Black Power and Balance Sheets

The audience for this article is members, board directors, and executive leadership of Black non-profit organizations (including HBCUs).

I started a research project in 2025 analyzing financial statements from Black nonprofits (including HBCUs). My goal was to calculate the average return on investment they were earning on idle cash, but what I found was a larger balance sheet problem. The average amount of cash sitting in checking accounts earning 0% interest was nearly 50% of liquid assets. For the non-finance people reading this, that's bad…really bad. If a financial advisor advised me to do that with my personal portfolio, I would fire them immediately. Having that much cash sitting around is like lighting it on fire because it's being eaten away by inflation. For reference, endowments typically target between 2–10% cash for liquidity needs.

The original impetus for the research (calculating ROI) paints an equally concerning picture that makes sense given the amount of idle cash. The median return these organizations were earning in 2023 was 1.73%, less than the risk-free rate of around 4% at the time. If I was talking about just one organization, this could be explained away. But this is systemic financial mismanagement at an institutional level.

The Opportunity Cost Is Staggering — And Getting Worse

To understand how badly this underperformance stings, you need to know what's possible. In fiscal year 2024, Harvard's endowment returned 9.6%, growing to $53.2 billion. Yale earned 5.7%. Columbia posted 11.5%. Brown hit 11.3%. These are not magic numbers — they are the product of disciplined investment policies, professional management, and long time horizons. None of these numbers even beat investing in the S&P index, but our organizations, meanwhile, are earning 1.73% on median — roughly what a basic savings account was offering before 2022.

This gap is not a minor inconvenience. It is a compounding catastrophe. Every year we leave capital idle, we are handing the opposition a compounding advantage in the very game we're trying to play.

The endowment disparity between HBCUs and Predominantly White Institutions tells the same story. The PWI-to-HBCU endowment gap in 2024 stood at 129 to 1. Only one HBCU — Howard University — has crossed the $1 billion endowment threshold, while 148 predominantly white institutions have endowments exceeding that same mark. HBCUs represented 1.4% of institutions reporting to NACUBO but controlled only 0.3% of reported endowment assets. Even with the recent $100 million gift to Spelman, the top 10 HBCU endowments combined are estimated at roughly $2.9 billion — which is less than what Harvard earns in a single good year in investment returns alone.

If you want a number that captures the depth of this structural problem: McKinsey estimates that HBCUs would need $12.5 billion in incremental funding just to reach endowment parity with similarly sized PWIs. We're not starting at zero — we're starting behind.  My goal here is not simply to compare our institutions to PWIs or try an emulate them.  My belief is that we should be innovating and setting our own standards of excellence and dominance.  The comparison here is simply an illustration of alternate potential outcomes.

Why Is This Happening?

My initial hypothesis was that this was primarily due to financial illiteracy, so I asked around to confirm my suspicions. Some folks mentioned donor restrictions, but I accounted for that in my research since 990s separate out restricted net assets. That doesn't explain the discrepancy.

I found multiple examples of organizations with poor performance that had board members with professional finance experience, so one might think that pokes a hole in the financial illiteracy hypothesis. But then I had a personal experience with a Black-led nonprofit that had millions in a checking account with no investment policy until I suggested that we adopt one. From that initial suggestion, it's been about three years and we still haven't moved beyond having millions in a money market account. Yes, better than a checking account, but not enough to beat inflation.

We are currently in the process of implementing a more sensible investment policy, which has faced constant internal opposition under the guise of governance, but in reality likely stems from a lack of capacity and understanding. Also, cash is seen as "safe" and any risk is uncomfortable. While this sentiment is misguided, it is understandable.

Dr. Isaac Addae, a former Tennessee State University professor and executive advisor to HBCUs and MSIs, summed it up well:

"HBCUs don't hoard cash because they lack financial sophistication. They hold cash because they've learned that survival requires liquidity. These institutions have operated for generations on the edge of financial uncertainty, navigating enrollment volatility, inconsistent state appropriations, and donor bases that, however loyal, cannot match the wealth concentrations behind PWI endowments. When your institution has watched peer schools lose accreditation or face existential funding crises, cash stops feeling like a missed opportunity and becomes a lifeline. The reluctance to invest isn't irrational; it's institutional memory. The question we should be asking is how do we build the governance capacity, the investment infrastructure, and the psychological safety for HBCU leadership to think in decades, not fiscal quarters."

Dr. Addae's framing is important because it is honest about why we got here. Generations of financial precarity — discriminatory state appropriations, enrollment volatility, episodic philanthropy — trained Black institutions to hoard. The survival reflex is real. But a reflex born in one era can become a liability in the next.

That time has come. The context has changed. The tools exist. The only remaining obstacle is leadership will.

