Wednesday, July 31, 2019

The Responsible Business Summit West: October 9-10, 2019

The Responsible Business Summit West will challenge 250+ CEOs, sustainability leaders, Investors, Government representatives and NGOs to show how they’re going to leverage new technologies and investments to deliver the blueprint for the future economy – over two days you will learn how to move from dialogue to action on the key opportunities that lie ahead. Grasping the chance presented whilst simultaneously responding to investor demand to be more transparent on ESG related risks is no straightforward task. Keynote speakers include:

o    Assistant Secretary-General, UN Environment
o   President & CEO, Oxfam America
o   President & General Counsel, DSM North America
o   President, CDP North America
o   President & CEO, Fairtrade USA
o   Executive Vice President and Group President, Sempra Energy
o   Chief Environment Officer, Microsoft
o   Chief Sustainability Officer, Hewlett Packard Enterprise
o   Chief Sustainability Officer, FedEx
o   Chief Sustainability Officer, MetLife
o   Chief Sustainability Officer, Mastercard
o   Chief Operating Officer, Partnership on AI
o   State Controller, State of California

Location: San Diego [Hilton Mission Valley is the hotel – full address: 901 Camino del Rio S, San Diego, CA 92108, USA]
Dates: October 9-10
Contact: Ed Long
Contact email:
Contact phone: +44 207 375 7188
Contact address: 7-9 Fashion Street, London E1 6PX

Sunday, July 28, 2019

Second IRS Hearing on Qualified Opportunity Funds. Tisa Forrest, Johns Hopkins University, Impact Investing Analyst

On July 9, the IRS held the second hearing on Qualified Opportunity Funds following the second tranche of proposed guidance on Opportunity Zones issued on April 17. The first hearing in February followed the initial regulation issued on October 19. The panelists of Internal Revenue Service and Department of the Treasury employees asked speakers to discuss problems and examples of possible solutions that can help them clarify the regulation.

The panel emphasized that they are governed by the language within Opportunity Zone legislation. They are not legislatures themselves. They stressed that their job is to work within the guidelines of the laws congress passes.  The 19 speakers each discussed what they thought would help improve the legislation.

The initial hearing covered an array of issues and clarifications for the Treasury Department to address. During this second hearing, speakers had a narrower list of issues to address, largely technical and tax related.  This is expected to be the last hearing on Opportunity Zones. Final regulations are expected to be issued later this year.

The following speakers touched on social issues not clarified by the second tranche of guidance.
William Michael Cunningham (Creative Investment Research) expressed concern that the program will divert economic resources and needed tax revenue from black and brown communities. He suggested that legislators who had a part in selecting the Opportunities Zones (OZ) be specifically prohibited from benefiting financially from the OZ program.  He suggested using Ethereum blockchain to report on OZ social impact. Also, he suggests that the tax credit be calibrated to the social impact of the business.

Mary Scott Hardwick (Opportunity Finance Network) was excited about the potential additional capital flows into disinvested communities but expressed reservations that the proper regulations have not been written to do so. She expressed support from Opportunity Finance Network for the Beech Centers OZ framework. In addition to anti-abuse provisions, there needs to be clarification on vacant land improvement.  Hardwick requests a ban on sin business that extends to subsidiaries and clarification on the reasonable cause that allows a fund to fail the 90% asset test. She also expressed support for the EIG Coalition’s recommendation for improving regulations for operating businesses.

Fran Seegull (U.S. Impact Investing Alliance) underscored the importance of data collection and publicly reporting transaction data on Qualified Opportunity Funds in a way other than through a tax form but likely a web portal for real time collection. She recommended that treasury provide greater clarity on abuse prevention. The IRS commissioner should maintain authority to recharacterize abusive investments.  Seegull asked that clear abuse actions be defined such as land banking.
Most speakers express optimism for the program. Some have hopes that the tax incentives for investors will reduce poverty, increase employment and spur growth in historically underdeveloped communities. Others criticized the program finding it unlikely work as optimist hope. Instead, it will lead to gentrification and the displacement of current residents. 

Monday, July 22, 2019

Libra Hearings on Capitol Hill. Tisa Forrest, Johns Hopkins University, Impact Investing Analyst

On June 18, Facebook released it’s white paper on the new digital currency, Libra.  The news led David Marcus, Chief Executive Officer of Calibra, to appear before the House Financial Services committee on July 17 - a day after appearing before the Senate Banking Committee.

