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Nonprofit Funding Bias And Foundation Diversity

This presentation examines funding biases of nonprofits across race, class, gender and faith. 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.

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Nonprofit Funding Bias And Foundation Diversity

  1. 1. Nonprofit Funding Bias and Diversity in Foundations Andrew Sears Executive Director TechMission
  2. 2. Funding Bias: Non-Whites Make Up 52.4% Of Poverty But Non-White Led Nonprofits Only Receive 3% of Funding and
  3. 3. Why Diversity Is Important And How Funding Bias Happens
  4. 4. Nonprofit Leadership Does Not Reflect Racial Community It Serves Source:
  5. 5. 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:
  6. 6. Most Nonprofits: Have A Different Class Culture Than Clients White Black Latino Asian Upper Leadership Leadership Leadership Leadership Middle Lower Clients
  7. 7. 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
  8. 8. Funding and Gender From:
  9. 9. Sources of Funding Bias
  10. 10. Why Does Only 3% Of Foundation Funding Go To Nonprofits Led By People Of Color?
  11. 11. 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:
  12. 12. 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: & The class statistic is explained on a previous slide
  13. 13. 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: &
  14. 14. 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
  15. 15. 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
  16. 16. Policies To Address Funding Bias
  17. 17. 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
  18. 18. 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?
  19. 19. 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
  20. 20. 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
  21. 21. 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.
  22. 22. 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: ◦ AmeriCorps Members to small organizations: TechMission Corps ◦ Free Grants, Jobs & Training Directories:
  23. 23. 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
  24. 24. 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
  25. 25. Appendix
  26. 26. 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
  27. 27. 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) ◦ being the Black/Latino counterpart to and  Leadership has extensive experience on writing about and living out reconciliation across race, class and gender
  28. 28. Diversity Profile at TechMission
  29. 29. 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