Nonprofit Funding Bias and
Diversity in Foundations
Andrew Sears
Executive Director
TechMission

Funding Bias: Non-Whites Make Up 52.4%
Of Poverty But Non-White Led Nonprofits
Only Receive 3% of 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

Why Diversity Is Important And How
Funding Bias Happens

Nonprofit Leadership Does Not
Reflect Racial Community It Serves
Source: http://www.aecf.org/upload/publicationfiles/executive_transition_survey_report2004.pdf

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

Most Nonprofits: Have A Different
Class Culture Than Clients
White Black Latino Asian
Upper
Leadership Leadership Leadership Leadership
Middle
Lower Clients

Nonprofit Leadership Does Not
Reflect Class Community It Serves
Data shows subjective estimates from the author based on educational levels and class assimilation rates of nonprofit leadership.
94% of leadership have at least a bachelor’s degree with an estimated class assimilation rate of 90-95% based on living location &
culture

Funding and Gender
From: http://www.aecf.org/upload/publicationfiles/executive_transition_survey_report2004.pdf

Sources of
Funding Bias

Why Does Only 3% Of Foundation
Funding Go To Nonprofits Led By People
Of Color?

Bias Source No. 1: Limited Funding of
Faith-Based Nonprofits
 Religious Restriction = Racial Bias: 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
◦ Not funding faith-based organizations makes White-
led nonprofits twice as likely to get funded
◦ Some believe that the literacy tests for voting in the
1950’s have been replaced with religious tests for
funding today
Statistics are explained in the attached spreadsheet at:
www.urbanministry.org/fundingbias

Bias Source No. 2: Cultural Bias
 Race
◦ 97% of foundation funding goes toward White-
led nonprofits
 Class
◦ Estimated 95% of nonprofit leadership is
culturally middle class
 Gender
◦ While 58% of nonprofit executives are women,
the median nonprofit income led by a man has
twice the 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

Learning From Research: Cultural Bias
On SAT Test
 Research has shown the SAT test
statistically to have a bias:
◦ If you are White or Asian on average you will
have a 150-200 point increase
◦ On average, you score 30 points higher per
$10,000 of family income
 Why?
◦ Test follows White, middle class values
◦ Legacy of past discrimination
Source: http://www.maec.org/natstats.html &
http://www.educationanddemocracy.org/testing_facts.pdf

Cultural Bias In Funding: Different
Value Systems
Dominant Culture Non-Dominant Culture
(middle & upper class) (lower class)
 Values Big Organizations  Cost effectiveness
 Almost no weight given to  Is leadership close to the
the leadership being close community?
to the 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
Lower Class Value Middle/Upper Class Value
 Low Cost  High Quality
 Low Cost  Speed
 Relational  Structured/Orderly
 Relational  Efficient
 Spontaneous  Detached/Objective
 Subjective  Objective
 Intense  Reserved
 Hierarchical  Egalitarian Appearance
 Trauma Is Common  Trauma Is Avoided
 Many Small Organizations  Big Organizations
 Many Volunteers/Time’s  Staff Time Is Expensive
Cheap  Any Middle/Upper Class
 Any Lower Class Culture/ Values
Culture/Values

Policies To Address
Funding Bias

Policy Recommendation No. 1:
Diversity Profiles
 “If you can't measure it, you can't manage it.” Peter Drucker
 Foundations and the government should require all funding
recipients to complete diversity reporting forms as part of
applications
 All funders should publicly list their own diversity reporting
form with the cumulative results of who they have funded
 Diversity reports should carry similar weight as financial and
other outcome reports and should be listed in foundations’
annual reports
◦ Diversity profiles and reports become an approximate measure for many
of the subjective elements that are hard to measure in other outcomes

Policy Recommendation No. 2:
Change Funding Criteria
 Need funding criteria that values diversity
 Examples
◦ 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 the organization serving
the highest risk community?
 Require detailed criteria to distinguish at-risk vs. high risk, etc.
◦ 10% of Grant Application Weight: How closely is the
organization partnered with major indigenously-led
initiatives?

Policy Recommendation No. 3:
Affirmative Action In Funding
 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
 Promote strategies to support small
nonprofits
◦ View explosion in number of nonprofits as comparable to
the increase in small businesses and adopt strategies
similar to those promoting small businesses

Policy Recommendation No. 4: Fund Studies
on Macroeconomic 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

Examples of Macroeconomic
Research Questions
 Perform a study on people who made it out of poverty
asking “What organizations and programs were most
helpful”?
◦ Hypothesis: You might find that Black, Latino and lower class
culture organizations and especially faith-based organizations
provide 75% of life change while receiving 3% of foundation
funding.
 How should we allocate funding to meet the need for after-
school programs when demand is more than twice that of
supply?
◦ Hypothesis: 75% of funding goes to middle-class organizations
that have a high cost per student and only serve 25% of the
population, while lower-class culture serves 75% of the
remaining population at a third of the cost.

Policy Recommendation No. 5: Adopt Strategies
To Support Smaller Organizations
 Promote strategies to support small nonprofits
◦ View explosion in number of nonprofits as comparable to
the increase in small businesses
◦ Funders should adopt strategies similar to those
promoting small businesses
 TechMission Strategy
◦ Online Volunteer Matching: ChristianVolunteering.org
◦ AmeriCorps Members to small organizations:
TechMission Corps
◦ Free Grants, Jobs & Training Directories:
UrbanMinistry.org

Policy Recommendation No. 6:
Have Diverse Staffing & Board
 Track Diversity Profile of Staff and Board
of foundation
 Be intentional about having staff that
work most directly with community reflect
the demographics of the community

3 Keys To Achieving Diversity
1. Diversity Measurements 2. Diversity At Every
& Affirmative Action Level Needed for
At Every Level Leadership Pipeline
3. Recognize That Values & Culture Will Be Set
By Those With Power In The Organization

Appendix

Why TechMission Is Addressing
This Issue?
 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 the funding of nonprofits
 In a down economy, we are observing an increasing
bias towards big (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 a 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
grassroots 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

Diversity Profile at TechMission

What TechMission Can Uniquely
Do To Address This?
 Ability to build a highly scalable
organization that has values and staff that
reflect the low-income communities that
we serve
 Provide resources to those communities
 Why?
◦ Capacity: Scalable resources from National
Service Movement and Technology
◦ Values: Foundation in Black, Latino and low
income churches