Author: Linh McCool, Consulting Associate

With Pride Month and Juneteenth on the calendar, it’s an especially important time to focus on Diversity, Equity and Inclusion (DEI) in all spheres of our society. While robust DEI initiatives exist, it’s apparent racial bias is still deeply ingrained in many individuals and institutions, including the field of philanthropy. Change can only come by exploring the racial discrimination and inequity that exist in the nonprofit fundraising sector, in both leadership and funders and, crucially, what nonprofit organizations and grantmakers can do to overcome racism.

There needs to be more diverse representation across the board, and particularly in leadership. While many nonprofit organizations aim to serve people of color, marginalized and underprivileged groups, there are far too few professionals of color in the nonprofit fundraising field. In 2019, only 13% of 9,254 Association of Fundraising Professionals members who answered a question about their ethnicity or race identified as other than white. And according to the Race to Lead: Confronting the Nonprofit Racial Leadership Gap study, the percentage of people of color in nonprofit and foundation executive leadership roles has remained under 20 percent for the last 15 years. A study respondent said, “One of the big problems in the nonprofit sector is that the leadership of nonprofit organizations doesn’t represent the racial/ethnic diversity of the country.”

While many nonprofit organizations aim to serve people of color, marginalized and underprivileged groups, there are far too few professionals of color in the nonprofit fundraising field. Leaders of color bring perspectives and strategies that reflect the experiences and issues communities of color face that nonprofits ultimately aim to serve.

Why does the lack of representation of people of color in the philanthropic fundraising sector matter? Leaders of color bring perspectives and strategies that reflect the experiences and issues communities of color face that nonprofits ultimately aim to serve. As philanthropist Jeff Raikes, co-founder of the Raikes Foundation and former CEO of the Bill & Melinda Gates Foundation, said: “Philanthropy is overlooking leaders of color who have the most lived experience with and understanding of the problems we are trying to solve. That needs to change.”   

With the lack of diverse representation a key factor, nonprofit organizations led by people of color receive less money than those with white leaders, reinforcing the social issues nonprofits say they are trying to overcome. Black, Indigenous, and Latinx nonprofit leaders receive only 4% of total grants and contributions in philanthropic funding today. According to the May 2020 Echoing Green and Bridgespan Racial Equity and Philanthropy Report, the revenues of Black-led organizations are 24 percent smaller than their white-led counterparts. And when it comes to financial support, the unrestricted net assets of the Black-led organizations are 76 percent smaller than their white-led counterparts, indicating a lack of trust in Black leaders and continued racial bias in the fundraising landscape. 

The need for more diversity and inclusion in nonprofit fundraising is clear, and there are steps nonprofits can take:

  1. Reflect and Acknowledge: Acknowledge discrimination and inequity within the industry and biases within ourselves. Be mindful of how this affects research, fundraising and personal interactions. Organizations can also go through their databases to discover and identify potential biases and assumptions, such as name associations that link to gender, nation of origin or religious affiliation, which may hinder philanthropic fundraising efforts.
  2. Promote Diverse Representation: Have more people of color involved in the conversation and decision-making processes by bringing them into professional positions in philanthropy. This gives nonprofit organizations the unique opportunity to have the lived experiences, insights, and strategies needed to serve marginalized communities and lead the missions of nonprofit organizations.
  3. Get Involved: Actively learn from, connect to, engage with, and build trust with communities most impacted by the social changes your organization’s mission seeks to address.
  4. Set Goals: Organizations can set racial equity/diversity goals to track measurable progress in DEI.
  5. Support: Support local nonprofits, businesses, and the community, specifically those of color and marginalized groups. Learn more about DEI via classes, webinars, and forums. Create a supportive and inclusive environment at your organization, and offer help and understanding to professionals of color.

Steps nonprofits can take to be more inclusive: reflect and acknowledge discrimination and inequity, hire people of color, actively learn from, connect to and engage with communities of color, set racial equity/diversity goals and support local nonprofits and businesses.

There are also ways that prospect researchers can be more diverse and inclusive:

  1. Look More Deeply into Communities: There is a common misconception that people of color do not have wealth and, therefore, aren’t asked as often to donate. But according to the Women Give Study from the Women’s Philanthropy Institute at IU’s Lilly Family School of Philanthropy, women and people of color give differently than their male or white counterparts. For instance, women give a larger number of gifts than men. While average gift size is relatively equal, and in some cases men’s gifts are larger, women contribute a greater proportion of dollars than men. This should be considered when doing prospect research, using different giving and affinity indicators, and various sources to get a fuller perspective. When building portfolios, prospect researchers can make more profiles with people of color, utilizing research and experience about how different groups of people give.
  2. Be Critical of the Tools: Prospect researchers should be aware of their tools and the bias that may be integral. Prospecting from contact reports, transactions, and giving to other organizations are some ways to find new and diverse prospects for organizations. Algorithms can perpetuate biases against women and people of color. The data collected and used by AI typically have inherent biases, and subconscious prejudice can impact the information researchers search, find, and interact with, thus perpetuating biases and being exposed to data that confirms preconceived notions.

Of course, funders are the key to helping nonprofit organizations achieve their mission and provide services to those in need. Ford Foundation President Darren Walker states, “As funders, we need to reject the impulse to put grantmaking rather than change making at the center of our worldview,” The Ford Foundation is focusing on putting racial equity at the center of its grantmaking. The foundation recently revised its entire grant process to track racial data on its grantees’ executive leadership and boards. Ford’s BUILD portfolio is a $1 billion five-year investment that aims to equip social justice organizations with the resources they need to impact systems change. BUILD gives grantees, many of whom have leaders of color, larger, longer, and more flexible grants and the autonomy to decide where to put the funding.

While racial discrimination and inequity are all too prevalent in philanthropic fundraising, all of us can play a role in being more diverse and inclusive and doing what nonprofits do best: leading transformational change to improve the lives of people and communities.