Philanthropic Initiative for Racial Equity Blog

This past June, three California foundations—the David and Lucile Packard Foundation, the James Irvine Foundation, and the William and Flora Hewlett Foundation—unveiled a program of $5.75 million in capacity-building grants to nine intermediary organizations that would provide TA and training to “strengthen grassroots organizations that are led by or serve low-income people and communities of color in the Greater San Francisco Bay Area, Central Coast and San Joaquin Valley.”  The intermediaries—three community foundations, two other public foundations, and four capacity-building and advocacy nonprofits—will also distribute $3.3 million in pass-through grants to these organizations. 

On first glance, this looks like a reasonably typical foundation capacity-building initiative, with the bulk of the resources supporting intermediary-delivered training and TA and a smaller amount of money designated as pass-through grants to the capacity-building beneficiaries. 

What makes this initiative significant is that it is a core component of the response of major California grantmakers to the legislative challenge introduced in the state legislature that called for enhanced transparency and public reporting on foundations’ grantmaking for communities of color and their own staff and board diversity—not how much capacity-building they were doing, but how much money they were putting into actual nonprofits and how much racial and ethnic diversity they themselves were building within their own institutions. 

In an agreement between nine large, prominent California foundations and legislative leaders, the foundations promulgated as a solution to support not necessarily more grantmaking to communities of color, much less people of color-led nonprofits, but an initiative emphasizing capacity-building support.  The foundations’ response shifts the focus from a supply question—whether foundations will make more grant dollars available to nonprofits serving, and even more importantly, led by people of color—to a demand question—whether such nonprofits have the skill and capacity to effectively apply for and deploy increased foundation grantmaking. 

The foundations’ response reads like the reaction of employers to affirmative action hiring pressures to justify poor diversity numbers:  “We would have hired more minorities if we could have find more that were qualified …”

The foundations sector’s response, ostensibly that capacity-building assistance is a missing element if not a precondition for foundations to be able to put more money into communities of color, is unconvincing.  But taken on their own merits, capacity-building initiatives aimed at nonprofits serving communities of color—or led by people of color—have to be subjected to questions about what they add to racial equity–what type of capacity is being built, whose capacity is truly enhanced, who is doing both the identification of need and providing the tools, and how the capacity-building gets delivered.   

Kien Lee, Principal Associate of Community Science (formerly the Association for the Study and Development of Community), and a member of PRE’s Advisory Board, visits the question of the competencies and capacities of the foundations and the foundation-selected “capacity builders” themselves in the essay below.

Is Everyone Really Ready for the Task?

by Kien Lee

When several California foundations structured a response to the California legislature on the question of enhanced reporting regarding large foundations’ support of nonprofits serving communities of colors, the agreement downplayed the issue of mandatory public reporting in favor of strategies to better support nonprofits serving communities of color.  In addition to commitments to help build a diverse pipeline of leaders for the nonprofit and philanthropic sectors and supporting ongoing research, a core component of the foundations’ plan was to build the capacities of nonprofits that serve communities of color or are led by people of color.

The foundations appear to assume that it is the nonprofits, not philanthropic grantmakers themselves that need capacity building. It also wouldn’t surprise me if the foundations assume a one-size-fits-all-capacity-building approach for all nonprofits that serve minority and low-income communities, including those that are led by people of color. They’re wrong; capacity-building for racial and ethnic equity is complicated. Nonprofits that serve minority and low-income communities do not operate in isolation. Effective capacity building of these nonprofits requires developing and redirecting the orientations and skills of a group of outside professionals who directly affect their success, including program evaluators, capacity-builders, and especially the funders themselves.

It takes both funders and the groups they contract and fund to “walk the talk” in order to have a successful capacity building process.^1,2 Yet, the literature is dominated by toolkits, guidebooks, and studies about building the capacity of nonprofits, and not of foundations. Few toolkits and guidebooks for foundations (GrantCraft/PRE’s Guide to Grantmaking with a Racial Equity Lens³ among them) actually discuss the unique lens needed to support nonprofits that serve minority and low-income communities. Other frequently cited sources, such as Connolly and Lukas’ Funders’ Guide to Capacity Building⁴ and the Grantmakers for Effective Organizations’ (GEO) Funding Effectiveness—contain almost no information about working in racially, ethnically, and culturally diverse settings. Only one author in GEO’s Funding Effectiveness, Rick Cohen, pointed to the lack of diversity among foundation program staff and capacity builders, and how this limits the capacity of foundations and management support organizations to assist nonprofits led by people of color and that work with minority and low-income communities.

The situation is similar in the nonprofit capacity-building and evaluation professions, though in the last few years the national professional associations for these sectors have stepped up their efforts to elevate the importance of cultural competency, that is, the ability to understand the history and context of minority and low-income communities, the roles that nonprofits play in these communities, and the approaches needed to promote equity through their work. The American Evaluation Association, with support from the W.K. Kellogg Foundation, launched the Building Diversity Initiative in 2001. The goal was to diversify the profession and create a pipeline for emerging evaluators of color. Since the initiative ended, a core group of evaluators has been working proactively to institutionalize cultural competency standards in the association and in the field.

Likewise, the Alliance for Nonprofit Management established the Cultural Competency Initiative in 2005; the initiative’s goals were specifically to 1) research and document culturally-based practices in nonprofit capacity building, and 2) provide training and resources for nonprofit capacity builders and nonprofit leaders to develop the awareness, the will, and the skill to practice cultural competency effectively. This initiative’s evaluation shows that while this topic was increasingly discussed at the alliance’s national conferences and among some alliance members, many capacity builders were still not ready to consider cultural competency a required skill.

