The Wharton School of the University of Pennsylvania is investing in the promise of alternative finance to bring diversity to the financial industry. The business school has partnered with Apollo Global Management, Ares Management, and Oaktree Capital Management to launch the $90 million AltFinance: Investing in Black Futures™, an initiative that will fund recruiting, training, and career opportunities at three Historically Black Colleges and Universities (HBCUs) over the next ten years.
The consortium of finance companies has established a non-profit, ALT Finance Corporation, to administer the program, with $3 million from each company pledged annually. This initiative is the first of its kind for the alternative finance industry.
Clark Atlanta University, Morehouse College, and Spelman College will be the beneficiaries of this initiative, which will include a mentored fellowship program, a tailored virtual institute, and a scholarship program. The fellowship is run in partnership with Management Leadership for Tomorrow, a non-profit organization dedicated to increasing representation for Black, Hispanic, and Native Americans in business leadership. Positions with Apollo, Ares, and Oaktree will give students experience at top finance firms, and fellows will also be eligible for need-based scholarship funding.
Wharton’s role is to take on the educational component of the initiative. The school is creating a virtual institute open to interested students at all HBCUs, providing coursework and educational tools developed by top professors and finance professionals. Offered to full-time students enrolled in degree programs at their HBCUs, the coursework is non-credit and not part of a degree program but rather a supplement to their learning journey. The institute makes accessible the resources and expertise of America’s oldest collegiate business school to promising and talented black business students, introducing them to the emerging and influential alternative finance industry.
Wharton at the Forefront of Alternative Finance
Professor Serguei Netessine, Vice-Dean at The Wharton School, helped bring the school into the project through Wharton alum Mark Rowan, Apollo Global Management’s co-founder, and CEO. His firm, like many in the industry, was having difficulties recruiting minority candidates. A significant contributor to the issue is that many historically underrepresented minority college students and prospective MBA students do not consider working on Wall Street as a viable career path, and even less so alternative finance. Says Professor Netessine, “So, how can we solve this? We need to go to undergraduate institutions and explain to students that this is a career path, offer them an opportunity to learn about this career path, and offer them an opportunity to try it out. That’s how the idea was born that we could do the education part of this consortium, and the three partners could offer opportunities for internships for minority students, with the hope of hiring them.”
Wharton is already at the forefront of alternative finance research, primarily through the Harris Family Alternative Investments Program. The school also provides extensive opportunities for pre-collegiate students with non-credit educational enhancement programs in finance through its Wharton Global Youth Program. The Executive Director, Eli Lesser, will oversee the development of the AltFinance virtual institute.
“We are a global leader in this area of teaching and research when it comes to alternative investments, so it’s natural that they would come to us,” says Lesser. “Wharton is positioned to put together a program like this. We can channel our faculty, teaching, research, and all the amazing work that goes to make Wharton a global leader into a program like this to engage and support HBCUs—and companies, as they seek diversity goals.”
While many institutions are promoting executive education and upskilling programs as part of lifelong learning for adult professionals, The Wharton School has adopted the premise “Business for Life,” where education in business principles begins in high school and takes many forms throughout both academic and professional careers. “The opportunity with these non-degree programs is to engage more and more minority students, students who historically did not have an opportunity to come to Wharton or other top institutions,” says Professor Netessine.
Alternative Finance Plays a Role in Diversifying the Industry
Increasing opportunities for historically underrepresented minorities at the highest levels of business management and corporate governance is key to creativity, growth, and access in finance. Supporting Black students with knowledge, resources, and employment opportunities ensures they can succeed and thrive professionally.
The alternative finance industry, born in the early 2000s as the internet rapidly expanded, has matured since the 2008 Financial Crisis thrust alternative lending and banking into a more substantial role. Crypto-currency, peer-to-peer lending, and crowdfunding have evolved from niche internet trends to a significant global growth industry. These alternatives to traditional banks and loans offer historically underrepresented minorities a powerful position in global finance, promising to transform the industry into one that better serves stakeholders.
Erika James, dean of The Wharton School, is quoted in the press release saying, “We are proud to play an important role in the creation of AltFinance which, through its efforts to support HBCUs, will make an immediate and positive difference for students of color. As the country’s largest business school, with a reach from pre-college students to C-suite executives, it is Wharton’s privilege to offer our world-class faculty and resources to those who are so deserving.”
The expected launch date for AltFinance is the first half of 2022, and the hope is that it may expand beyond the three initial partner HBCUs.