How Investors Can Turn the Heat on the DEI Chilling Effect

The United States has the highest maternal mortality rate of high-income countries, and this rate is increasing. Meanwhile, pregnancy-related mortality rates among Black and Native women are over three and two times higher, respectively, compared to the rate for White women. These death rates and racial disparities only widened during the COVID-19 pandemic. Yet we also know that 84% of pregnancy-related deaths are preventable.

Maternal mortality is just one example of how crucial it is for values-aligned investors to target racial equity to address some of the gravest social issues affecting our communities. We see this every day at Rhia Ventures, which works to tap into a multibillion-dollar venture capital market to change the flawed systems that perpetuate unjust outcomes for women of color, low-income women, and others directly affected by systemic inequities.

Advancing reproductive and maternal health equity by leveraging capital to center the needs, experiences, and perspectives of historically marginalized people in decision-making could have a transformative outcome for families – many for whom health equity is a question of life and death. Meanwhile, racial equity and DEI have come under political and legal attack in the U.S. Recent examples include  the Supreme Court ruling against affirmative action in college admissions and a federal appeals court panel ruling against a grant for Black female business owners run by the Fearless Fund.

Now is the time for organizations committed to racial equity to intentionally continue engaging in their work. One way to do so is to tap into the capital invested by philanthropic institutions through their endowments. A recent study by Bridgespan Social Impact, in collaboration with Capricorn Investment Group and the Skoll Foundation, found that just 5% of the investable assets held by 65 surveyed foundations are being allocated to investments for social or environmental impact. Worse yet – how some of these funds are invested could even exacerbate problems like inequality, working against the very mission of these foundations.

Philanthropic assets possess the stability and long-term focus necessary to drive meaningful change. Steps forward can include:

• Including racial equity as part of the investment policy statement: Philanthropies can affirm their commitment by prioritizing strategies that  advance racial equity and DEI. This could include hiring more diverse asset managers, funding BIPOC-led businesses, and supporting initiatives that promote systemic change.

• Soliciting buy-in from all parts of the organization in racial equity investing: For mission-aligned investing to be successful, there must be buy-in from across the organization, including trustees and staff. Foundations should also work with advisors and asset managers who are well-suited to helping them achieve their racial equity investing objectives.

• Building partnerships with community organizations, nonprofits, and other stakeholders: Working in collaboration with civil society and local representatives can provide valuable insights and enhance the effectiveness of investments that seek to improve racial equity.

The pursuit of racial equity and DEI requires sustained effort and commitment. Impact investors have a pivotal role to play in this journey, and by building a critical mass toward racial equity investing, they can put the heat on the chilling effect of the backlash against DEI.