By Marianne Lu
The Rev. Al Sharpton, a longtime civil rights activist, called on Stanford to release a report on the diversity of its endowment managers in a letter to University President Marc Tessier-Lavigne on April 29.
Sharpton asked that Stanford disclose whether any senior African American professionals are involved in managing the school’s endowment — valued at $27.7 billion in August 2019 — whether internally or externally. The request, according to Sharpton, comes after several studies have highlighted the under-utilization by asset allocators of very high performing women and people of color.
“The question is simple,” Sharpton wrote. “If you aren’t working with the best, fail to track or report with whom you are working with, how do you know that you are in fact maximizing performance?”
Stanford spokesperson E.J. Miranda told The Daily that Stanford is committed to diversity and agrees with Sharpton that its success depends on embracing and advancing diversity in classrooms, academic programs and business units.
“Stanford Management Company works with a wide range of diverse partners that drive superior investment results and align with Stanford’s interests and goals,” he wrote. “We are continually working to promote diversity and inclusion to have a broader range of voices in our planning and management decisions.”
Miranda did not comment on the diversity of Stanford’s endowment management.
Sharpton is the president of the National Action Network, a nonprofit civil rights organization he founded in 1991. Sharpton has sent similar letters to universities including Harvard, Princeton and the University of Michigan. The letters are a part of a broader campaign to bring greater attention to the issue of diversity among managers of elite university endowments.
“There’s no way that in the 21st century you can sit around and not have a fair and inclusive policy of diversity in who manages your money,” Sharpton said in an interview with The Daily Princetonian.
In his letter to Stanford, Sharpton cited the University of California report detailing efforts to promote diverse hiring practices among its endowment managers as a testament to the school’s “commitment to diversity,” and he called on Stanford to follow in their footsteps. Among other findings, the California report indicated that people of color comprise 60% of the university’s internal investment team, while at least 59% of its partner firms are owned in majority by white men.
Sharpton pointed to Stanford’s endowment, one of the largest in the country, writing, “now is the time to show how Stanford University is achieving its fiduciary duty and living out its ideals of both performance and equality.”
Stanford’s endowment is managed by Stanford Management Company (SMC), which was established in 1991 as an office within the University. Its website states that SMC’s goals are “to provide material support for current University operations, including student financial aid, and to preserve the purchasing power of the Endowment so that future generations of students and scholars are similarly supported.”
Information about Stanford’s asset allocation, performance and medium-term priorities are released in SMC’s annual investment reports, but the company does not disclose individual investments or demographic information about endowment managers.
In a 2018 Q&A with Stanford News, SMC CEO Rob Wallace said the holdings of the Stanford endowment are not publicly available because “doing so would erode our ability to add value through active management.” Wallace said SMC’s investment partners are sensitive to the amount of capital they can accept, and competition from other investors following SMC into investments would damage results.
He also said that “ethical and social factors” play a very important role in SMC’s economic analysis.
“Not only is it the right thing to do, but as a long-term investor, Stanford must be concerned with ethical issues,” Wallace said.