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How the Serve America Act Can Counter Nonprofit Funding Bias

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Research shows that while 52.4% of those in poverty in the USA are people of color, only 16.5% of nonprofits are led by people of color, and only 3% of foundation funding goes toward organizations ...

Research shows that while 52.4% of those in poverty in the USA are people of color, only 16.5% of nonprofits are led by people of color, and only 3% of foundation funding goes toward organizations that are led by people of color. This presentation provides three recommendations of how AmeriCorps can counter this bias: (1) reaching out to Black and Latino led Faith-based organizations (2) requiring grantees provide diversity profiles (3) Revising funding priorities.

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How the Serve America Act Can Counter Nonprofit Funding Bias How the Serve America Act Can Counter Nonprofit Funding Bias Presentation Transcript

  • How CNCS Can Address Nonprofit Funding Bias Andrew Sears Executive Director, TechMission andrew@techmission.org 617-282-9798 x101 Presentation Available at: www.urbanministry.org/americaservesact
  • Outline  There is a strong bias across race, class and gender from foundation funding of nonprofits  CNCS has the potential to counter this bias  Specific policy recommendations on how CNCS can counter the funding bias
  • Why TechMission Is Addressing This Issue?  TechMission is an AmeriCorps national direct grantee that supports an at-risk corps  TechMission primarily supports Black and Latino-led nonprofits that are close to the community – We have seen how these nonprofits are experiencing systemic issues with bias in funding of nonprofits – In a down economy, we are observing an increasing bias towards large (i.e. White) organizations – Many of our partner sites are struggling to stay functional
  • Why TechMission Can Speak to This Issue?  TechMission’s organizational culture reflects lower class culture – Nearly all of board and senior staff are Black, Latino and/or come from low-income background – ED is White from lower class background – TechMission Corps AmeriCorps members are 62% Black and Latino with 50% from low-income backgrounds  TechMission has one of the widest spans of connection with grass roots organizations (over 4,000 registered nonprofits) – UrbanMinistry.org being the Black/Latino counterpart to Idealist.org and VolunteerMatch.org  Leadership has extensive experience on writing about and living out reconciliation across race, class and gender
  • Nonprofit Statistics and Race  1.4 million registered nonprofits in USA – 1,169,000 White-led nonprofits – 138,600 Black-led nonprofits – 50,400 Latino-led nonprofits – 12,600 nonprofits led by other races Source: Number of nonprofits from Independent Sector, Racial breakdown extrapolated based on survey results at: http://www.aecf.org/upload/publicationfiles/executive_transition_survey_report2004.pdf
  • Funding Bias: Non-Whites Make up 52.4% of Poverty but Non-White Led Nonprofits only Receive 3% of Foundation Funding http://www.slideshare.net/rosettathurman/race-matters-in-nonprofits-promoting-diversity-in-our-profession and http://www.aecf.org/upload/publicationfiles/executive_transition_survey_report2004.pdf
  • Nonprofit Leadership Does Not Reflect Class Community it Serves Data show subjective estimates from the author based on educational levels and class assimilation rates of nonprofit leadership. 94% of leadership have at least bachelor’s degree with an estimated class assimilation rate of 90-95% based on living location & culture
  • Most Nonprofits: Have a Different Class Culture than Clients They Serve White Black Latino Asian Upper Leadership Middle Lower Clients
  • Indigenously Led Nonprofits Are Most Affected by Funding Bias White Black Latino Asian Upper Middle Lower Leadership and clients
  • Funding and Gender From: http://www.aecf.org/upload/publicationfiles/executive_transition_survey_report2004.pdf
  • Diversity Profile of CNCS Black Latino(a) White Asian Native Other American USA Poverty 23.9% 24.8% 47.6% 3.7% 5.3% 1% AmeriCorps 26% 15% 50% 2% 3% 4% NCCC 86% VISTA NO DATA (recommendation for study) CNCS Staff NO DATA HHS Staff 16.8% 3.6% 55.8% 7.2% 16.6% Leadership of NO DATA (recommendation for study) Funded Orgs Sources: http://www.abtassociates.com/reports/ES-americorps-baseline.pdf http://www.abtassociates.com/reports/COMSRVS.pdf http://www.opm.gov/feddata/demograp/Table2mw.pdf
  • If CNCS Funding Profile Reflects Nonprofit Leadership Profile in USA… Source: http://www.aecf.org/upload/publicationfiles/executive_transition_survey_report2004.pdf
  • Diversity Profile of CNCS AmeriCorps Strength Potential Area for Growth Sources: http://www.abtassociates.com/reports/COMSRVS.pdf % Nonprofit Leadership Funded Assumes CNCS Funding Profile reflects nonprofit leadership in USAhttp://www.aecf.org/upload/publicationfiles/ex
  • Summary  It is not CNCS’s fault that there is a funding bias in the nonprofit community, but…  CNCS has the ability to dramatically counter nonprofit bias – Diversity profile of AmeriCorps members is strong: creates diversity in leadership pipeline of nonprofits – Diversity profile of leadership of CNCS funded organizations is unknown  This is what is most important to counter funding bias  Diverse leadership creates diversity throughout organizations
  • How Can CNCS Be A Force to Counter Nonprofit Funding Bias?