House Financial Services Committee members questioned whether Facebook would have overwhelming control over  the Libra Association’s 27 other members and if they were to be trusted with 2.7 billion users’ financial data, given past privacy violations. 

Facebook’s trustworthiness has been in question since the 2016 Cambridge Analytica data scandal.  Most recently, charges brought in March by the Department of Housing and Development concerning Facebook's alleged violations the Fair Housing Act have not helped the firm gain favor with the public.

Last month, Facebook was removed from the S&P ESG 500 index because of privacy concerns and a lack of transparency as to why certain user information is collected and shared.  These issues earned the company a 22 and 6 in social and governance sub scores, respectively, against an 82 environmental sub score - this last score being easy for a technology company to achieve. 

Marcus pointed out that the social media platform is just one of 28 current Libra Association members - they hope to grow to 100 members - and lists Mercy Corp and Women’s World Banking as groups capable of combating any use of the digital currency for human rights violations.

Michigan representative Rashida Tlaib pointed out that Marc Andreesen, co-founder of Andreesen Horowitz, sits on the board of Facebook; Mark Zuckerburg, CEO of Facebook, sits on the board of Breakthrough Initiatives; Peter Thiel, co-founder of PayPal, sits on the board of Facebook; Ben Horotwitz, co-founder of Andressen Horowtiz, sits on the board of Lyft; David Marcus, the witness, sits on the board of Coinbase. All are founding members of the Libra Association.

These close  relationships do nothing to soothe fears that a nexus of power exists within the Facebook network, controlled by a few individuals. Of course, this also does little to address the problem of diversity in the tech industry. 

As pointed out at an earlier Diversity and Inclusion subcommittee hearing (subcommittee of the Financial Services Committee), a lack of diversity tends to occur when non minorities in positions of power look to fill leadership rolls with those they already know. People tend to associate with those who look like themselves. Predominately white and male organizations inviting other predominantly white and male organizations to have a seat at the table does nothing to bring diverse thoughts and perspectives into new innovations.

As stated in the Libra white paper and subsequent press release, a social driver for Libra has been that it will provide easier access to those who have historically been excluded from using financial institutions.  Marcus cited the example of a young woman sending money from the US  to her loved ones in another country without the wait and fees that might apply to other methods of money transfer. Harping on the 1.7 billion unbanked and underbanked individuals in the world, he returned to the social service that Calibra might bring to a broken system.

Ohio’s Joyce Beatty (pictured with the author at left) pointed out that it “wasn't very unique” to mention 1.7 billion globally who lack access to a bank account without details on how those unbanked would have access to Libra. Many of Marcus’ responses to the lack of clarity that still exists left the burden of clarifying exactly how on this would work on regulators.

Pressley asked how Libra would serve the unbanked, who lacked a bank account to purchase Libra digitally,
 but admitted that “the reason we are here is because the Federal Reserve has failed” to provide a safe and secure system to access and move money.

Facebook’s altruistic intentions aside, the question of how they planned to benefit from Libra was posed. Marcus described two ways Facebook will make money from the new digital currency:
  1. Libra will aid 90 million businesses in transacting with one another. More consumers on the platform will drive small businesses to expand, and as they expand, they will purchase more advertisements with Facebook.
  2. As trust in Libra is earned, services will be offered in partnership with banks at lower cost that will add revenue.
“What would it mean for the world if everyone everywhere could be part of the global economy with access to the same financial opportunities?” Mercy Corps website expressed an optimistic vision of the private, public and social sectors working together to solve the existing problems of inequality.  Many other questions  were left  unanwered after the exhaustive hearings, with more hearings to come.  Questions concerning currency manipulation and social engineering still need to be addressed.

For now, the social benefits of Libra are difficult to verify. Time will tell if Libra leads to a more equitable financial system.

Monday, July 15, 2019

Financial Services Subcommittee Hearing on “Building a Sustainable and Competitive Economy: An Examination of Proposals to Improve Environmental, Social, and Governance Disclosures.”

Last week the House Financial Services Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets held a hearing on “Building a Sustainable and Competitive Economy: An Examination of Proposals to Improve Environmental, Social, and Governance Disclosures.”

Several pieces of legislation, or bills, have been proposed, (but not filed yet) in the US House of Representatives regarding Environmental, Social and Governance (ESG) reporting by large corporations.