This Is Not Just an HBCU Problem

While HBCUs are the most visible data point in my research, this balance sheet pathology extends well beyond higher education. It is present in Black community development organizations, civic leagues, Black fraternities and sororities, Black professional associations, and Black churches.

Let me spend a moment on the churches, because the scale there is almost incomprehensible. Research from the early 2000s through the 2010s estimated that Black churches collected more than $420 billion in tithes and donations between 1980 and 2013 — averaging over $12.7 billion per year. More recent estimates suggest the total annual figure has continued growing alongside inflation and population. We don't have precise figures for how much of that is being invested versus sitting in low-yield accounts, but based on the broader pattern we've documented in nonprofit balance sheets, there is every reason to believe the problem is worse in churches, not better.

The Black church is the oldest and most trusted institution in Black America. It has been the organizing hub for our community since emancipation. But trust and capital are not the same thing. The question is not whether Black churches are beloved. The question is whether they are deploying their financial resources in a way that serves the long-term economic interests of their communities. Based on everything we know, the honest answer is: largely no.  They may actually be doing more harm than good by siphoning resources (time and tithes) from organizations that would be better stewards.

The Invisible Tax: What Mismanagement Costs Us

The failure to invest is not a neutral act. It is a transfer — from our institutions to inflation, from our communities to the status quo.

Here is a simple illustration. Suppose a Black nonprofit has $10 million in liquid assets. At 1.73%, it earns $173,000 per year. At 6% — a modest, achievable, diversified portfolio target — it earns $600,000. The difference is $427,000 annually. That is a program officer's salary and budget, a student scholarship endowment, a small business lending fund. That's not found money — it's lost money. Money that should have been there, being diverted by inertia.

Now scale it. In my research I identified approximately $1.5 billion in idle cash across less than 200 organizations — mostly HBCUs and National Pan-Hellenic Council (NPHC) organizations. If that capital were invested at a modest 6% target return, it would generate an additional $90 million annually. Compounded over ten years, it would grow to $2.69 billion. That is the cost of doing nothing.

And remember: that figure is from fewer than 200 organizations. There are thousands of Black nonprofits, civic organizations, and churches that almost certainly carry the same dysfunction on their balance sheets. The total addressable waste is likely in the tens of billions of dollars.

The Black Investment Manager Problem

Here is the part of this story that turns mismanagement from a tragedy into a double tragedy.

When our institutions do invest — and most of them, to be clear, are not investing optimally — where does the money go? The answer, in nearly every documented case I've examined, is to large, predominantly white-owned asset management firms. Organizations like Neuberger Berman, Vanguard, AllianceBernstein and Fidelity.

I understand why. They are large, credentialed, and familiar. A fiduciary feeling anxious about their investment committee is going to reach for the name they recognize. But that choice has a hidden cost that never appears on any balance sheet.

According to research by the Knight Foundation, firms like mine, owned by women and people of color managed only 1.4% of assets in the $82 trillion U.S. asset management industry as of 2021 — barely changed from the 1% figure recorded in 2016. Black-owned asset managers specifically account for only 0.2% of global assets under management. The largest Black-owned asset management firms collectively manage approximately $253 billion — a figure that sounds large until you realize that a single PWI endowment like Harvard manages $53.2 billion on its own.

To put it more starkly: Alabama State University's $125 million investment account represented just 0.02% of Neuberger Berman's AUM at the time the firm managed it. The relationship was so asymmetric that Alabama State's entire endowment barely registers as a rounding error on Neuberger Berman's books. Contrast that with what the same capital would mean to a Black-owned firm. A $125 million allocation to a smaller Black asset manager would move their bottom line significantly — it would create jobs, build capacity, generate track records, and recycle returns back into the Black economy.

This is the second tragedy of the idle cash crisis. Not only are we failing to invest — when we do invest, we are overwhelmingly investing with people who are not us, in ways that do not benefit us, and whose success does not depend on our institutions' survival.  In other words, we’re putting other people’s kids through college with the fees we’re paying them.

The Counterargument — and Why It Fails

At this point, some readers — particularly those inside these institutions — will raise the fiduciary duty argument. The argument goes like this: our board has a legal obligation to maximize returns and minimize risk. We cannot sacrifice yield to support Black-owned managers. It would expose us to legal liability.

This argument has two major problems.

First, it is factually incorrect as applied to most nonprofit investment decisions. The prudent investor standard — which governs most nonprofit investment committees — does not require maximizing returns. It requires prudent diversification and reasonable risk-adjusted performance relative to the organization's goals. A thoughtfully constructed mandate that favors Black investment managers with a clear and documented rationale based on mission alignment, while maintaining reasonable return targets and diversification, is entirely defensible. Leading CDFI practitioners, impact investors, and mission-aligned endowment managers have been making this case for decades.