Anecdotal and impartial evidence from the evaluation of the above initiatives suggests that change has to simultaneously occur in the philanthropic, evaluation, and capacity-building sectors to ensure that the capacity building of nonprofits that serve minority and low-income communities occur in a culturally competent manner. Foundations have to recognize this, understand this, and support this; they cannot operate as if it is just the nonprofits that require strengthening. They have to look at their own grantmaking and contracting practices.

Foundations Must Change Their Grantmaking and Contracting Practices

Foundations could start by scrutinizing their criteria for a capacity-building grant. Foundations value well-written proposals that contain clearly articulated problem statements and performance measures.⁵ Such proposals are usually submitted by large established nonprofits that have been socialized into the culture of philanthropy. Unfortunately, frequently these nonprofits are not close enough to the ground to fully understand and appreciate the history, context, and culture of minority and low-income communities.

Therefore, foundations have reconsider the diagnostic and evaluation tools they typically use to identify areas for capacity building and to monitor the nonprofits’ progress. These tools usually contain questions about the following characteristics demonstrative of a healthy organization: clear vision, mission, and values; strong leadership, governance, and management; strong program development and delivery; diverse funding base and strong financial management; strategic relationships; and infrastructure for learning and evaluation.^{7, 8, 9}

Nonprofits that work with minority and low-income communities, however, have to build additional capacities. They need capacity to: understand how these communities are organized to support their members; engage these communities’ leadership to advocate for policy and systems change; navigate the intergroup and intragroup dynamics in these communities; respond to constant changes in their environment; sit at more than one “table” and be a player, and develop and disseminate the solutions that work for the particular community they serve. These capacities are usually left out of traditional organizational assessments and evaluations.

Further, this additional set of capacities requires foundations and nonprofits (especially the large established ones) to acknowledge the disproportionate power distribution in our society and the part they play in perpetuating the status quo. The nonprofits’ part gets little attention in the literature. In evaluations I have conducted about collaborations (e.g., Initiative to Strengthen Neighborhood Intergroup Assets, Community Foundations/Intergroup Relations Project), the cultures of large established and small grassroots nonprofits often clashed, even though they shared a commitment to strengthen the minority and low-income communities they served. The large established nonprofits (both majority- and minority-led) enjoyed the status quo because they had access to all kinds of resources, while their smaller counterparts (usually minority-led) were trying to change the status quo so that they too could have the same access.

Are foundations prepared to build the additional capacities required by nonprofits that serve minority and low-income communities? Do foundations understand the unequal distribution of resources between large established and small grassroots nonprofits and be prepared to change their practice to level the playing field?

Another important factor affects the unequal playing field. It is no secret that our communities are rapidly changing because of global migration. As a result, many nonprofits led by immigrant leaders are emerging in response to the needs of their communities. These nonprofits have staff who are passionate and committed, but unfamiliar with the grant-writing process and philanthropic culture. These nonprofits probably don’t have the resources to hire a professional grantwriter. Consequently, they are at a disadvantage.

Even if the immigrant-led nonprofits were fortunate enough to get funded, they may be deemed unsuccessful if the criteria for progress are based on the traditional capacities expected of nonprofits.

Are foundations willing to change their grantmaking criteria for capacity building? Are they willing to take the time to understanding nonprofits that do not look, act, or sound like the nonprofits they typically fund? Are they willing to provide intermediate funds (e.g., to teach the nonprofit staff how to write a proposal in response to a request) as a first step towards full and more conventional capacity grants?

Finally, if foundations were to become more effective in building the capacity of nonprofits that serve minority and low-income communities, they also have to examine their criteria and selection process for management support organizations (MSOs) and program evaluators. The criteria for a suitable MSO and program evaluator should include cultural competency.

Some foundations have started to ask MSOs and evaluators about the racial and ethnic diversity of their leadership and staff as a reflection of this competency. Such counting is helpful, but not enough. Foundations have to ask the MSO and evaluator to explain their values and practices that support cultural competency and social equity.

MSOs Must Become More Culturally Competent

Can foundations move beyond funding “solutions” to becoming part of the solution itself?

The Alliance for Nonprofit Management posits that capacity building must be a culturally competent process that pays attention to historical realities and the community’s assets in its own cultural context in order to foster change that will result in a just society.¹⁰ Culturally competent capacity building practices are still being developed and not widely accepted as a core competency for capacity builders. Rick Cohen mentioned also in GEO’s Funding Effectiveness book that the nonprofits surveyed by the National Committee for Responsive Philanthropy routinely bemoaned the lack of diversity among capacity builders, a comment I and others¹¹ also hear all the time when evaluating capacity-building initiatives.

Another challenge my colleagues and I frequently encounter in our evaluations of capacity-building initiatives is the engagement of national MSOs to do capacity building because they are more well known and credible among foundations. But they are not familiar with the local history and context of the communities they assist and they usually don’t apply a lens that focuses on power differences between majority and minority groups. While nonprofits may benefit from these MSOs’ national perspective and broad experience, they don’t get a tailored approach that is responsive to their local dynamics. Foundations need to require these national organizations to demonstrate their cultural competency and/or partner with local experts.

