Philanthropic funding lagging for nonprofits led by people of color
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Nonprofits led by black or Latino executive directors face a harder time getting adequate funding from foundations compared with those headed by white leaders, according to a report from Echoing Green and the Bridgespan Group coming out this week, The New York Times reports.
Among organizations focused on helping black boys, those with black leaders had nearly half the revenue and unrestricted assets that were 91 percent lower than organizations with white leaders.
The report highlights three reasons that racial disparities remain regarding how philanthropy funds nonprofits. First, because philanthropic institutions are overwhelmingly white, it can be difficult for leaders of color to make connections to them. That can lead to the second challenge: How to build rapport with funders. And when a relationship is established, reporting requirements measuring how effective an organization’s program is can be particularly burdensome.
This latest data comes at a time when funders are already being challenged to take on more flexible grantmaking and other practices to help nonprofits through the COVID-19 crisis.
“Is this a moment to not just talk about the data but to do something about it?” Cheryl Dorsey, president of Echoing Green, asked rhetorically in the Times article.
The Nonprofit Finance Fund has been calling for funders to take on more flexibility when evaluating possible grantees in order to be more racially inclusive. “Common approaches to evaluating a nonprofit’s financial fitness – and ‘readiness’ for a grant or loan – unwittingly reinforce divides,” its guide on how funders can support racial equity reads. “Nonprofits that have money have an easier time getting more, and nonprofits that don’t – and the communities that rely on them – lose out.”
Among its recommendations are to avoid judging a nonprofit’s financials solely on revenue size and composition and to look holistically at how involved its board members are beyond how much they donate.