Andrew SearsExecutive Director

TechMission

Nonprofit Funding Bias and Nonprofit Funding Bias and Diversity in FoundationsDiversity in Foundations

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

http://www.slideshare.net/rosettathurman/race-matters-in-nonprofits-promoting-diversity-in-our-profession andhttp://www.aecf.org/upload/publicationfiles/executive_transition_survey_report2004.pdf

Why Diversity Is Important And How Why Diversity Is Important And How Funding Bias HappensFunding Bias Happens

Nonprofit Leadership Does Not Nonprofit Leadership Does Not Reflect Racial Community It ServesReflect Racial Community It Serves

Source: http://www.aecf.org/upload/publicationfiles/executive_transition_survey_report2004.pdf

Nonprofit Statistics And RaceNonprofit Statistics And Race1.4 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 Most Nonprofits: Have A Different Class Culture Than Different Class Culture Than ClientsClients

White Black Latino Asian

Upper

Middle

Lower

Leadership

Clients

Leadership Leadership Leadership

Nonprofit Leadership Does Not Nonprofit Leadership Does Not Reflect Class Community It ServesReflect 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 GenderFunding and Gender

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

Sources of Sources of Funding BiasFunding Bias

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

Bias Source No. 1: Limited Funding of Bias Source No. 1: Limited Funding of Faith-Based NonprofitsFaith-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 BiasBias Source No. 2: Cultural BiasRace

◦97% of foundation funding goes toward White-led nonprofits

Class◦Estimated 95% of nonprofit leadership is

culturally middle classGender

◦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 Learning From Research: Cultural Bias On SAT Test 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 incomeWhy?

◦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 Cultural Bias In Funding: Different Value SystemsValue SystemsDominant Culture (middle & upper class)

Values Big Organizations Almost no weight given to

the leadership being close to the community

Analytical & Quantitative◦ Nonprofit “SAT scores”

Purely Objective Criteria Secular Focused

Non-Dominant Culture (lower class)

Cost effectiveness Is leadership close to the

community?◦ Race of leadership

(staff/board)◦ Class background of

leadership◦ Neighborhood they live in

Holistic◦ Has a life been changed

Subjective Faith-Based & Secular

Common Class ValueCommon Class ValueTensions In OrganizationsTensions In OrganizationsLower Class Value Low Cost Low Cost Relational Relational Spontaneous Subjective Intense Hierarchical Trauma Is Common Many Small Organizations Many Volunteers/Time’s

Cheap Any Lower Class

Culture/Values

Middle/Upper Class Value High Quality Speed Structured/Orderly Efficient Detached/Objective Objective Reserved Egalitarian Appearance Trauma Is Avoided Big Organizations Staff Time Is Expensive Any Middle/Upper Class

Culture/ Values

Policies To Address Policies To Address Funding BiasFunding Bias

Policy Recommendation No. 1: Policy Recommendation No. 1: Diversity ProfilesDiversity 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: Policy Recommendation No. 2: Change Funding CriteriaChange Funding CriteriaNeed funding criteria that values diversityExamples

◦ 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: Policy Recommendation No. 3: Affirmative Action In FundingAffirmative Action In FundingIf 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 Policy Recommendation No. 4: Fund Studies on Macroeconomic Social Entrepreneurshipon 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 Examples of Macroeconomic Research QuestionsResearch 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 Policy Recommendation No. 5: Adopt Strategies To Support Smaller OrganizationsStrategies 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 businessesTechMission Strategy

◦ Online Volunteer Matching: ChristianVolunteering.org◦ AmeriCorps Members to small organizations: TechMission

Corps◦ Free Grants, Jobs & Training Directories:

UrbanMinistry.org

Policy Recommendation No. 6: Policy Recommendation No. 6: Have Diverse Staffing & BoardHave Diverse Staffing & BoardTrack Diversity Profile of Staff and Board

of foundationBe intentional about having staff that

work most directly with community reflect the demographics of the community

3 Keys To Achieving Diversity3 Keys To Achieving Diversity1. Diversity Measurements& Affirmative ActionAt Every Level

2. Diversity At EveryLevel Needed for Leadership Pipeline

3. Recognize That Values & Culture Will Be Set By Those With Power In The Organization

AppendixAppendix

Why TechMission Is Addressing Why TechMission Is Addressing This Issue?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 Why TechMission Can Speak to This Issue?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 TechMissionDiversity Profile at TechMission

What TechMission Can Uniquely What TechMission Can Uniquely Do To Address This?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 communitiesWhy?

◦Capacity: Scalable resources from National Service Movement and Technology

◦Values: Foundation in Black, Latino and low income churches