Rep. Cleaver, Senator Booker Reintroduce Legislation to Bring Transparency to College and University Endowments, Ensure Equal Opportunity for Diverse Asset Managers

(Washington, D.C.) – Today, U.S. Representative Emanuel Cleaver, II (D-MO) and Senator Cory Booker (D-NJ) reintroduced the Endowment Transparency Act to bring transparency and accountability to college and university endowment funds across the country. With college and university endowment assets collectively totaling more than $807 billion, the Endowment Transparency Act would require higher education institutions to report how much of their endowment fund is managed by diverse-owned firms, helping to shine light on endowment managers and whether institutions are providing equal opportunity to diverse-owned firms.

“Right now, diverse-owned asset management firms oversee only 1.4% of the $82 trillion asset management industry – which is as offensive as it is embarrassing for our nation,” said Congressman Cleaver. “Congress must take steps to ensure this enormously influential industry is providing equal opportunity to the countless qualified, high-performing firms headed by women and minority managers that have been historically shut out, and I believe the Endowment Transparency Act is a perfectly logical place to start. I’m thankful that Senator Booker has partnered with me in this critically important effort, as we seek to not only ensure colleges and universities are upholding their commitments to diversity and inclusion in all aspects of their institutions, but also to strengthen diversity within the asset management industry as a whole.”

"Creating opportunities for women and people of color in the financial sector is critical to address the stark racial divide in the industry. Institutional investors like colleges and universities, who are stewards of taxpayer dollars, play a key role in the solution,” said Senator Booker. “The Endowment Transparency Act will require publicly subsidized higher education institutions to report and share their data to address potential biases in the selection of asset managers overseeing their massive endowments, offering greater economic opportunity and success for all.”

"Thank you to Senator Booker and Congressman Cleaver for their leadership in drawing attention to the underutilization of talented women and people of color in the management of universities’ endowments.   It remains incredible to the Diverse Asset Managers Initiative that it requires federal legislation to get universities to say whether and how they work with women and Black, Latino or Asian Americans, but sadly that is where we are,” said Robert Raben, Executive Director, Diverse Asset Managers Initiative.

“NASP applauds the leadership of Congressman Cleaver in reintroducing the Endowment Transparency Act. Given the positive financial performance of several of the endowments of these major Colleges and Universities, there is no better time than now to see the contributions that diverse financial services are providing and what future opportunities they can continue to provide for sustained growth,” said Ronald C. Parker, President and CEO, National Association of Securities Professionals.

“For our country to maximize innovation and progress, economic opportunity must be accessible to all communities,” said Patrick Armstrong, Director of Tech Policy at the Kapor Center. “Women and people of color manage only a small fraction of funds in the asset management industry (1.4% of $82 trillion, according to the Knight Foundation report) – and this has direct consequences for where we see investment. When more diverse people direct the flow of capital, our research shows more diverse companies get backed. Thanks to the leadership of Sen. Booker and Rep. Cleaver, the Endowment Transparency Act will foster greater accountability for endowments and lay essential groundwork for a more equitable and high-performing U.S. economy. Newer data demonstrates that stronger financial returns come from funds working to solve big problems and close gaps of access for low-income communities, and these are challenges that diverse entrepreneurs are often motivated to fix.”

In 2020, Reps. Cleaver and Joseph P. Kennedy, III surveyed the 25 colleges and universities with the largest endowments about their utilization of diverse-owned asset management firms. Every institution, except for the University of Notre Dame, provided at least some level of information on the data and practices used to ensure diversity and inclusion for the asset managers overseeing their endowment funds. While some institutions, such as the University of California, tracked and disclosed investments with women- and minority-owned firms, others did not appear to have ever adopted policies or practices to address potential biases in the selection of asset managers. Following the inquiry, Cleaver and Kennedy released a report revealing their findings and ten recommendations that colleges and universities should adopt nationwide.

In a similar inquiry of endowments done by the Knight Foundation last year, only 16 of the 50 colleges and universities surveyed elected to disclose the percent of endowment assets managed by diverse-owned firms.

Considering college and university endowments are subsidized by the federal government via tax exemptions in accordance with the Internal Revenue Code section 501(c)3, as well as with the federal government’s interest in remedying the legacy of exclusion in the financial services industry, Rep. Cleaver and Senator Booker have reintroduced the Endowment Transparency Act to ensure institutions are providing data to policymakers. The legislation would provide public transparency and accountability for diversity and inclusion in the management of more than $807 billion in assets from higher education endowments by:

• Amending the Higher Education Act of 1965 to require information about investments with women- and minority-owned firms to be included in other data annually collected from colleges and universities;
• Requiring the Minority Business Development Agency to publish a report, to be updated every two years, recommending legislative changes and best practices for substantially increasing the use of women- and minority-owned firms in higher education investment and bond transactions; and
• Authorizing a conference, every two years, which shall convene institutions of higher education and investment advisors, firms, and consultants to develop professional networks and increase the visibility of business opportunities.

The Endowment Transparency Act is endorsed by the Diverse Asset Managers Initiative, National Association of Securities Professionals, National Urban League, Kapor Center, New America Alliance, U.S. Black Chambers, Inc., and Garcia Hamilton Associates, the largest Hispanic-owned firm in the country.

Official text of the Endowment Transparency Act is available here.

A fact sheet on the Endowment Transparency Act is available here.

Emanuel Cleaver, II is the U.S. Representative for Missouri's Fifth Congressional District, which includes Kansas City, Independence, Lee's Summit, Raytown, Grandview, Sugar Creek, Greenwood, Blue Springs, North Kansas City, Gladstone, and Claycomo. He is a member of the exclusive House Financial Services Committee and Ranking Member of the House Subcommittee on Housing and Insurance.