Impact Investing Unpacked: Affirmative Action

By Dr. Sylvia Kwan

Recently, I was digging through old files to KonMari my space. I discovered some really old stuff — I mean decades old — high school reports and projects, applications for college and scholarships, and to my delight, my acceptance letter to my alma mater Brown University, as well as other colleges I had applied to. (Apparently I KonMari’ed my rejection letters long ago, as they were nowhere to be found.)

In that same pile, I found early drafts of my handwritten *gasp* college application essays, and reading them made me cringe a little with embarrassment. Brown’s essay prompt that year was an open-ended one, something like: “Give us as complete a picture of you as possible.” At 17, I did a lot of things — I wrote for my high school paper, I ran track and cross country, I was active in my church, and I was an accomplished pianist. But my essay draft wasn’t focused on any of these. It was about my experience as an Asian American and my belief that by growing up in the US, I had the best of two cultures. 

I don’t remember why I wrote about being Asian American and why it was important to me. And I certainly had no idea what affirmative action was.

In the aftermath of the US Supreme Court’s ruling that race-based affirmative action is unconstitutional, it’s hitting me like a ton of bricks what my essay may have meant. While I can’t recall with certainty that the draft I found was my final response, I'm pretty sure I submitted some version of it. And for the college admissions department, it would have been impossible to ignore my race in my application. It was front and center, with no way not to see it. Today, I wonder whether my race was a factor — positive or negative — in my admission to Brown, or in any of the acceptances and rejections from other colleges. 

What I do know is that I received an opportunity to get a college education — a really good one — and that’s not an opportunity that is available to everyone. Affirmative action was intended to increase and encourage more racial and economic diversity across college campuses. But like most social issues, it is complex, with both positive and negative consequences. But at its core, the spirit behind affirmative action is about increasing access to ensure equal opportunity and prevent discrimination based on a broad range of identities, including race, sex, gender, religion, national origin, and disability.

While we can debate the merits of affirmative action and social policies, there are other ways to help create more equal opportunities and level the playing field. We can start by using the power of our capital to invest for impact and financial returns. Barron’s reported that more than $1 trillion in impact investments have evolved from environmental and micro-financing themes to social themes like racial equality and diversity, equity, and inclusion. More and more funds are raising capital to invest in women, underrepresented and disadvantaged entrepreneurs and founders, and enterprises that are creating innovative solutions to help close economic gaps. 

Recently, Ellevest added an education technology impact fund to our private wealth platform that invests in companies with technology solutions aiming to decrease the costs of education, reduce friction to learning, and improve instruction and educational outcomes, particularly for lower-income students. 

One of the companies in the fund develops programs to help improve the college test scores of students from low-income communities. This matters because a staggering 90% of low-income students graduate from high school without a college-ready ACT or SAT score. For such disadvantaged students, an increase in their score from below college acceptance to one that is college-ready is the difference between opening the door to a college education and not. Studies show significant lifetime earnings differences between college and high school graduates: for men, it’s $900k and for women, $650k over the course of a career. Increasing the number of low-income students with college-ready scores will help increase the opportunities for low-income students to become college graduates, earn higher incomes, and ultimately close economic gaps. 

At Ellevest, we believe in the strength and power of diversity — not only of gender, but of race, beliefs, experiences, geographies, and perspectives. And we believe that impact investing is a powerful way to use our capital to help close gaps and create wealth-building opportunities for those who have been previously denied either access, opportunity, or both. Whether on college campuses, in the workplace, in decision making, in government — diversity leads to better outcomes for everyone


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Dr. Sylvia Kwan

Dr. Sylvia Kwan is the Chief Investment Officer of Ellevest.