The disproportionate harms to Black Americans wrought by COVID and those wrought by police brutality are symptoms of the same disease: racism hardwired into our political, economic, social and cultural systems.
What Black and Latinx communities are experiencing is the culmination of four centuries of laws, policies, practices and attitudes engineered to benefit white people exclusively. The violence inherent in our justice system is inextricable from the violence inherent in our health care and economic systems. At the Babcock Foundation, we believe this moment compels us to embark on a deeper examination of how we can better use all our tools, particularly our grantmaking and our endowment, to advance racial equity.
At the foundation’s first-ever online board meeting last month, our directors committed to significantly increasing our grant payouts for at least the next three years. Our board also approved an additional $3 million for organizations supporting rural and low-wealth communities, and advancing COVID relief and power building strategies in communities of color. In a typical year, the foundation makes about $8-$9 million in grants. This year, we expect to pay out close to $30 million.
While significant for us, this figure is a drop in two buckets. One bucket is the scope of what’s needed to dismantle the systems that created today’s interwoven crises. The other, much smaller bucket, is the size of the Babcock Foundation’s endowment. Over the last few years, the foundation has been taking a much more active role in how our assets are invested, rather than having advisors invest them with only fiduciary duty in mind. We transitioned to new advisors and consultants, implemented environmental, social and governance guidelines, and signed the Divest-Invest pledge. The foundation got out of hedge funds for lack of transparency and added a private equity asset allocation, which is where we believe our market-rate investments can have the greatest impact.
More recently, we examined how much of our portfolio was managed by women and people of color, then dug deeper to discover a woefully small number of Black and Latinx managers. We diversified our investment committee, updated our investment policy and began seeking to invest in Black and Latinx leadership and companies with strong track records of hiring and promoting people of color. We are always looking for ways to disrupt the friends-and-family nature of wealth management that shuts emerging managers out and keeps the industry overwhelmingly white and male.
“Our racial equity work is deepening our commitment to making our market-rate investments work better for the people and issues we care about,” said Babcock Foundation’s Jennifer Barksdale. “It is not only the right thing to do; we believe it is consistent with our fiduciary responsibility. Our fully values-aligned market-rate portfolio has met or exceeded its performance benchmark each year since 2017, the first full year our portfolio was 100 percent ESG aligned. We expect our focus on more diverse firms to enhance the generation of competitive market returns.”
The foundation committed $5 million to private equity impact funds owned and managed by Black and Latinx people, including the Impact America Fund and Illumen Capital. We are working with the impact investing firm Candide Group to invest in funds that prioritize organizations run by Black and Latinx leaders. Our investment committee approved a set of goals, among them: ensuring our investments do not harm communities of color, and providing access to capital and wealth-building for people of color. The committee also committed to advancing investment management firms that build wealth for owners of color, have portfolio managers of color and/or have policies and practices that hire, develop and promote investment professionals of color.
“We’re proud to work with the Babcock Foundation, who have committed to putting their money where their values are,” said Candide’s Morgan Simon. “Foundations are finding that impact investing is a critical way to comprehensively support Black and Brown communities — not just through philanthropy, but throughout their entire portfolio.”
For the Babcock Foundation, this is just the beginning of our evolution, and we hope to learn from other organizations growing in similar ways. Much of our endowment came from tobacco, an industry that relied on exploitation of Black labor. We are mission-bound to do everything we can to right the inequities that produced the wealth we now steward. As a relatively small foundation, we are under no illusion we can reverse the reverberating harms caused by centuries of disinvestment, extraction and oppression. But we can start in our own house, ask hard questions, target our investments in more productive ways, and participate in a money movement worthy of this moral moment.
Susanna Hegner is the communications director at the Mary Reynolds Babcock Foundation.