How Corporate America Can Work With HBCUs to Boost Economic Mobility and Build Diverse Talent Pipelines

Students at Spelman College, one of the HBCUs home to the Center for Black Entrepreneurship. (Paras Griffin/Getty Images)

This report was written by Rachael Doubledee and Daniel Krasner

The Supreme Court’s decision this year to end affirmative action in college and university admissions – and the backlash against diversity, equity, and inclusion (DEI) it emboldened – creates a more challenging environment for companies’ DEI efforts. Companies are now expected to balance growing pressure for more inclusive workplaces with the reality that recruitment of workers of color from institutions of higher education may become more challenging in the coming years. 

Companies looking to advance equity and inclusion can continue to support diverse hiring pipelines and boost economic mobility in the U.S. by actively recruiting from, funding, and partnering with Historically Black Colleges and Universities (HBCUs). HBCUs play a crucial role in producing top talent and advancing career success for Black workers, especially. 

In light of this, we took a look at how the companies we rank are working with HBCUs as part of their efforts to invest in their communities. Of the 951 companies we ranked in 2023, 80 disclosed that they financially supported HBCUs. We also found a correlation between HBCU support and companies’ overall ranking within our Rankings. Of the companies that support HBCUs, 66% sit in the top 20% of our Rankings, and 45% sit in the top 10% of companies – the JUST 100.

The SCOTUS Ruling and the Current Environment

Some companies have recognized, and acted on, the strong business and investor case for diversity, equity, and inclusion (DEI). Nearly 80 companies filed an amicus brief before the ruling – including several in the JUST 100 – stating that corporate DEI programs rely on college and university admissions that result in “graduates educated in racially and ethnically diverse environments.” 

In deciding how to pursue diverse and equitable workplaces in this environment, companies should look to rising expectations from the American public. Our survey research has repeatedly found that Americans want to see companies follow through on their commitments to diversity and inclusion. We’ve also found that 68% of Americans believe companies have not done enough to achieve racial equity in the workplace – that number jumps to 77% when we look only at Hispanic respondents and 87% when we look only at Black respondents.

America’s Most JUST Companies Financially Support HBCU Institutions

Companies that provide financial support for HBCUs are among those that perform the best in our annual Rankings of America’s Most JUST Companies, which ranks corporate performance across key worker, communities, customer, environmental, and shareholder/governance issues. 

Of the 951 companies we ranked in 2023, 80 disclosed that they financially supported HBCUs by providing funding to increase academic, administrative, and fiscal capabilities – factors that contribute to significant, systemic change. 

Company rank was closely tied to support of HBCUs, with higher ranked companies being more likely to contribute and lower ranked companies being less likely. Our analysis found that 66% of companies that support HBCUs sit in the top 20% of our Rankings, and 44% sit in the top 10% of companies – the JUST 100. Support for HBCUs drops off sharply after the top quintile, and declines steadily until we see no companies providing support in the bottom 20% of our Rankings. This shows that the companies considered most just according to the public are also those most likely to provide support to HBCUs.

Banks and Software Companies Are Most Likely To Support HBCUs

Banks, which were strongly represented in the 2023 JUST 100, have long faced criticism for their exclusion of historically marginalized people and communities, with some recently pledging to do better in these communities. The sector overall has been proactive in investing in talent pipelines, with a recent LinkedIn analysis pointing to Financial Services as an industry that saw 8.2% growth in hiring from HBCUs in 2022. 

Bank of America – the top company in this year’s Rankings – stands out for its contributions to HBCUs and other institutions that serve historically marginalized populations. In 2020, the company gave $25 million to 21 HBCUs, Hispanic-serving institutions, and community colleges. This funding supported advisory services to help these schools set strategic priorities and meet long-term financial goals, as well as programs to help students develop skills for career success. Additionally, as part of its $1.25 billion, five-year commitment to advance racial equality and economic opportunity, in 2021 Bank of America provided a $10 million grant to launch the Center for Black Entrepreneurship in partnership with Morehouse and Spelman Colleges, two of the highest-ranking HBCUs.

Aside from Banks, Software and Retail companies are also leading the way in supporting HBCUs in ways that can help further long-term change. While there is room for growth across industries, our analysis also reveals widespread investment, demonstrating overall relevance regardless of industry.

The Role of HBCUs in Economic Mobility and Diverse Talent Pipelines

As part of their efforts to build diverse hiring pipelines, companies should actively recruit from HBCUs, which help bolster the success of diverse populations. In the last decade, Latino students have accounted for increasing shares of the HBCU student population. And in the past three years, Black student enrollment has also risen – the SCOTUS ruling is expected to bring even greater numbers of applicants to HBCUs. 

In addition to providing critical pathways for economic mobility, HBCUs are important economic contributors with strong local impact. They contribute at least $14.8 billion in annual economic impact, and are the main driver of many local economies – accounting for about 134,000 jobs in disproportionately economically disadvantaged areas. 

HBCUs also boast almost double the mean mobility score of other institutions (3.0 v 1.6). As key drivers of Black economic mobility, these institutions have been at the center of equity efforts and are pivotal in developing leaders in the Black community, accounting for an estimated 40% of Black engineers, 40% of Black U.S. Congress members, 50% of all Black lawyers, and 80% of all Black judges. Additionally, HBCU graduates support the growth of diversity in sectors that have publicly struggled with diversity such as STEM and Finance.

How Companies Can Make an Impact

To ensure the success and quality of HBCU programs, companies should consider supporting beyond the creation of individual scholarships. Investments in HBCU infrastructure, educational programming, and operational costs are needed following decades of federal and state disinvestment and preferential systems that funneled government and foundation funding away from HBCUs. 

Following George Floyd’s murder in the summer of 2020, some companies, high net worth individuals, and foundations made a targeted effort to invest in HBCUs – and the results have been clear. HBCUs have made significant strides to put this funding to good use by upgrading facilities and making progress toward top research institution status, a necessary step in bringing in federal and foundation funding. However, sustained support is still needed to ensure these institutions can continue to operate and step into the vacuum left behind by the recent Supreme Court ruling. 

By investing and partnering with HBCUs, companies can demonstrate commitment to racial equity while also providing a pathway forward for more diverse talent. In addition, CEOs and CHROs can consider focusing a portion of recruitment efforts on HBCUs to help sustain a diverse talent pipeline. Not only will companies contribute to building more diverse teams, which helps them outperform their peers, they’ll also open up pathways for economic mobility for many, ultimately helping to create an economy that works for all. 

For more information on how we’re engaging with the country’s largest employers on these issues, reach out to our team at corpengage@justcapital.com.