It takes a level of intentionality to ensure a culturally competent capacity-building process. Foundations must be willing to invest the time and effort to be that intentional. I am fortunate to have evaluated the Jessie Smith Noyes Foundation’s national effort to build the capacity of nonprofits advocating for sustainable food policies that benefit minority and low-income communities. The program officer recognized from the outset that some of these nonprofits’ proposals were not well-written but still deserved a closer look because of the nature of the issues they were addressing. She also recognized that if funded, these nonprofits required more intensive capacity building than others. These challenges did not turn her off from working with these nonprofits; on the contrary, she developed an honest relationship with these grantees and openly discusses issues related to race, ethnicity, and power with them. She goes out of her way to identify capacity builders who understand the history and context of minority communities, food and agriculture issues that affect these communities, and challenges faced by nonprofits that get involved in advocacy work. As a result, the grantees get the best of all worlds.

As I stated in the beginning of this article, effective capacity-building of nonprofits that serve minority and low-income communities requires developing and redirecting the orientations and skills of professionals who directly affect the success of nonprofits. This includes MSOs; however, MSOs can’t do it alone. Foundations have a part in changing their practices by setting higher performance standards and increasing the demand for culturally competent capacity building.

Program Evaluators, Too

Program evaluators have an important role in evaluating nonprofits’ work and generating evidence-based models; thus, they are part of the process of building the capacity of nonprofits. Unfortunately, like the capacity-building sector, cultural competency is not yet a required skill among program evaluators, in part because there is not sufficient demand for it by the foundations who pay for evaluations as well as the nonprofits that are being evaluated.

A few consequences occur when program evaluators do not practice cultural competency. First, they could pick the wrong measures, which might deem the nonprofit unsuccessful or noncompliant. Second, they might assume that the playing field is level for every racial and ethnic group and inappropriately compare groups to each other. Third, they might conclude wrongly that race is the factor causing group differences because they failed to control for other key factors (e.g., income, education level, gender, age) and to carefully study the context for other possible explanations for the group differences. Evaluators, like MSOs, directly affect the success of nonprofits that serve minority and low-income communities.

I was part of an evaluation that involved two Native American nonprofits’ effort to address the impact of exposure to violence among young children. After spending a few months on the evaluation, my colleagues and I quickly learned that these nonprofits needed time to deal with the historical trauma their communities have experienced for decades. Any expectations for the organizations to progress more quickly would have been unrealistic. They could not implement an effective mental health intervention for the child victims without first initiating a community-wide healing process and preparing the community to talk about the taboo subject of the violence that has affected their families for generations. Had we not paid attention to community context and history, but instead inappropriately compared these nonprofits to other grantees in the initiative, these two grantees could have been perceived as behind schedule and less successful.

Culturally competent evaluation practices such as understanding how another racial, ethnic, and cultural group values data and views the people who collect the data, identifying the appropriate key informants to engage (which requires the evaluator to understand the social organization of the community involved), and providing professional translation and interpretation during evaluation activities (e.g., focus groups, surveys) require time and resources.¹² Further, evaluators usually have to assist the smaller nonprofits develop systems for collecting data.

The problem, however, is that evaluations that look at the efforts of the smaller nonprofits, particularly those led by minority persons, rarely get enough funding to do the above. I often see Requests for Proposals that range between $20,000 and $50,000 for a regional or national initiative that involves ten or more grantees. Culturally competent evaluators recognize this and must decide if they can actually meet the foundations’ expectations without compromising their practices, or if the effort is critical enough for them to do it no matter the cost. The more perilous situation is if a culturally incompetent evaluator gets selected for the evaluation contract because he/she did not account for the costs associated with the above practices.

Are foundations ready to change their selection criteria for evaluators? Are they willing to re-examine the resources they allocate for culturally competent evaluations?

In conclusion, effective capacity building of nonprofits that serve minority and low-income communities is a complex, nuanced process that simultaneously requires the capacity building of foundations, MSOs, and program evaluators. These nonprofits do not operate in a vacuum or static environment and the responsibility to create an equitable society is not theirs alone. Are the philanthropic, capacity building, and evaluation sectors and their leaders ready to step up to the plate and share this responsibility?

References

¹ Grantmakers for Effective Organizations, Funding Effectiveness (San Francisco, CA: Jossey Bass, 2004).

² R. Millett, The “Change Equation”: Partnering for Improved Learning and Effectiveness,” Learning (Grantmakers for Effective Organizations, 2006).

³ Grantmaking with a Racial Equity Lens (GrantCraft and Philanthropic Initiative for Racial Equity, 2007).

⁴ P. Connolly & C. Lukas, C., Strengthening Nonprofit Performance: A Funder’s Guide to Capacity Building (St. Paul, MN: Amherst H. Wilder Foundation, 2004).

⁵ Will Pittz and Rinku Sen, Short Changed: Foundation Giving and Communities of Color (Oakland CA: Applied Research Center, Spring 2004).

⁷ Connolly & Lukas, 2004.

⁸ Grantmakers for Effective Organizations, 2004.

⁹ A. Philbin. Capacity Building Work with Social Justice Organizations: Views from the Field. (Boston, MA: Center to Support Immigrant Organizing, 1998).

¹⁰ M. Gitin, M. & B. Rouson, Beyond Diversity: Cultural Competency in Capacity Building. (http://www.allianceonline.org/cci.ipage/cci_resources.page).