  • Why Does Only 3% of Foundation Funding Go to Nonprofits Led by People of Color? Statistics are explained in the attached spreadsheet at: www.urbanministry.org/fundingbias
  • Policies Recommendation 1: Continue to Reach out to Indigenously-Led Faith-Based Nonprofits  Policies that restrict funding faith-based organizations create an unintentional bias toward White-led organization  How it works – About 2/3 of Black-led nonprofits are in churches or other faith- based organizations – About 2/3 of White-led nonprofits are secular – Limited funding of faith-based organizations makes White-led nonprofits twice as likely to get funded  It is Critical to Continuing efforts of Office of Faith- based & Neighborhood partnerships Statistics are explained in the attached spreadsheet at: www.urbanministry.org/fundingbias
  • Two Fundamental Problems 1. Lack of representation of FBOs can lead to Disproportionate Effects on Black and Latino led- organizations – Less than 10% of AmeriCorps national direct organizations are faith-based – Faith-based organizations represent about 1/3 of the social services sector 2. Cultural Bias – Outcome measures and funding criteria can unintentionally introduce a cultural bias into funding process just like SAT test introduces bias in testing Statistics are explained in the attached spreadsheet at: www.urbanministry.org/fundingbias
  • How to Perform on the SAT Test  Be White or Asian – 150-200 point increase  Be Rich – 30 points per $10,000 of family income  Conclusion: To Improve SAT Scores… – Be careful how you pick your parents Source: http://www.maec.org/natstats.html & http://www.educationanddemocracy.org/testing_facts.pdf
  • How to Get Funding from Foundations  Be White – 97% of foundation funding goes toward White-led nonprofits  Be Culturally Middle Class – Estimated 95% of leadership of nonprofits is culturally middle class  Be Male – While 58% of nonprofit executives are women, the median income of a nonprofit led by a man has twice the median income of a nonprofit led by a woman Sources: http://www.aecf.org/upload/publicationfiles/executive_transition_survey_report2004.pdf & http://greenlining.org/publications/pdf/339 The class statistic is explained on a previous slide
  • Dominant Culture Outcomes vs. Non-dominant Outcomes Dominant Culture Non-Dominant Culture (middle & upper class value) (lower class value)  Value Big Organizations  Cost effectiveness  Almost no weight given to  Is leadership close to the leadership being close to the community? community – Race of leadership (staff/board) – Class background of leadership – Neighborhood they live in  Analytical & Quantitative  Holistic – Nonprofit “SAT Scores” – Has a Life been Changed  Purely Objective Criteria  Subjective  Secular Focused  Faith-Based & Secular
  • Common Class Value Tensions in Organizations Dominant Class Value Non-Dominant Class Value  High Quality  Low Cost  Speed  Low Cost  Structured/Orderly  Relational  Efficient  Relational  Detached/Objective  Spontaneous  Objective  Subjective  Reserved  Intense  Egalitarian Appearance  Hierarchical  Trauma is Avoided  Trauma is Common  Big organizations  Many small organizations  Staff time is expensive  Many Volunteers/Time’s Cheap  Any Middle/Upper Class Culture/  Any Lower Class Culture/Values Values Source: http://www.urbanministry.org/reconciliation-across-social-class http://www.techmission.org/presentations/social_class_for_ccda_v2.ppt
  • Policies Recommendation 2: Use Diversity Profiles for All CNCS Applicants  Recommend CNCS require all funding recipients to complete diversity reporting form as part of applications  Recommend CNCS publicly list their own diversity reporting form with the cumulative results of who they funded and who the members are  Recommend Diversity reports carry similar weight as financial and other outcome reports and should be listed in CNCS’s annual report – Diversity profiles & reports become an approximate measure for many of the subjective elements that are hard to measure in other outcomes
  • Sample Diversity Profile Form Board & Staff Asian Black Latino(a) White Other Total F M Tot % F M Tot % F M Tot % F M Tot % F M Tot % F M Total % Board Chair/President of Board 0 0% 0 0% 0 0% 1 1 17% 0 0% 0 1 1 17% Other Board Officers 0 0% 1 1 17% 1 1 17% 0 0% 0 0% 0 2 2 33% Other Board Members 0 0% 2 1 3 50% 0 0% 0 0% 0 0% 2 1 3 50% Subtotals 0 0 0 0% 2 2 4 67% 0 1 1 17% 0 1 1 17% 0 0 0 0% 2 4 6 100% Management Staff Executive Director 0 0% 0 0% 0 0% 1 1 33% 0 0% 0 1 1 33% Other Management or Supervisory Staff 0 0% 1 1 2 67% 0 0% 0 0% 0 0% 1 1 2 67% Subtotals 0 0 0 0% 1 1 2 67% 0 0 0 0% 0 1 1 33% 0 0 0 0% 1 2 3 100% Other Staff Program Staff 0 0% 0 0% 0 0% 3 1 4 27% 0 0% 3 1 4 27% Support Staff 1 1 7% 2 1 3 20% 1 1 7% 3 2 5 33% 1 1 7% 7 4 11 73% Subtotals 1 0 1 7% 2 1 3 20% 0 1 1 7% 6 3 9 60% 1 0 1 7% 10 5 15 100% Volunteer/AmeriCorps Members at Sites 1 1 2 7% 7 4 11 38% 1 2 3 10% 9 4 13 45% 0 0% 18 11 29 100% Subtotals 1 1 2 7% 7 4 11 38% 1 2 3 10% 9 4 13 45% 0 0 0 0% 18 11 29 100% Grand Total 2 1 3 6% 12 8 20 38% 1 4 5 9% 15 9 24 45% 1 0 1 2% 31 22 53 100% Organization Population Served 47 39 86 6% 304 256 560 42% 291 248 539 40% 37 41 78 6% 37 33 70 5% 716 617 1333 100% Program Population Served (if applicable) 2 4 6 1% 125 103 228 53% 107 59 166 39% 2 2 4 1% 15 12 27 6% 251 180 431 100% From Associated Grantmakers of Massachusetts: http://www.agmconnect.org/cpf/CPF_Diversity_Form.xls
