As vital as it may seem today, the idea that corporations should meet the needs of underserved communities and integrate social good into their DNA—rather than address it separately through philanthropy—is far from common. Indeed, the need to break down the walls between profit and purpose helped spark the impact investing movement.

However, our company, Prudential, was founded in 1875 on the belief that working families from lower-income communities deserve access to the same financial protections as wealthy Americans. Where some saw the industrial class falling behind, our founder, John Dryden, saw unmet market need and an opportunity for the company and its community to succeed together.

Today, we offer a variety of products and services through our business lines, including individual and group life insurance, annuities, retirement-related services, mutual funds, investment management, and real estate services with operations in the United States, Asia, Europe, and Latin America. Our goal of supporting underserved communities remains the same. This drives Prudential to see our culture, products, and services—including impact investments and grants—through the lens of “shared value,” an intentional strategy of bridging the divide between traditionally corporate and traditionally philanthropic partners, toolsets, and activities.

We also recognize that social and economic inequality maps along racial and gender lines, and that tackling these disparities requires a long-term commitment to diversity and inclusion—both internally and externally. Keeping our headquarters in our hometown of Newark, New Jersey, where nearly two-thirds of households live one emergency away from falling into poverty and where one in five are unbanked, is an expression of this sense of purpose and a strong reminder of how much needs to be done.

Organizing for Impact

As I alluded to earlier, corporations in the United States often silo off their organization’s philanthropic function and separate out main business lines from corporate centers. This makes it difficult to communicate a unified view or collaborate across teams.

In committing to diversity and inclusion, Prudential believed it was important to first look within, and build a more integrated and inclusive workplace. I also firmly believed we could go further by combining the best of what we knew from nonprofit work with financial expertise and market efficiency from the corporate side. To build this bridge, we recently merged our human resources function of diversity and inclusion with Prudential’s impact investing, philanthropic giving, and community engagement practices.

This kind of team is unique in financial services. It allows us to see which initiatives have the most impact and align resources behind them. We can also build partnerships with businesses, social enterprises, and nonprofits more flexibly across different business areas, and leverage these relationships worldwide across Prudential’s more than 49,000 employees and millions of customers.

Supporting Capital Managers of Color

The need for accelerated progress on race and gender is acute in financial services. A recent (unpublished) study by Fairview Capital, the largest private equity manager owned by a woman of color, of racial and ethnic representation in private equity found that 78 percent of senior management was white, 20 percent was Asian, and only 1 percent was Latinx or African-American. Under-representation in private equity is also more severe than in other well-compensated professional fields, such as law and medicine. This pattern also holds for gender; the field of asset management has a much lower participation rate by women than other professional fields.

To address these disparities, we’re developing a continuum of initiatives that draw on Prudential’s approach to shared value. One of our tactics is to invest directly in diversity by deploying capital with financial intermediaries founded and run by women and people of color. They include:

  • Committing to inclusive venture capital: Prudential’s impact investment program has an ongoing, $25 million commitment to support the growth of more-inclusive venture capital models that promote diverse investment teams, support underrepresented founders, and invest in business models that address large-scale social challenges. Through this program, we’ve placed capital with the Impact America FundBronze Investments, and Urban Innovation Fund.
  • Supporting emerging managers: We commissioned a study in 2016 with the Association of Black Foundation Executives (ABFE) that found that, despite the array of programs foundations support to address inequality around the globe, very few foundations had implemented diverse manager programs within their investment portfolios. Prudential has developed a portfolio of emerging managers and has placed $905 million of our corporate account dollars with minority and woman-owned asset managers, sparking billions in asset growth at participating firms.
  • Placing assets with minority and veteran-owned depository institutions and money managers: Since 1987, three-quarters of the nation’s 91 African-American banks have disappeared, as the industry has consolidated in response to changing market conditions. Yet minority depository institutions address the persistent lack of capital and other financial services available to minority communities. Prudential actively places cash deposits and other liquid assets—totaling $47.8 million—with minority depositories, and minority and veteran-owned money managers across the United States.

Read the rest of Lata Reddy’s article at Stanford Social Innovation Review