If philanthropists overlook diversity, it makes 'the wealth gap larger and larger': Ariel Investments co-CEO
As a wave of racial justice protests swept across the country this summer in the aftermath of the police killing of George Floyd, wealthy individuals and major corporations from Wall Street to Silicon Valley gave hundreds of millions to racial justice causes.
Top philanthropies also stepped forward with generous donations, even as many of them struggled to accomplish diversity among their own staff.
In a new interview, Ariel Investments co-CEO John Rogers — who leads the nation’s oldest minority-run mutual fund firm — applauded donations in the name of racial justice but said the lack of diversity within philanthropic foundations worsens the racial wealth gap that many of their initiatives aim to address.
“Philanthropy is commendable,” says Rogers, who is Black. “It doesn't mean wealthy families can continue in their daily lives and only hire people who look like them and do business with people who look like them.”
“It’s commendable to make donations but the next day go out and only higher white-owned money managers, law firms, accounting firms, wealth management firms, whatever it is,” he adds. “You’re making the wealth gap larger and larger. I just think that’s a huge issue.”
“I always say look at a family office: who do they employ and who do they spend money with?” he says. “That tells you whether they’re committed to our community or not.”
A survey conducted by the nonprofit Council on Foundations in 2016 found that 10% of staff within the philanthropic sector are Black, 7% are Latino, and 6% are Asian American. Minorities made up 10% of CEOs in the sector, the study found.
The lack of diversity extends to banks like JPMorgan Chase (JPM) and tech giants like Facebook (FB) — both are companies that garnered headlines this year for donations to racial justice efforts.
Noting the limits of philanthropy, Rogers cited a quotation from Dr. Martin Luther King: “Philanthropy is commendable but it must not cause the philanthropist to overlook the circumstances of economic injustice which make philanthropy necessary.”
Even before COVID-19 disproportionately impacted Black and brown communities and workers, the racial wealth gap touched many aspects of minority Americans’ financial lives, from wages to home ownership. The disparity has likely widened amid the coronavirus outbreak as a stock market rally has disproportionately benefited wealthy and White Americans.
Rogers, who served as chair of the Council on Financial Capability under the Obama administration, suggested that the wealth gap could be addressed in part if more Black Americans invested in the stock market. He stressed the importance of improving access to pension plans among workers and providing financial literacy courses for children.
“Our parents, grandparents didn’t have the opportunity to build wealth here in this capitalist democracy,” he says. “Because of discrimination, Jim Crow, segregation — it creates a profoundly negative impact.”
“Once we start to teach kids about markets, they start to teach their parents about the markets, and it becomes a beautiful thing,” he says.
Correction: An earlier version of this story incorrectly described Ariel Investments as the largest minority-owned mutual fund. The error has been corrected.
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