¹¹ L. Guerro. Technical Assistance and Progressive Organizations for Social Change in Communities of Color (http://comm-org.wisc.edu/papers.htm)

¹² The Role of Culture In Evaluation (Denver, CO: The Colorado Trust, 2006)

Putting the AB 624 Agreement into Practice and Policy

by Rick Cohen

A backroom deal in mid-2008 on assistance to minority-serving nonprofits in California followed by an end-of-the-year release of a plan of foundation assistance ostensibly to promote more grant support for racially diverse communities has closed a Pandora’s box that foundations had no desire to leave open. After vociferously opposing for almost two years proposed state legislation to increase aid to groups that serve communities of color, foundations headed off any possibility of governmental intervention in their grantmaking with a half-year process to explore what they might do to respond.

California State Assemblyman Joe Coto and State Senator Mark Ridley-Thomas agreed not to push the measure they sponsored, AB 624, through to Governor Arnold Schwarzenegger’s desk, prompting significant – and freely expressed – relief among foundation executives. Advocates and their foundation opponents  stopped quibbling about the language of a bill that would have required foundations to publicly self-report their racial/ethnic grantmaking in favor of examining what these foundations would them. (The proposed reports would have appeared on foundation websites but would have not been submitted to the state government, nor would they have been externally verified.)

The surprise announcement of a commitment by nine California foundations (and one out-of-state foundation) to voluntarily address diversity issues in philanthropic grantmaking forestalled legislative action.  In December, nine of the ten foundations committed to make new investments in nonprofits serving communities of color, with no significant reaction from legislators regarding the adequacy of these commitments compared to what they might have been looking for from the foundations or to what they had hoped to achieve with the potential enactment of AB624 itself.  In California, for the moment, interest in revisiting or reviving the tabled legislation does not appear to exist.

Now the dialogue will focus on how philanthropy rethinks what constitutes racial equity in grantmaking and how the plans of the nine foundations will make that happen.

In this analysis, we ask:

• The Deal: What did the California foundations that signed the agreement commit to do?
• The Framework: What are the underlying analytical frameworks behind what the foundations have and have not put on paper in their agreement with the California legislature?
• The Replication: Where might there be an impetus for replicating the AB 624 initiative, with what prospects for success?
• The Standards: What might be potential standards for California legislators – along with nonprofit grant recipients and potential recipients – to apply to determine whether the foundations’ implementation is appropriate?

The Deal

The general outline of this agreement emerged at the May 2008 Council of Foundations (COF) annual conference at which an occasional foundation leader hinted at negotiating just this sort of agreement – while denying that any talks were being contemplated, much less underway. At a contentious hearing of the California Senate Committee on Business, Professions and Economic Development on May 12, 2008,[1] just before the COF meeting, Assemblyman Coto asked his Senate counterparts not to vote on AB 624 while he and foundation leaders wrapped up an agreement for increased foundation support for communities of color.

The resulting deal to supplant the proposed legislation with voluntary foundation commitments committed the 10 foundations to an unspecified “comprehensive set of grantmaking activities….in the multimillion dollar range…over several years, to begin in 2009” that “will lead to increased funding for capacity building and technical assistance targeted to minority-led and grassroots community-based organizations” and “support for leadership development activities that will bolster and train a diverse pipeline of executives, staff, and board members for the nonprofit and philanthropic sector.”[2] There were some indications that the foundations have committed to a “decade of strategic investment”[3] in youth development, financial literacy, community health, and civic engagement grantmaking targeting minority communities. In addition, the funders committed to research the number of minority-led, community-based nonprofits in the state and their capacity needs.

After months of deliberations, nine of the foundations announced their plan (a tenth, one of the smallest of the original signatories to the AB624 deal, did not participate in the final announcement).  The December 2008 plan committed the foundations, through collective and individual foundation commitments, over a 2-3 year period to do the following:

1.  “Increased grant support—over and above ongoing commitments–…to nonprofit organizations serving minority-led and other grassroots community-based organizations serving diverse and/or low-income communities totaling more than $20 million” (boldface in the original):  Examples include $3.2 million from the Annenberg Foundation expanding current programs such as the “Annenberg Nonprofit Leadership Forum” (to be held in “underserved communities” such as Boyle Heights, East Los Angeles, and Pocoima and $6 million from the California Endowment for “place-based capacity-building and leadership development for minority-led organizations”.

2.  “Joint community-based regranting programs in Northern and Southern California to provide leadership training, technical assistance, and organizational capacity support to smaller, minority-led and other grassroots organizations…(with a) total commitment over three years…in excess of $10 million” (boldface in the original):  This presumably includes funding from the California Endowment ($2 million), California Wellness ($3 million), and the Weingart Foundation ($1 million) for core support, technical assistance, and leadership development activities through the Liberty Hill Foundation (for Southern California) and an as of yet unidentified intermediary (for Northern California groups) over two years, and collaborative commitments from the James Irvine Foundation ($2.5 million), the Hewlett Foundation ($3.5 million), and the Packard Foundation ($2-3 million) for core support, technical assistance, and leadership development for small and mid-sized minority-led organizations.

3.  “Research and analysis (including evaluation of these new initiatives)…to…better understand the current state of minority leadership in California’s nonprofit community and how best to support those leaders and organizations”:  This category of new support includes $100,000 for the Diversity in Philanthropy Project (DIPP), $300,000 for various foundation affinity groups, and up to $250,000 for the regional associations of grantmakers from the California Endowment and pledges from several of the participating foundations to conduct program evaluations and put new money into the research efforts of the Foundation Center on philanthropic diversity.