HR ___: ESG Disclosure Simplification Act of 2019 (Rep. Vargas)
HR ___: Shareholder Protection Act of 2019
HR ___: Corporate Human Rights Risk Assessment, Prevention, and Mitigation Act of 2019
HR ___: To require issuers required to file an annual or quarterly report under the Securities Exchange Act of 1934 to disclose the total amount of corporate tax such issuer paid in the period covered by the report, and for other purposes
HR ___: Climate Risk Disclosure Act of 2019 (Rep. Casten)

The US Securities and Exchange Commission (SEC) has broad rule-making authority to require the disclosure of specific information that it determines to be in the public interest or for the protection of investors. Investors overwhelmingly support greater ESG disclosures to evaluate reputational risks as well as financial performance. Over 2,300 institutional investors worldwide, representing over $80 trillion in assets, are signatories to the UN-sponsored Principles for Responsible Investment which formally commits them to incorporate ESG factors into their investment decisions.

Investors need ESG information to hold managers accountable, enhance the accuracy of stock prices, and ensure a more efficient allocation of capital.

Some of the testimony at the hearing included the following:

Subcommittee Chair Rep. Maloney:
ESG disclosures include environmental issues (climate change), social issues (human rights), and governance issues (political spending by public companies).
Considerable evidence shows that companies with better ESG also perform better financially.
Many companies disclose some ESG info which lacks detail and a standardized format.
Rep. Maloney called for SEC to establish standards for ESG Disclosure to apply to all public companies.
Rep. Juan Vargas:
“Investors increasingly view ESG Disclosures as crucial tools and material information for evaluating a company's financial performance. Research has shown that companies that account for ESG factors tend to perform better with more stable returns.”

From an outline written by Willem Sheetz, Impact Investing Analyst, University of Wisconsin (Madison).

Sunday, July 14, 2019

Semiannual Monetary Policy Report Hearing

Last week, Chairman of the Federal Reserve, Jerome H. Powell appeared before the House of Representatives Committee on Financial Services to present the Semiannual Monetary Policy Report. Chairman Powell opened his remarks by stating that “the economy performed reasonably well over the first half of 2019 and the current expansion is now in its 11th year.” Inflation has run below the FOMC 2% objective, trade tensions and concerns about global growth have weighed on economic activity."

The Current Economic Situation

Labor Market: job gains remain healthy, with the unemployment rate falling to 3.7% in June. Employers are increasingly willing to hire and train workers with fewer skills.  Unemployment for African Americans and Hispanics remain well above the rates of whites and Asians. Urban employment rates are higher than those in rural communities. Labour force participation by those in their prime working years is lower in the US than in comparable nations.

GDP: GDP increased to last year’s pace at a rate of 3.1% in the first quarter of 2019, largely due to net exports and inventories. Growth in consumer spending was weak, but recovered and is now at a solid pace. Growth in business investment has slowed, possibly reflecting trade tensions and slower global economic growth. Housing investment and manufacturing output declined in the first and second quarter.

Inflation: Inflation has run below the FOMC 2% objective. Overall consumer price inflation declined to 1.5% in May. PCE inflation (excludes food and energy prices) decreased to 1.6% in May


Powell stated that the Federal Reserve’s outlook “is for economic growth to remain solid, labour markets to stay strong, and inflation to move back up over time to the Committee’s 2 per cent objective.”

Uncertainties in recent months, relate to slowing economic momentum in foreign economies, unresolved government policy issues (trade development, federal debt ceiling, and Brexit), and the risk that weak inflation poses, will be monitored and may affect the Federal Reserve’s outlook.
As mentioned above, labour force participation by those in their prime working years and the rural-urban labour market disparity are concerns. Powell noted that the lack of upward mobility for lower-income families as an issue. He stated that finding ways to boost productivity growth should be a national priority, since this leads to rising wages and, ultimately, a higher living standard.

Monetary Policy

The Federal Open Market Committee (FOMC) target range for the federal funds rate was 2.25-2.5 per cent during the first half of the year. Powell remarked that the Committee has decided to enact a strategy of patience to determine future adjustments.

At May’s meeting, progress made in trade negotiations with China were encouraging factors leading to the Committee not adjusting their policy rate. In the time since, trade tensions have reemerged, creating uncertainty. Slowing global economic growth indicators raise added concerns that trade weakness will continue to affect the US economy and possibly help spark further declines in business confidence.

Powel reiterated the Committee's June meeting statement: increased uncertainties concerning the economic outlook.


The Federal Reserve began purchasing securities in 2007 when the financial crisis began.  Since then, total system assets increased from $870 billion in August 2007 to $4.5 trillion by January 2015.  In October 2017 the FOMC balance sheet normalization program began and has since lead to a decrease in total assets to $3.8 trillion in July 2019. 