  • Example Diversity Profile: TechMission
  • Policies Recommendation 3: Revise Funding Criteria to Better Reflect Community Values  Diversity profiles become an objective measure to approximate subjective elements that are hard to quantify  Example from TechMission’s Grant Applications – 20% of Grant Application Weight: Is leadership close to the community as reflected in their diversity profile and strategy?  Use diversity profile form and grant questions – 20% of Grant Application Weight: Is organization serving the highest risk community?  Require detailed criteria to distinguish at-risk vs. high risk, etc.
  • Policies Recommendation 3: Revise Funding Criteria  Consider “Minority Owned Business” Preference for Nonprofits – If the Government gives preference to minority owned businesses in contracts, shouldn’t that be a consideration with nonprofits? – Nonprofits that closely reflect the demographics of the communities they are serving should be given preference (affirmative action in nonprofit funding)  Promote strategies to support small nonprofits – View rapid increase in number of nonprofits as comparable to the increase in small businesses – Funders should adopt strategies similar to those promoting small businesses
  • Policies Recommendation 3: Revise Funding Criteria to take into Account Macroeconomic in Addition to Microeconomic Social Entrepreneurship  Social entrepreneurship and traditional nonprofit outcome measures take a microeconomic perspective focused on individual organizations  Need new measures of effectiveness that provide a macro perspective – Need macro-tools just as social entrepreneurship brought microeconomic business tools to nonprofits – i.e. Perform a study on people who made it out of poverty asking “What organizations and programs were most helpful”? – i.e. How should we allocate funding to meet the need for after school programs when demand is more than twice supply?
  • Policy Recommendation 3: Revise Funding Criteria Related to Cost Per Member Incentives  Macroeconomic Consideration: CNCS funding process currently encourages a high cost per member – Higher match means more likely to get more funding from CNCS – Most 1,000+ member grantees have a cost per member around $30k-40k per member – Under the Serve America Act, growth from 75,000 members to 250,000 @ $40k/member would require $7 billion in growth annually in the nonprofit sector – $7 Billion of nonprofit sector growth among CNCS grantees is not realistic in the current economy
  • Policy Recommendation 3: Revise Funding Criteria Related to Cost Per Member Incentives  Emphasis on high cost per member creates a systemic bias – Since 97% of foundation funding goes to White-led upper-middle class nonprofits, other nonprofits have difficulty finding match – High cost per member programs have much more funding to track and record rigorous quantitative outcomes further increasing their chances of funding – Encourages high overhead and upper-middle class, elite organizations  Solution – Need stronger weight on measures of efficiency and diversity profile in funding and less weight on total cost per member (high match) – Move toward quantitative measures of social value beyond just funding match to show social return on investment (RoI)
  • Summary  There is a strong bias in the nonprofit funding community toward White, elite nonprofits – That is not CNCS’s fault  CNCS needs to implement policies to counter this bias 1. Intentionally pursuing indigenously-led FBOs 2. Use diversity profiles in applications & outcomes 3. Need to revise funding criteria to offset systemic bias
  • Summary: Revisions to Funding Criteria 1. Give diversity profiles significant weight in funding decisions. 2. Give preference for nonprofits that are the equivalent of a “minority owned” business 3. Develop funding strategies to foster growth of new nonprofits similar to the government’s small business strategies 4. Reverse incentives for programs to have a high cost-per-member with incentives focused on efficiency with high social RoI