These commitments occur against a backdrop underscored by the foundations of a precipitous decline on foundation endowments due to the downturn in the economy and the constantly sinking stock market.  Many foundations have lost 20 or 30 percent of the value of their endowments and few have joined the Irvine Foundation or the John D. and Catherine T. MacArthur Foundation in committing to equal or increase their 2009 grantmaking compared to their 2008 totals.[4] The foundations’ statement noted that “we must responsibly balance numerous priorities in the context of diminished resources”, implying that they would be hard-pressed to announce and pledge to fulfill big new multi-year initiatives toward racial equity in foundation grantmaking.

The Foundations’ Real ‘Enemy’: Government Oversight

Foundation opponents would have probably won on AB 624 in due time, based on the problems with the language and structure of the legislation. At the state senate hearing on the measure, a California Bar Association spokesperson listed the numerous inconsistencies in the bill that PRE noted in its first report on AB 624,[5] such as what kinds of foundations are included and excluded for coverage, that would have made the bill a non-starter (see Critical Issues Forum Measuring What We Value – April 2008). The spokesperson also weighed in with apocalyptic prognostications that the legislation would drive nonprofits and foundations out of California. As a result, getting the foundations to make these new funding commitments, even if they might fall short of what some had hoped for (more money committed for more than 2-3 years), constitutes something of an achievement in generating new resources for underserved communities and people of color-led organizations.

Ultimately, however, as the senators realized at the hearing, the foundations opposed not so much the bill’s specific reporting requirements or the underlying call for additional grantmaking to these communities as the prospect of future governmental “intrusion” in the work of foundations. In response to the senators’ questions, the foundation opponents repeatedly cited various versions of their “grave concern that this is the beginning of the slippery slope.” They seemed to tacitly agree when State Senator Leland Yee said that he understood that they were “opposing what they’re fearful of down the road, the intrusion of government to basically tell you how you might fund; what you’re afraid of is not what is in this bill, you’re worried about what this might lead to.”

Despite their lobbying muscle and the likelihood that they would have easily persuaded Governor Schwarzenegger to issue a veto, the foundations – in spite of their tax-exempt status – had no desire to confront a dynamic that would legitimize a state’s inquiry into what foundations deliver. Legislators appeared not to buy the foundation executives’ assurances that they’ve voluntarily made substantial progress on racial/ethnic equity. If the foundations were “voluntarily doing this… we wouldn’t have to be here,” Senator Dean Florez said.

The Framework

Assemblyman Coto called the initial deal a “win-win” [6] and his legislative aide, Mike Welch, suggested that foundations “maybe surpassed the goals of the bill on their own.”[7] The head of the Weingart Foundation indicated that this agreement “will be a cause for celebration by the nonprofit community, especially in low-income communities of color.”[8] The Berkeley-based Greenlining Institute made the initial call for AB 624 after issuing a 2005 diversity report card on California foundations. In response to the December commitments, Greenlining cited the “new funding opportunities that could make a big difference for small minority-led nonprofits” and commended the 9 foundations for their leadership on the issue.”[9] One of Greenlining’s representatives, Adam Briones, called the initial agreement “a great starting place.”[10]

Starting where and going where? The underlying principles of the agreement suggest a framework that was nowhere to be found in the language or reporting of AB 624.

The Wall Street Journal editorialized that the agreement was “shaking down philanthropies.”[11] In a response posted on www.wsj.com, the Hewlett Foundation’s Paul Brest wrote about the funders’ “shared belief that many minority-led nonprofits and other grassroots organizations lack the capacity to adequately serve the disadvantaged people who depend on their services.”[12] The California Endowment’s chief executive officer, Robert Ross, wrote that the agreement was a “workable solution for the core problem: the need to strengthen organizational capacity and leadership development in grassroots nonprofits in underserved communities.”[13]

Foundations Redefine the Heart of the Matter

As redefined by the foundations, the underlying problem is not that philanthropy is unwilling or unable to raise its grantmaking for racial/ethnic groups, but that racial/ethnic-serving organizations, not to mention people of color-led organizations, are somehow less than prepared to submit proposals and compete successfully for foundation grant dollars. If, with the support of foundation-funded management support organizations, minority groups upgrade their capacities, the foundation spigots will open.  Toward that end, several pieces of the $30 billion plan announced by the nine foundations aim at capacity-building for groups, either generally as leadership development initiatives (such as California Wellness’s funding to CompassPoint for training for 16 “next generation leaders of color”) or specifically in programs to help groups apply for funds (for example, Annenberg’s project grantsmanship workshops in conjunction with the California Community Foundation and the Weingart Foundation’s outreach efforts to community-based organizations to “provide technical assistance to emerging and existing nonprofits that may be unfamiliar with the Foundation”).

Some observers have declared this framework specious at best. Janet Murguia, president and chief executive officer of National Council of La Raza (NCLR), was the only commentator published in a Diversity in Philanthropy Project (DPP) colloquium on the agreement to suggest that a foundation-designed mythology was at work:

“Many minority organizations have less capacity and less credentialed leadership than their mainstream counterparts…But…these are hardly the only, or even the most important, barriers that confront minority-serving institutions seeking a level philanthropic playing field. The agreement assumes that foundation funds currently are distributed based on merit, and the main problem is that minority organizations lack expertise to design good programs or write good proposals.”[14]

The rational foundation decision-maker model conflicts with the experience of many grantseekers that foundation grantmaking is fundamentally relational. The critical dimension in successfully raising money from foundations is not the brilliant proposal or incisive analysis, but getting personal access to and developing relations with foundation program officers and directors.

