It could be the long-awaited turning point in the world of venture capital and beyond. Yale, whose $32 billion endowment has long been led since 1985 by the legendary investor David Swensen, just let its 70 money managers across a variety of asset classes know that for the school, diversity has now moved front and center.

According to the WSJ, Swensen has told the firms that from here on out, they be measured annually on their progress in increasing the diversity of their investment staff, meaning their hiring, training, mentoring and retention of women and minorities.

Those that show little improvement may see the university pull its money, Swensen tells the outlet.

It’s hard to overstate the move’s apparent significance. Though the endowment saw atypically poor performance last year, Swensen, at 66, is the most highly regarded endowment manager in the world, growing Yale’s endowment from $1 billion when he joined as a 31-year-old former grad student of the school, to the second-largest school endowment in the country today after Harvard, which currently manages $40 billion.

Credited for developing the so-called Yale Model, which is short on public equities and long on commitments to venture shops, private equity funds, hedge funds, and international investments, Swensen has inspired legions of other endowment managers, many of whom worked with him previously, including the current endowment heads at Princeton, Stanford, and the University of Pennsylvania.

It isn’t a stretch to imagine that they will again follow Swensen’s lead, which could go a long way in changing the stubbornly intractable world of money management, which remains mostly white and mostly male across asset classes.

While the dearth of woman and minorities within the ranks of venture firms may not be news to readers, a 2019 study commissioned by the Knight Foundation and cited by the WSJ found that women- and minority-owned firms held less than 1% of assets managed by mutual funds, hedge funds, private-equity funds and real-estate funds in 2017, even though their performance was on a par with such firms.

Swensen tells that WSJ that he has long talked about diversity with the fund managers to which the endowment commits capital, but that he had he held of anything systematic owing to a belief, in part, that there were not enough diverse candidate entering into asset management for a mandate to make sense.

After the Black Lives Movement gained momentum this spring, he decided it was time to take the leap.

What about that perceived pipeline concern? Fund managers will have to figure it out if they. For his part, says the WSJ, Swensen suggested to the U.S. managers that they forget the standard resume and consider recruiting directly from college campuses.

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