Second, and more damning: the organizations making this argument are typically the same ones earning 1.73% returns by holding 50% of their liquid assets in zero-interest checking accounts. You cannot invoke the fiduciary duty standard to avoid investing with Black managers when you are simultaneously committing textbook violations of that very same standard by not investing at all. The argument is a shield being used selectively — and the community should call it out as such.

What Should We Actually Do?

The good news is that the path forward is well-documented. In The Black 2050 outlines multiple strategies across asset classes, and I’ve documented playbooks in my new Substack publication, Permanent Capital OS. Here is a distilled version of the core principles:

1. Adopt a written Investment Policy Statement (IPS). If your organization does not have one, get one (I can help). This is not optional. A written IPS is the foundational governance document that defines your return objectives, risk tolerance, liquidity requirements, and asset allocation targets. Without it, every investment decision is made ad hoc, which is precisely how you end up with millions in a checking account for years on end.

2. Set a realistic return target aligned with your mission. For most Black nonprofits and HBCUs, a 5–7% target return with appropriate diversification is both achievable and defensible. This means moving out of cash and money market accounts and into a proper diversified portfolio that includes equities, fixed income, and potentially alternatives.

3. Allocate deliberately to Black investment managers. This does not require sacrificing returns. It requires intentionality. Your IPS should include a mandate — or at least a preference — for Black-owned and minority-owned managers where performance, track record, and fees are comparable. The Knight Foundation and numerous institutional investors have demonstrated that diverse-owned managers can perform competitively. We just have to give them the allocation.

4. Consider mission-aligned investments in Black productive capacity. This is the highest leverage play. If your organization has excess capital beyond operational reserves, consider whether some portion of that capital can be deployed — through CDFIs, community development finance, or direct investment — into Black real estate, Black-owned businesses, or Black housing and infrastructure. The double bottom line is real: financial return plus community return.

5. Build investment governance capacity at the board level. This means recruiting finance professionals who understand investment management onto your board. It means running your investment committee like a committee, with agendas, minutes, and regular performance reviews against benchmarks. The days of "we'll just keep it in the bank because that feels safe" have to end immediately.

What Members and Alumni Can Do

Leadership of these institutions rarely changes without external pressure. If you are a member, alumni, or donor to a Black organization or HBCU, you have more power than you think.

Ask your leadership to publish the organization's investment policy — or confirm that one exists. If they cannot produce one, that is your answer. Ask for annual reports that include investment performance data or simply look at their public 990 filings. Ask what percentage of the organization's investments are managed by Black-owned firms. Ask what the board's return target is, and how the organization is performing against that target.

These are not hostile questions. They are the questions any responsible financial steward should be able to answer on demand. If your leadership treats them as hostile, that itself is informative.

Alumni giving is leverage. Donor-directed funds, conditional gifts, and alumni organizing campaigns have moved nonprofit leadership before. They can do so again.

The Bigger Picture

We are not just talking about financial management. We are talking about the compound interest of institutional power.

Other endowments — operating at 8–10% annual returns over decades — are building research infrastructure, funding advocacy, supporting faculty, and subsidizing the development of the next generation of elites. They are compounding their institutional power every year. We are not, and the wealth gap is growing every year we fail to act — not just because they are raising more money, but because they are generating more money from the capital they already have. We cannot donate our way out of that gap. We have to invest and lobby our way out.

The $1.5 billion in idle cash I documented is not just a missed return. It is a missed decade of compounding. It is scholarships not funded, infrastructure not built, and researchers not retained. It is institutional power foregone. And every year we delay, the cost compounds.

Final Thoughts

While I understand the generational trauma that may have led to this point, it's no longer a sufficient excuse. My conclusion remains unchanged from the original thesis of In The Black 2050: we don't JUST have a resource problem. We have a RESOURCE MANAGEMENT problem — which is ultimately a leadership problem. There is no acceptable reason to continue tolerating this level of financial negligence.

Furthermore, not only should these institutions be implementing sensible investment policies to generate a reasonable yield on idle cash, we should also be using that cash to make profitable investments that increase Black productive capacity — real estate, construction, factories, hospitality, and more. Even if that simply means allocating capital to Black investment managers with a strict and clear mandate to invest in Black businesses when possible, even if it results in a slightly lower ROI on paper, the community return more than compensates.

The math is clear. The tools are available. The Black investment managers are qualified and waiting for capital. The only variable left is will. If the leaders of our institutions cannot find that will, the community should find new leaders.

If your organization needs support, I’m partnering with Dr. Addae to provide comprehensive strategic and treasury management solutions.  Apply here to see if your organization is a good fit.