A Double Standard

It is a bit of an emperor wears no clothes scenario, no one quite willing to point out that the problem resides in the corridors of philanthropy more than among people of color-led community-based organizations. Writer Mark Winston Griffith has written extensively about the chasm between foundation policies and community realities, noting that it is “hard to ignore some of the ironies of fundraising in a community development environment…[such as when] foundations, when setting their funding criteria … place premium value on things like democratic structures, organizational accountability and collaborations with other organizations, without ever observing those practices within their own institutions…[and] foundations who patronizingly dictate that grantees maintain ‘involuntarily poor people’ on their board, while themselves maintaining institutions with little if any input from low-income people.”[15]

As a recent analysis by Rockefeller Philanthropy Advisors has documented,[16] the racial and ethnic diversity of the leadership of America’s top foundations is stunningly lacking. An Annie E. Casey Foundation report described foundation boards as the “least diverse influential bodies in the philanthropic community.”[17]

While there is no guarantee that increasing the racial/ethnic mix of foundation decision-makers automatically yields greater racial equity in grantmaking, the experience of efforts to increase corporate diversity provides an answer. Facing litigation on grounds such as Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, and the Americans with Disabilities Act, plus Executive Order 11246 applying to federal contractors, corporations know the score: “representation is the backbone of a strong corporate diversity program.”[18]

In the DPP colloquium, Aaron Dorfman of the National Committee for Responsive Philanthropy (NCRP) noted that the initial agreement lacked any reference to diversifying the board and staff composition of foundation decision-makers.[19] While the final agreement said that the foundations “recommitted” themselves to leadership development activities that would “train a pipeline of diverse executive, staff and board members for the nonprofit and philanthropic sectors,” their account of regional meetings convened by the foundations did not reference the diversity of foundation staffing and governance as an element of the feedback they received from nonprofits, and only the California Endowment and California Wellness made specific mention of their own staff and board diversity, the Endowment committing to a “Diversity Audit” to benchmark its progress on staff and board diversity, Wellness announcing its openness to engage diverse people on its board and staff.

Blaming the Victim

The underpinnings of the agreement constitute a perhaps unintentional but discernible “blame the victim” perspective, that people of color-led organizations would get more funding if they were simply more capable and skilled. This is a philanthropic parallel of sorts to the responses of many employers to affirmative action: that they would recruit and hire more racial/ethnic employees if they could only somehow find the elusive “qualified minorities.”

Unwittingly harkening back to the anti-affirmative action arguments, some foundations at the California legislative hearing expressed sentiments that could have been taken as a less than vigorous commitment to people of color-led organizations. One funder, ignoring that many rural areas, especially in California, are hardly a proxy for “white underserved,” observed that the proposed AB624 legislation would have communicated the message “to rural white underserved communities in the state of California, you don’t matter, your issue doesn’t count [compared to] the people identified in the legislation, [that] their issue matters, their issue counts.”[20]

Another raised the specter of reverse discrimination, a frequent bogeyman of affirmative action opponents: “My concern is that this bill may set up two tiers of sort of nonprofit organizations in the minds of some of our foundations, those nonprofits that seem to meet the threshold requirements of this bill and those that do not, and I get concerned that decisions will be made based on who meets the requirements of this bill rather than who can provide the most effective services to the communities we’re all trying to serve.”

The hoary charge of unqualified minorities delivering lower quality work product appeared in another funder’s California State Senate testimony with the suggestion that grants to minority-led groups will result in poorer program service: “We should be influence (sic) to help people in low-income diverse communities no matter who supports them and not necessarily through a particular group of organizations…This is a design to not necessarily to do the best grants we could do in low-income communities.”

In a debate over legislation that all sides couched as a matter of transparency, the deal was negotiated with foundations behind closed doors. Nor did the sun shine on the initial steps to put meat on the bones of this agreement. The foundations scheduled three small, invitation-only, press-excluded meetings in Fresno, Oakland, and Los Angeles in late August and early September. The invitation said that the participants would:

• document organizational strengthening and leadership development needs in the region;
• share best practices regarding organizational capacity-building;
• identify culturally-competent technical assistance providers; and
• understand nonprofits’ assessment of barriers to accessing foundation funds.[21]

The notion of specifically creating avenues for people of color-led nonprofits was hard to immediately discern in this agenda.  The result is a split in the actual plan revealed by the foundations, a mix of language focused on minority-led organizations and on generally “grassroots” groups serving underserved or minority communities.  The depth of the commitment to building people of color-led organizations as opposed to strengthening the delivery of nonprofit programs and services in minority, underserved neighborhoods, will only be revealed by the foundations’ actual practice on-the-ground.

A Boon for Consultants and Capacity-Building Groups

The winners in this framework become management support organizations (MSOs) and other capacity-builders. At a minimum, consultants responding to RFPs for “diversity audits” and designs for culturally appropriate capacity-building will do well. New funding commitments to DIPP, the affinity groups, the RAGs, the highly respected CompassPoint organization in San Francisco ($200,000 from California Wellness), and various unnamed technical assistance and capacity-building providers exist throughout the plan announced in December.  From the perspective of racial/ethnic minorities, the question will be whether the foundations themselves receive sufficient capacity-building assistance to overcome the cultural biases they hold that presume that people of color-led organizations are somehow automatically less capable than their mainstream counterparts in serving needs.

