NEW YORK—The Open Society Economic Justice Program, through the Soros Economic Development Fund, its impact investing arm, has committed $5 million to an innovative new fund focused on reducing racial and gender bias in investment decisions.

The $87.9 million fund is the first raised by Illumen Capital, a majority Black-owned firm that seeks to drive capital to entrepreneurs and communities that have historically been overlooked or undervalued by the asset management industry.

Its investment strategy—the first of its kind in the field—involves taking stakes in other impact investment funds, and then providing long-term, evidence-based coaching to those fund managers to mitigate and reduce their implicit biases that work against businesses owned by people of color and women.

“The Soros Economic Development Fund is identifying new and creative ways to promote racial justice through its investments,” said Catherine Cax, director of investments at the Soros Economic Development Fund.

“Illumen Capital’s systemic approach to a structural problem is what initially drew us to this opportunity. The idea that we can try to influence the financial industry toward more diversity and inclusion while also deploying capital to underserved communities to provide agency in decision-making and opportunities for asset creation is a win-win.”

The new fund will initially invest in approximately 10 to 12 social impact investment funds that seek equitable outcomes in education, health technology, financial inclusion, and sustainable energy.

The bias-reduction coaching that forms the core of Illumen’s approach is backed by research conducted by Stanford SPARQ, a team of leading social psychologists with expertise in unconscious bias. Research conducted between Stanford SPARQ and Illumen Capital shows biases of asset allocators inhibit them from seeing the true value of investments due to the race of the person presenting the opportunity, and that by overlooking these groups of people, investors are significantly underperforming.

The Soros Economic Development Fund is joining the Ford Foundation, the W.K. Kellogg Foundation, the Weingart Foundation, the California Wellness Foundation, and Deutsche Bank as anchor investors in this new fund.

The Illumen investment is part of the wider and ongoing commitment of the Open Society Foundations to racial justice. In July, Open Society announced $220 million in grant funding for emerging organizations and leaders building power in Black communities across the United States.