Someone forwarded me an invitation to the Foundation and Endowment Minority and Women-Owned Fund Roundup to take place at the end of January in Los Angeles. Sponsored by the California Endowment, the Annie E. Casey Foundation, and the William T. Grant Foundation, among others, this conference is a way to encourage foundation and endowment leaders to meet "minority" investors. According to the invitation:
"This inaugural event is the beginning of educational programming designed to bring together senior members of endowments, private and community foundations to explore the current investment landscape and growing importance of minority- and women-owned managers as part of their investment strategy. Join us for a candid discourse on the merits and best practices of investing with the nation's most experienced minority- and women-owned asset managers -- and meet a select group of the nation's top diverse managers actively investing in hedge, private equity, real estate, public equity and fixed income."This is not the first time I have heard about such efforts. A few years back I believe the leadership of the Greenlining Institute invited the heads of several foundations to their offices to discuss some similar proposal for getting them to invest with a more diverse set of money managers. But I have to say I am just as puzzled as I was before. Money managers are judged by how much money they make. This may seem shallow or materialistic but I doubt you will find much disagreement on this point. If black money managers or female money managers want to get the business of a large endowment or anyone else, they'll have to be making a good return on investment for their clients. If they do, they'll get noticed.
But let's say that money management is an inexact science (something about monkeys throwing darts, right?) and there is some old white boys' network of money managers out there and you have to know someone in order to get business like that of the California Endowment. The question is this: what is the social good that comes out of giving your business to a black or hispanic money manager? These are already very wealthy folks. This is like giving the black kid who graduates from Exeter preferential admission to Harvard. It's not that there aren't a disproportionate number of minorities who are disadvantaged, but this is not the target population. There are minorities who are born on third base too. And even if they weren't born there, by the time they're asking for someone to invest hundreds of millions of dollars with them, they have pretty much made it. Do we assume that they will make better use of their riches than white people?
When liberal activists like those at the Greenlining Institute demand that philanthropists give more of their money away to minority-run nonprofits, they suggest that such nonprofits are serving a niche that white-run nonprofits are not. That the minorities are bringing a different perspective to the table. That they are better able to serve minority communities. This is not an argument I put much stock in, but at least it's conceivable. What sort of different perspective does a black money manager bring to the table that a white money manager does not? At the end of the day, they're both supposed to make their clients more money.