The Replication

As much a concern as the opening of the philanthropic door in California to governmental intrusion, national foundations worried that other states might imitate the Greenlining Institute and its California legislative allies. No surprise, but the inquiry has begun in other states, although on a limited basis.

With the help of the Greenlining Institute, activists in other states have been reportedly exploring racial/ethnic reporting requirements for foundations in Pennsylvania, New York, and to a more limited extent Florida. On the heels of the California announcement, the Florida Minority Community Reinvestment Coalition (FMCRC) posted a statement to a listserv entitled: “Historic Agreement Reached For California Minority Organizations With Foundations: Question To Florida Legislature: What about Florida Minority Organizations?”

Florida’s philanthropic terrain poses hurdles to such an agreement not found in California. Only nine foundations in Florida would have met the $250 million in assets threshold (based on 2006 data)[22] of AB 624, meaning that the legislature would have to extend this reporting requirement to much smaller foundations to get meaningful statistics on racial/ethnic grantmaking. Thirty of the top 50 foundations making grants to Florida nonprofits in 2006 were out-of-state foundations. Of the in-state foundations, in 2006 the $2 billion John S. and James L. Knight Foundation awarded only $12.1 million (in the form of only 23 grants) of its total grantmaking of $104 million to Florida-based nonprofits.[23]

The political strategy behind the Greenlining Institute study and the Coto legislation made political sense in California, where there were major foundations such as California Endowment, California Wellness, and the James Irvine Foundation headquartered there and predominantly focused on in-state grantmaking. In addition, the leader of FMCRC noted, California has a vigorous organized labor movement, a tradition of community organizing, and a relatively progressive state legislature, creating a receptive environment for the AB 624 discussion.[24] But for Florida, a state legislative effort would be likely to go nowhere. Consequently, the Florida effort appears to be focused on working with a Greenlining-inspired national effort, the Green Agenda Coalition,[25] to connect FMCRC’s (and Greenlining’s) foundation agenda with members of the Florida congressional delegation, such as Democrats Robert Wexler and Ron Klein, as well as pitching to the leadership of the Congressional Hispanic Caucus chaired by California’s Joe Baca (D). However, the FMCRC strategy targets Florida-based foundations which appear, according to Greenlining data compilations, to show little or no grantmaking to minority-led organizations, including the Publix Super Markets Charities, which defends its racial/ethnic giving trackrecord  by highlighting its giving to the United Way, Boys & Girls Clubs, and Habitat for Humanity.[26]

State efforts to replicate the AB 624 legislation or the agreement might be more promising in states that look a lot more like California, well stocked with large institutions. Such a campaign would focus largely on in-state players. On June 30, 2008, Pennsylvania state legislator Jake Wheatley sent a letter to nine Pennsylvania-based foundations[27] asking them for information to turn over to the Greenlining Institute for analysis. Wheatley himself reported in an interview that all nine foundations responded and have been, to date, cooperative, although this is prior to their receipt of a report from the Greenlining Institute,[28] though some of the Pennsylvania foundations reported supplied the legislator only with their publicly available Form 990 filings at most.  A letter from Wheatley himself, however, thanked some foundation people for attending a discussion of capacity-building needs, though the language on foundation diversity appears to focus on the Pittsburgh region that Wheatley represents in the legislature. Wheatley described the Pittsburgh dynamic as a “pilot conversation,” which he imagines would work on a 6-month timetable parallel to a statewide foundation conversation.

A New York effort named the “NYC Collaborative for Fairness and Equity in Philanthropy,” whose initial coordinating committee is chaired by Angelo Falcon of the National Institute for Latino Policy, emerged in the fall of 2008.  Its September 2008 statement of principles includes calls for documented racial/ethnic diversity strategies by foundations, robust and meaningful data collection, and a foundation commitment to building “organizational infrastructure and capacities in communities of color.” According to a March 2009 email from the Collaborative, there have been meetings held with members of the Asian, Black, and Hispanic Congressional Caucuses, the Puerto Rican/Hispanic Task Force of the New York State Legislature, and representatives of the office of House Ways and Means Committee chairman, Charles Rangel ”to discuss potential strategies for change.” .  The Collaborative has promised an “aggressive agenda” to pursue racial equity issues in foundation practices in New York City, including discussion of a potential AB624-like state bill.

The California experience demonstrates how rapidly foundations can gear up in the face of a perceived threat, with commitments that may well yield new dollars for racial/ethnic groups in that state. The bigger challenge on the minds of foundation executives is what the U.S. Congress might do.

We Must ‘Change the Facts on the Ground’

“At some point, the numbers don’t lie, and someone needs to do something, especially when you’re using the taxpayers of America’s money to do your philanthropic work…,” argued House Ways and Means Committee member Xavier Becerra (D), who represents South Los Angeles, at the May COF conference.