Beginning in May 2019, the Committee’s intentions were to reduce holdings of Treasury securities by reducing the cap on monthly redemptions from $30 billion to $15 billion, ending in September 2019. Beginning in October 2019, up to $20 billion per month in Mortgage Backed Security principal payments will be reinvested in Treasury securities. Limited MBS sales might also be an option in the long run to reduce holdings.


After Powell’s hearing, Chicago Federal Reserve Bank President, Charles Evans indicated that the Fed should cut rates by half a per cent before the end of the year in an effort to increase stubbornly low inflation rates. 

Both Republican and Democratic committee members seemed pleased with the Chairman’s monetary policies.  He received praise from both sides on keeping the agency independent amid pressure from the White House.

Research provided by Tisa Forrest, Johns Hopkins University, Impact Investing Analyst

Thursday, July 11, 2019

Why the Fed is wrong about Libra

The Federal Reserve Act (FRA) requires the Chairman of the Federal Reserve System to testify before the House Financial Services Committee and the Senate Banking Committee twice a year, in February and July, on how the Board handles monetary policy and its observations on economic developments.

In keeping with that requirement, the current Chairman of the Federal Reserve, Jerome Powell, testified before the House on July 10th. He indicated as follows:

  • Economic activity increased at a solid pace in the first part of 2019. The labor market has continued to strengthen: unemployment fell from 3.9% (Dec) to 3.6% (May), wage gains remained moderate. 
  • Inflation has been running below the Federal Open Market Committee’s (FOMC) longer- run objective of 2 percent. 
  • In June, the FOMC judged that current and prospective economic conditions called for maintaining the target range for the federal funds rate at 2 1⁄4 to 2 1⁄2 percent. 
  • Inflation: Consumer Price Index = 1.5 (May).
  • Economic Growth: 1st qtr Gross Domestic Product, the total of all goods and services produced over the quarter, increased at an annual rate of 3.2%.
  • Financial Conditions: Treasury yields down, loans remain widely available to most homes. 
  • Financial Stability: Borrowing by businesses outpaces GDP, risks in the financial system remain low relative to pre-financial crisis, banks hold large quantities of assets. 

Chairman Powell discussed Libra, Facebook's proposed digital currency and feels the currency poses special challenges to the Fed’s dual mandate of low inflation and maximum employment. We think the Fed is attempting to diminish Libra in particular and crypto markets in general by tying their objections to the Fed's social mission (maximum employment) and placing Libra in the category of having negative social return. We know this is likely false.

House Financial Services Committee Chairwoman Maxine Waters maintained that the bank regulatory system lacks the capacity to control Libra (she is correct), and reiterated her call for a moratorium on Libra's development (she is incorrect - see:  Regulating Libra’s a waste of time. House Financial Services Committee Ranking Member McHenry used the hearing to, once again, state that Libra poses a risk to financial stability,

While Chairman Powell: indicated he thought Libra posed risks due to the possibility of broad adoption and of money laundering, he stated that Facebook's proposed currency offers financial inclusion benefits.

Mr. Powell also indicated that the Fed's control over money supply and demand allows it (the Fed)  to appropriately respond to major economic disturbances. This is not what happened in the years leading up to the last financial crisis, and is not likely to be true now, in the months leading up to the next crisis.

The Chairman is correct in saying that if a cryptocurrency becomes widely used and viable, this would adversely affect the Fed's conduct of monetary policy. As another form of currency becomes used widely for payments, a central bank loses its absolute monopoly on controlling inflation and inflation targeting through manipulating cash in the system. There are, however, other ways to control monetary aggregates and inflation. Thus, there are other tactics the Fed could use to maintain control over monetary policy. (We discuss these in our paper, Monetary Policy under Cryptocurrency.)

