Philanthropy’s Racial Funding Gap is an Urgent Crisis

The demand for racial justice erupting across a nation ravaged by a pandemic disproportionately impacting communities of color is a call to action: the time for grantmakers to invest in Black leaders and Black-led organizations in America is now.

Black Lives Matter must not only be a rallying cry for the impact we want to achieve; it’s a recipe for how to achieve it. Race is one of the most reliable predictors of life expectancy, academic achievement, income, wealth, physical and mental health, maternal mortality, and so much else in life. This determinant factor means donors who care about supporting social change must take deliberate action to achieve racial equity. That’s what we call “equitable philanthropy,” and we believe it’s the foundation of more effective, high-impact philanthropy.

Consider the fight against teen smoking in the US, which has seen impressive declines overall, with philanthropy playing a pivotal role. However, when disaggregated by race, the data tells a different story. The majority of prevention programs and policy have targeted teens, thus missing the adult window when African Americans typically start to smoke. While African American teens smoke at much lower rates than white teens, by the time they are adults the rates are about the same—with tragic results because African Americans die at much higher rates from smoking-related illness.

It’s critical to support Black leaders and other leaders of color because these leaders often bring strategies informed by an intimate understanding of the racialized experiences of communities of color and the issues these communities face. Like the Black adult smoking window. Unfortunately, by and large, such funding is not happening today.

Take Echoing Green’s applicant pool, a group that is considered among the most promising start-up nonprofits. Looking just at its highest qualified applicants (i.e., those who progressed to its semifinalist stage and beyond), revenues of the Black-led organizations are 24 percent smaller than the revenues of their white-led counterparts, and the unrestricted net assets of the Black-led organizations are 76 percent smaller than their white-led counterparts. The stark disparity in unrestricted assets is particularly startling, as such funding often is a proxy for trust.

Disparities persist even when taking into account factors like issue area or education levels. For example, among organizations in Echoing Green’s Black Male Achievement fellowship, which focuses on improving the life outcomes of Black men and boys in the United States, the revenues of the Black-led organizations are 45 percent smaller than those of the white-led organizations, and the unrestricted net assets of the Black-led organizations are 91 percent smaller than the white-led organizations — despite focusing on the same work.

What Grantmakers Can Do

These inequities are neither new nor limited to Echoing Green’s applicant pool. Organizations led by people of color, including ABFE, a philanthropic partnership for Black communities, and Philanthropic Initiative for Racial Equity, have been sounding the alarm about this issue for quite a while. Although the economic crisis brought on by the global pandemic is wreaking havoc on the finances of all nonprofits, organizations led by people of color already often live close to the financial edge. We are hearing from our networks that these nonprofits are even more vulnerable right now.

To further understand what drives the racial funding gap, Echoing Green and Bridgespan conducted interviews with more than 50 leaders and other nonprofit executives of color and philanthropic staff. The research found that leaders of color face multiple barriers across the full arc of fundraising efforts:

• Getting connected to potential funders: Leaders of color have inequitable access to social networks that enable connections to foundations and influential people in philanthropy.
• Building rapport with potential funders: Interpersonal bias can manifest as mistrust and micro-aggressions, which inhibit relationship building and place emotional burdens on leaders of color.
• Securing support for the organization: Grantmakers often lack understanding of culturally-relevant approaches, leading them to over-rely on strategies with which they are familiar and forms of evaluation that may not be accessible to organizations that face chronic challenges getting adequate financing and other support.
• Sustaining relationships with current supporters. Grant-renewal processes can be arduous if mistrust remains, and funding may stop if the grantmaker has a white-centric view of what is a strategic priority and how to measure progress.

The existence of these barriers is a sign of how racial bias — both personal and institutional, conscious and unconscious — creeps into all parts of the philanthropic and grant-making process. We had intended to showcase this research at the GEO 2020 National Conference. With that marquee event a victim of COVID-19, our organizations came together in webinars to discuss these barriers because the issue of racial bias in funding could not be more urgent. Simply, the racial funding gap thwarts impact. But such disparities also matter because without taking active antiracist measures to ensure equity in funding, philanthropists inadvertently contribute to inequities in society.

Meeting this Moment

GEO recently reminded us all that hope is not a strategy. Echoing Green has outlined five strategies for moving forward from this moment to more effective social change. Bridgespan committed to continuing to challenge funders it works with to break through the systemic barriers that impede capital from flowing to Black leaders and other leaders of color. Being in community with other grantmakers and learning alongside our peers is what helps us achieve the changes we want to make. But it takes more than simply knowing what’s better to actually do better. It takes intentional attention to culture, adaptive leadership, change management and the ability to learn alongside others in community.

Change is possible. The global pandemic has challenged society in ways that might have seemed unimaginable before. But within that disruption, grantmakers took the opportunity to do things differently than how funding has traditionally been done before. The hundreds of US-based and international foundations that signed the pledgefacilitated by the Council on Foundations to embrace flexible and unrestricted grant making in response to the COVID-19 crisis shows what grantmakers are capable of doing when faced with an immediate crisis. The crisis of racial injustice is chronic but its harm is no less immediate; building a just and equitable society is no less urgent.

Aaron Walker, CEO of Camelback Ventures, a nonprofit social venture fellowship for early-stage underrepresented entrepreneurs, recently wrote an open letter to grantmakers on racism in philanthropy. Reflecting on the barriers faced by BIPOC entrepreneurs seeking philanthropic funding, he highlights the attachment of power to money: who gets it, how they get it, and whether it is enough funding for these leaders of color to be present in the work rather than navigating still more barriers to receive the next check from the next funder. Walker writes: “What BIPOC entrepreneurs have essentially been saying is ‘let me breathe!’ The oxygen in this world is money. Philanthropy has its knee on many of our organization’s necks—and the question is will you wait ‘nine minutes’ until we’re dead or get up.” It’s time for grantmakers to stand up.

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Cheryl L. Dorsey is president of Echoing Green. Prior to taking lead of the organization in 2002 she was a social entrepreneur herself receiving an Echoing Green Fellowship in 1992 to help launch a community-based mobile health unit in Boston. She has also served in two presidential administrations and several nonprofit boards.

Peter Kim is a partner at The Bridgespan Group and its chief learning and innovation officer. He co-leads the firm’s racial equity strategy, focusing on integrating racial equity more fully into its approach to serving clients.

Marcus Walton is president and CEO of GEO. He joined GEO after more than a decade of practice in both nonprofit management and ontological learning model and has a long history of racial equity facilitation and training. Previously he was Director of Racial Equity Initiatives for Borealis Philanthropy and has also served as Vice President and Chief Operating Officer for ABFE.