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How to Find Funds That Address Systemic Racism and the Wealth Gap

This Martin Luther King Jr. Day, consider what tools you can use to create change.


“Life’s most persistent and urgent question is: What are you doing for others?”

—The Rev. Dr. Martin Luther King Jr.

That’s not a question often asked of investors, but as we celebrate Martin Luther King Jr. Day, it’s one worth considering. A lot of work is needed to achieve racial justice in this country. What has been built up for centuries cannot be torn down quickly. Change must come from many directions, including those that may not seem obvious at first glance. Like investing.

Investing may not be the primary way to effect change, but it’s one of the tools that can lead to change. If you are fortunate enough to be an investor, you have the means to contribute to change by applying a racial-justice lens to your investments. Here are some ways to do it:

  • Invest in sustainable equity funds that address systemic racism

  • Invest in exchange-traded funds that focus on racial justice

  • Invest in social bond funds that address the wealth gap

  • Save at CDFIs

Invest in Sustainable Equity Funds That Address Systemic Racism

Not all sustainable funds share exactly the same priorities, so you have to do some homework. Look for funds that exclude investments that have a negative impact on Black communities, such as guns, predatory lending, for-profit education, and the prison-industrial complex. Look for funds that include as part of their overall environmental, social, and governance evaluation a company’s diversity, equity, and inclusion policies, board diversity, worker pay and overall treatment, and the impacts of its products and services on Black communities. Finally, and importantly, look for funds that use their rights as shareholders to actively engage with companies on racial-justice issues and that vote their shares in favor when issues tied to racial justice appear on proxy ballots at company annual general meetings.

Sustainable investors press companies on their DEI policies; on the composition of their boards; on the ways they compensate employees; on labor relations generally; and on where corporate lobbying and political expenditures go. Through direct engagement and proxy voting, sustainable investors can push for change at the corporations they hold in their portfolios. When dialogue doesn’t work, sustainable investors propose shareholder resolutions for a vote at the company’s annual general meeting. Shareholders, in turn, have been supporting ESG-related shareholder resolutions at record levels in recent years; this often spurs corporate action even when a vote doesn’t attract majority shareholder support.

Over the past two years, sustainable investors have pressed companies on the racial composition of their boards and senior management, the effectiveness of their DEI efforts, and their overall impact on racial equity and justice. Shareholder proposals asking for EEO-1 disclosure and other workforce diversity data totaled 61 in 2021 and 28 in 2022. Companies must file an annual EEO-1 form with the U.S. Equal Employment Opportunity Commission but are not required to make this information public. Doing so helps investors and other stakeholders evaluate corporate diversity initiatives. According to an As You Sow report, from August 2020 to October 2022, the number of S&P 100 companies publicly releasing their EEO-1 forms more than quadrupled.

Shareholder proposals calling for racial equity and civil rights audits went from nine in 2021 to 43 in 2022. These proposals typically ask companies to undertake an independent assessment of their policies and practices, as well as their products and services, to determine whether they contribute to systemic racism. Audits also focus on the effectiveness of any specific efforts a company is making to combat systemic racism. Shareholder support for these proposals has been strong. According to ISS Insights, support for racial equity audits averaged 44% in 2022, with eight proposals garnering a majority of shares voted. These included votes at Apple AAPL, Home Depot HD, Johnson & Johnson JNJ, and Waste Management WM. Often, companies will agree to do what a shareholder proposal asks and the proposal is withdrawn. Airbnb ABNB, Amazon.com AMZN, BlackRock BLK, Meta Platforms META, and Starbucks SBUX have all conducted audits after engagement with shareholders on the issue.

Invest in ETFs That Focus on Racial Justice

Adasina Social Justice All Cap Global ETF JSTC tracks the Adasina Social Justice Index, which is “screened for social justice and designed to support progressive movements for change.” In addition to broad ESG evaluations, the index is screened on a number of racial-justice concerns, including activities that support the prison-industrial complex, for-profit colleges, and corporate diversity and inclusion policies. The fund invests both inside and outside of the United States and thus provides exposure to large-cap companies globally. Just past its second anniversary, JSTC’s annual returns in each of 2021 and 2022 placed in the top half of the global large-stock blend Morningstar Category.

Impact Shares NAACP Minority Empowerment ETF NACP tracks the Morningstar Minority Empowerment Index, providing exposure to U.S. companies with strong racial- and ethnic-diversity policies. NACP is a nonprofit ETF, and any excess fees go to support the NAACP. It also engages with companies on what they need to do better in order to be candidates for inclusion in the index. NACP’s three-year annualized return (through December) ranks in the top third of the large-blend Morningstar Category. The ETF can be easily slotted into an investor’s core U.S. equity allocation.

Invest in Impact Bond Funds

With their focus on bonds’ use of proceeds, social bond funds can make impact their central thematic focus. While some also focus on bonds that finance projects addressing climate change, many emphasize bonds that address the racial wealth gap.

TIAA-CREF Core Impact Bond TSBIX, for example, evaluates its corporate issuers on ESG while also devoting around 40% of assets to bonds that have a direct and measurable social impact. Two prominent components of that impact focus are affordable housing bonds and community development bonds that benefit underserved or economically disadvantaged communities. The fund devotes about 15% of assets ($900 million) to those areas, with the remainder of its impact sleeve invested in climate change- and natural-resources-related bonds.

Two long-established funds, RBC’s Access Capital Community Investment ACCSX and Community Capital’s CCM Community Impact Bond CRAIX, focus on affordable housing, small business, and minority advancement in low-to-moderate-income communities. Community Capital also subadvises Impact Shares Affordable Housing MBS ETF OWNS, launched in mid-2021.

All these funds achieve social impact while providing exposure to high-quality, intermediate-term bonds similar to what investors would get in a conventional bond fund.

These are taxable funds, but if you invest in tax-free municipal bonds, there are now 19 muni-bond funds that focus in areas like affordable housing, education, economic and community development, and healthcare in marginalized and underserved communities. Examples include AB Impact Municipal Income ABIMX, Calvert Responsible Municipal Income CTTIX, and Columbia US Social Bond CONAX.

For Cash, Consider CDFIs or Impact Notes

And then there is cash. Consider banking at one of the many Community Development Financial Institutions. These include banks, thrifts, and credit unions throughout the country that devote at least 60% of their business to benefit low-income communities that are underserved by traditional banks. To find a CDFI near you, check this list of such institutions certified by the U.S. Treasury Department. Many CDFIs offer certificates of deposit in addition to checking and money market accounts.

If you are wealthy enough to be an accredited investor, you have ample opportunity to make additional impact investments, be they market rate or below market rate. But any investor, large or small, can purchase a Community Investment Note from Calvert Impact Capital, a nonprofit (not affiliated with Calvert Research and Management) that has invested in communities left out of traditional capital markets for 25 years.

We are in a take-action moment in America right now. In taking action, don’t overlook your financial resources. Through the use of sustainable equity funds, impact bond funds, and community banking, you can activate your entire investment portfolio and your bank account. Doing so gives you the ability to use your money in impactful ways as you save it and grow it, and then again when you donate it.


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