(Research provided by Willem Sheetz, Impact Investing Analyst, University of Wisconsin (Madison))

Tuesday, July 9, 2019

Senate Budget Committee briefing on “The Reasons Opportunity Zones Won’t Work". Willem Sheetz, Impact Investing Analyst, University of Wisconsin (Madison)

The 2017 Tax Cuts and Jobs Act (TCJA) provided new tax incentives for investments made through qualified Opportunity Funds in targeted communities around the United States. These tax advantaged investment areas, known as Opportunity Zones (OZs), were authorized to promote economic development in 8700 disadvantaged communities, selected by state governors and certified by the United States Treasury Department. The rationale behind OZs is simple: giving tax breaks to investors will spur economic growth in impoverished communities. However, it is important to consider the context in which this program was created. The TCJA was passed by a Republican House, Senate, and President. OZs are not a new idea and they have been tried and tested by conservatives for decades, as in Margaret Thatcher’s “enterprise zones.” Versions of OZs were then adopted in the United States at the state level, ultimately culminating in the 2017 TCJA. However, as uplifting as the OZ program seems on its face, it is just another tax break for the wealthiest Americans that has caused real estate prices in disadvantaged communities to skyrocket and has left our most vulnerable citizens worse off.

On June 18, 2019, the Senate Budget Committee hosted a briefing by the Financial Services Innovation Coalition (FSIC) on “The Reasons Opportunity Zones Won’t Work and What to do About Them.” Sen. Sanders (I-VT), Ranking Member of the Senate Budget Committee, was the sponsor of the event.

Kevin Kimble, Founder and Board Chair at the Financial Services Innovation Coalition, moderated the event. Panelists included Dr. Charles Steele Jr. (President of the Southern Christian Leadership Coalition), William Michael Cunningham (CEO of Creative Investment Research), Clairborne Booker (Founder of Quadrivium Partners LLC), Joe Milam (Founder of AngelSpan Inc.), and LaJuanna Russell (President of Business Management Associates).

Mr. Kimble opened the briefing by highlighting the main problems OZs present. He asserted that, at the end of the day, OZs never get to people in need. Additionally, he demonstrated the lack of accountability and inclusion in OZs. Mr. Kimble also highlighted the fact, reiterated by many other panelists, that OZs must be comprised of smaller investments to bring true benefits to poor communities. Mr. Kimble pushed for a bill to require OZ Funds to be comprised of 40% of investments under $200,000, be diverse, and include a board of community members.

The first panelist to speak was Dr. Charles Steele, Jr. Dr. Steele, (head of Martin Luther King’s Southern Christian Leadership Coalition) dove into an  examination of society through a macro lens.

He eloquently stated that there are three evils in society: racism, poverty, and militarism. Through this lens, Dr. Steele expanded his analysis to the recent Poor People’s Campaign and discussed how OZs may be just another effort that has failed to address poverty meaningfully.

Joe Milam of AngelSpan was next to speak. In contrast to Dr. Steele’s broad and sweeping discussion, Mr. Milam engaged in a policy-heavy discussion. He asserted that even though there are clear issues with OZs, there are still existing fiscal policies that could make up for the program’s shortfall. Among these polices, Mr. Milam mentioned Qualified Small Business Treatment and specific sections of the US Code (1202, 1204, and 1245) that pertained to these issues.

The discussion then shifted to Claiborne Booker of Quadrivium. Mr. Booker affirmed the problems generated by an extreme concentration of wealth. Mr. Booker compared the OZ program to the New Market Tax Credit program and concluded that, with the current focus of OZs on large scale investments, benefits will be realized by those with large quantities of capital at the expense of the 8700 targeted communities across the country.

This sentiment was echoed by many panelists throughout the briefing. Large scale investments, especially in OZs, do little to help the communities in which they are deployed. Moreover, OZs scaled to large investments allow those with vast capital gains to increase their wealth, exacerbates inequality, and siphon profits from very communities the OZ program was purported to help.

This point was clearly demonstrated by the next panelist,  LaJuanna Russell of Business Management Associates. Ms. Russell started her analysis of OZs with a deeply moving personal story. She discussed the myth most people have about OZs: that they were created to help people in disadvantaged communities realize the American Dream. On its face, a tool of upward mobility, Ms. Russell quickly dispelled this myth when she described how she was unable to secure the OZ funding she needed to make ends meet upon the illness of a family member. After her story, Ms. Russell asserted that to pursue the American Dream one needs education just as much as they need access to capital.

The last panelist to speak at the briefing was William Michael Cunningham of Creative Investment Research. Mr. Cunningham has been a tireless advocate of disadvantaged communities in our nation’s capital and has been on the forefront of providing council to minority- and women-owned businesses and banks. Mr. Cunningham first highlighted the major issues in OZs, including how they are a potential $6 trillion tax break for a disproportionate amount of white, wealthy individuals and businesses and how they have done more to hurt the communities they were designed to help.

