Giving Compass' Take:

• Benefits Canada discusses a report from Cambridge Associates on how impact investments centered around racial equity isn't just good for the world — it's good for the bottom line as well.

• The report shows how wage and income disparities are getting worse, and that we could grow the U.S. economy by trillions of dollars if education achievement gaps close within the next decade.

• Here's how philanthropy can help through incremental changes. 

With the growth of investment strategies focusing on socially responsible investing, there are many angles for institutional investors to consider.

A new report by Cambridge Associates indicated investors putting dollars to work with racial equity in mind will gain an advantage in the long term. While the report noted there are many potential definitions for social equity investing, it defines the term as building a portfolio that promotes equal opportunity for all, regardless of background.

Serious inequalities in access to opportunity and income in the U.S. aren’t only firmly established, they’re growing, noted the report. Citing research by think tank the Brookings Institute, it showed wages have stagnated in the U.S. since the 1970s. In 1940, 90 per cent of people earned more at age 30 than their parents did at the same age, but that percentage dropped to 50 per cent in 1980.

This is just one indicator of how inequality and decreased access to opportunity has become a major headwind for economic growth, noted the report. “There is real economic opportunity to be gained from creating more inclusive economies. The Center for American Progress estimates that if the racial education achievement gap were closed, the U.S. economy would be nearly $2.3 trillion larger in 2050,” it stated.

Read the full article about boosting long-term growth through racial equity at Benefits Canada.