the organization doesn't have the right to sort of set the agenda set goals that do performance evaluation It's all done by sort of classic investment standards of hitting your benchmarks and doing all of the things that a good investment set of Professionals does but again, we either are a single organization or we're not and I and I don't mean to be self-righteous about it I get that people will have different models But it just seems to me that as our society is moving toward a much more I think woke view of what it means to work in the 21st century that sort of independent hegemonus sort of relationship of investment officers by way of the rest of the Organization doesn't make as much sense to me now. I see why people are asking you to come around and talk Rip was just saying people are asking me to come around and talk to their boards now I see why okay, because I don't hear that that much Rip 25 by 25 you will announce this campaign at our conference in Detroit a couple of months ago Talk about the campaign. Well, I think it's one of the reasons I can't be too self-righteous Is that we announced it two months ago not ten years ago? And so I I don't want to sort of overstate it, but in some ways it became Almost in an inevitability We We are now at about 16 percent managers of color and women managed Funds moving to 25 percent doesn't seem that big a jump But it represents a level of intentionality that I think is really critical And it happened for a couple of reasons one as I mentioned you we have a CIO who is deeply competent committed and and fully aligned Second we have an organization that is fully aligned, but third We have a outside investment group We walked into a room Oh, I don't know a year or so ago, and we had our whole investment staff sort of sitting along one wall 12 white men and a woman and Myra Drucker one of our great outside directors Looked and kind of tilted her head. He looked she looked at me and she said that's just not acceptable She didn't even have to say the what wasn't acceptable. We all knew and I think for an enlightened CIO and for an organization committed to the work. It was sort of a tipping point and Rob Manila Immediately went to work trying to figure out how through internship programs through more expensive pipeline development through sort of different lens for Manager selection we could really go to work and it so it became almost I know brainer to say there is no reason in the world We shouldn't commit to 25 percent of our managers being managers of color or women by 2025 And if we can get there faster or increase that number we will How do we get more foundations rip to get on the bandwagon on this issue? It's a good question One is I think some of our Larger foundations need to use their voice and some of them are mean Darren Walker at Ford is a tireless Advocate for this kind of work He's got a difficult governance structure that makes it hard for him to move on some of this stuff But Darren is out there all the time Lujan, Lujan Montgomery Tebron at the Kellogg Foundation is way out on this But I I would argue that it can't just be our leaders of color. I mean people like me have got to start Talking about these issues and more than talking about I'm gonna start doing something about these issues because I actually think it's it's just again, it's almost Insulting to think that somehow 99% of all assets under management have to be Through firms that are white and male led. I mean in a 21st century world that doesn't make any sense And so it just seems to me that we just have to raise the issue I think I think you can see it be being raised by Abfi and Susan's work But I think I think we're slowly slowly creating a critical mass, but we also need a bunch of proof points We need to be able to show at Kresge and at Ford and at Kellogg and in any case in a lot of other places That the returns are every bit as good and they may even be better than in our previous practice That time went really really fast rip. We were laughing about the time. So in closing I just want to share that We are actually I mentioned the diverse asset manager pledge and Kresge was the first private foundation to join on We're about to roll this out into the foundation sector and the pledge Has five key points and I'm just in in closing want to summarize One we're asking foundations to make an organizational commitment to inclusive management practices Investment management practices to to engage your board investment committee staff and consultants in Conversations regarding your commitment to diversity and inclusion three require Transparency and accountability from your foundation's investments consultants the regular reporting or on management diversity and inclusive practices for actively engaged diverse asset managers as potential partners and advisors through conferences informal gatherings and the like and Then fifth to share your story publicly and specifically with AFI with your peers as well as investment Professionals folks help me thank rip and the leadership of the Kresge Foundation on this