Mr. Cunningham provided a detailed analysis of how initial investments under the OZ program are sold as fair and positive economic growth without attention to consequences of the program’s current structure. However, instead of uplifting impoverished communities, OZs have been implemented as if minority populations will stay put despite skyrocketing real estate prices. Mr. Cunningham provided examples of how this process has occurred on the micro level both in Washington, D.C. and Ferguson, MO. To address the current flaws in OZs, Mr. Cunningham proposed capping capital gains to participate in the program, requiring OZ recipients to crowdfund from community members so they can share in the growth, and reporting social impact of OZ investments using the ethereum block chain technology. Since the 2017 TCJA, Creative Investment Research has offered guidance and classes on how minority- and women-owned businesses can best utilize the OZ program to their advantage. Although the OZ program has many flaws, it is one of the only existing source of funds for struggling communities and therefore must be utilized to one day realize a truly just economy.

Wednesday, July 3, 2019

Why Regulating Facebook's Libra is a Waste of Time

Facebook’s recently announced cryptocurrency pilot, Libra, claims it will “transform the global economy.”

The company hopes that anyone would be able to send Libra through platforms like Facebook messenger and WhatsApp to act as an intermediary for transferring traditional currencies. The ultimate goal is to have this currency accepted as a (general) form of payment. And other financial services will be built on top of its blockchain-based network, called the Libra Blockchain, a “proof of authority" permissioned blockchain system.


Tuesday, July 2, 2019

Diverse Asset/Money Managers. Tisa Forrest, Johns Hopkins University, Impact Investing Analyst

The House Financial Services Committee Subcommittee on Diversity and Inclusion held a hearing on Tuesday June 25, 2019 to explore the challenges minority- and women- owned (MWO) firms face competing in the asset management industry.

According to Bella Research Group’s Diverse Asset Management Project Firm Assessment, MWO firms account for approximately 8.6% of all asset management firms but only manage 1.1% of all assets under management, $785 billion out of $71.4 trillion, and are underrepresented as managers in every asset class but over-represented in the top quartile of fund performance.

False assumptions harm opportunities for MWO firms. Bella’s concluded that compared to peers who manage similar asset classes, 25% of women-owned and 28% of minority-owned asset management firms fall in the top quartile on average for fund performance.

Studies have shown that minority and women-led investment firms invest in more diverse entrepreneurs and businesses, enriching  communitiesand creating more jobs, without sacrificing the returns pension funds need to meet their funding obligations.

Meredith Jones, Investment researcher and Author, stated that the lack of women and minorities in the asset management and investment industries is making everyone, from Wall Street to Main Street, poorer.

Access to diverse asset management talent can provide diversification within portfolios and help mitigate volatile market behavior. At least one study found that having more women on Wall Street could reduce market volatility due to the introduction of differentiated investing behavior.

The lack of funding outside of traditional money centers as well as the near exclusion of diverse founders represents a tremendous lost opportunity for investment, economic expansion and job creation in diverse and underserved communities.

Minority and women-led funds continue to be marginalized because of restrictions as to the types of investments that can be made. In order to achieve a level playing field Congress can create opportunity.

Witness John Rogers, Chairman, CEO & Chief Investment Officer of Ariel Investments stated some believe barriers exist and solutions do too for MWO firms.  There is a tendency to work with people you know and with whom you are comfortable Due to implicit or unconscious bias, many do not think of black leaders as successful money managers. He proposed congressional legislation requiring banks and other entities to consider diverse-owned firms when aiming to fill new investment mandates.

 Many banks, corporations and non-profits have embraced well-intentioned supplier diversity programs emphasizing construction, catering, janitorial services, and other fields.  This could be addressed by measuring all spending by category, including asset management and other professional services, and replacing the term ‘supplier diversity’ with ‘business diversity.’ Mr. Rogers also suggested meaningful transparency as a way to make measurable progress.

Brenda Chia, Founding Board Member & Co-Chair of Association of Asian American Investment Managers (AAAIM) suggested Congress mandate that funds under federal management be subject to regular and periodic open competition. Congress could also recommend federal agencies ensure that qualified minority and women-led funds are considered as part of the RFP evaluation process.

Per Illinois Pension Code, an aspirational goal of no less than 20% of investment advisors shall be minorities, women and persons with disabilities. Angela Miller-May, Chief Investment Officer of the Chicago Teachers’ Pension Fund encouraged Congress to adopt a similar language.

As Ms. Miller-May put it “as an underfunded pension fund, we simply cannot afford to forego investing with diverse managers that represent a pool of keenly talented and innovative asset managers.”