“I think we have to look at what I think are the…underlying facts that drive the operational facts on the ground of the disproportionate giving, the disproportionate numbers internally within the nonprofit world that are skewed against people of color…Most giving is local and most people give to those charities that serve them, those who can give most give most to these institutions and entities they patronize…We’re going to have to do something that changes the facts on the ground. We need to do something to recognize the fact that charity extends to the entire national public…”[29]

With some members of Congress, including Becerra,[30] appear ready to question whether some nonprofits may not merit tax exempt status or whether there should be enhanced treatment of donations for nonprofits that serve disadvantaged populations, foundations could sense Becerra’s subtext. Foundations are becoming less and less invisible. The public and legislators are watching to examine whether foundations’ stewardship of tax exempt moneys is meeting public needs.

The Standards

The California foundations committed to regular meetings with community representatives through the undetermined multiyear implementation of the AB 624 commitment, though there is no language in the December plan describing what if anything the foundations will do to monitor and report on the grants and programs they pledged. Will the foundations’ unspecified commitment to meetings be sufficient to see that the foundations live up to the letter and, more importantly, the spirit of the agreement? Will Senator Ridley-Thomas and Assemblyman Coto, the original AB 624 sponsor, call “foul” if they determine the foundations are falling short?

Will all this work in the long run address the structural issues of minimal numbers of people of color in leadership and trustee positions in grantmaking foundations? Reconstituting the composition of private foundation boards to better reflect diverse communities would appear to be a crucial element in any fundamental change in foundation attitudes and grantmaking behaviors toward people of color-led grant recipients, but altering the governance of private foundations is nowhere in either the nine foundations’ December plan or, for that matter, the language of the proposed legislation that originally sparked this dynamic. .

The California deal seems to mix many of the necessary players—key foundation leaders, state legislators, and the public policy watchdog organization—into what could turn out to be something useful for minority communities. But, as is obvious in agreements such as this, the proof is in the pudding. Will the California initiative simply take credit for these multiyear initiatives such as DPP that the foundations have already launched, or will the foundation coalition’s commitments involve serious new money?  Will the foundations simply work on promoting and supporting “diversity”, or will they make strides toward addressing the inadequate level of foundation grant support for minority-led nonprofits?

It should be up to the communities most affected to work with Coto, Ridley-Thomas, and Ted Lieu, chair of the Asian Pacific Islander Legislative Caucus and nominal cosponsor with Coto of AB 624, to establish standards. The first evaluative standard may well be that the communities most affected and the organizations that represent those communities should be at the table to make decisions with the foundations. This is too serious an issue of racial equity to allow foundations to convene amen choruses for their beneficence. Empowerment of the racial/ethnic communities in the bill should begin with the process itself.

No More Backroom Deals

A second touchstone worth establishing might be “open covenants openly arrived at,” a standard first invoked in a very different context by President Woodrow Wilson in the aftermath of World War I. The last thing that the sector needs is continued backroom dealing, particularly when so many nonprofit and foundation leaders make a point about the crucial importance of transparency in philanthropic accountability. Presented with a deal crafted by the foundations outside of the legislative process and behind closed doors, it is no  wonder the California state legislators in the Senate hearing so uniformly expressed misgivings about the foundations’ contentions in the hearing.

To think that the problem is only on the minority nonprofit side, a perception that the root issue is the inadequate capacities of minority-led nonprofits, is the epitome of blaming the victim. Foundations need a reworking of their structure and biases. To restructure foundations for the representational equity they need, there has to be a clear plan and timetable for diversifying foundation boards, family foundation boards and others, else this is no more than a perpetuation of philanthropic noblesse oblige.

In discussions that will legitimately influence access to foundation resources, the foundation community must structurally incorporate community leaders into decision-making roles within grantmaking institutions. It’s time to democratize how foundations make decisions about community grantmaking. At a July 24, 2007 hearing of the House Ways and Means Committee, COF President and Chief Executive Officer Steve Gunderson said that as a matter of course “most” foundations assess community needs “very carefully and very strategically” with advisory committees in tow to determine how to make their grants.[31] There’s little evidence to support that assertion, but this is the moment for foundations to make the voluntary change in their racial/ethnic decision-making. The California foundations acknowledged hearing from nonprofits that foundations had to “improve foundation practices and processes”, including “a desire for funders to listen, rather than being told what to do,” but the December announcement contained no commitments to incorporate communities in their grant-making decision processes.

Key Elements Missing from 2008 Report

In June 2008, the Foundation Center issued Embracing Diversity, a report commissioned by California foundations. The California foundations have used this report extensively in justifying their plans and approaches and have committed to work with the Foundation Center to futher this research.

The report is most notable for what was not included. The foundations reportedly did not want individual foundation grantmaking proportions to be revealed, so the authors presented only aggregate data on California foundations. But progress on the California agreement should necessitate foundation-by-foundation reporting, so that individual foundations cannot hide behind aggregate numbers. In California’s case, without foundation-specific reports,  the sector’s successes or shortcomings in assisting communities of color get camouflaged behind the racial/ethnic grantmaking of the California Endowment and California Wellness, the two big health conversion foundations with substantial grantmaking to organizations that serve communities of color. A report from an advisory committee convened by the three California grantmaking associations pointed out that the Endowment and Wellness comprised nearly two-fifths of the grants in the study.[32] Moreover, as foundations created through government action concerning the conversions of nonprofit health care and hospital facilities, the Endowment and Wellness are categorically different than other private foundations.  Disaggregation of these figures and the types of foundation grantmakers would expose the paucity of such grantmaking by many of the other foundations.

Also missing from Embracing Diversity[33] were any data on people of color-led organizations, perhaps reflecting a weakness in the authors’ understanding of people of color-led organizations and communities.[34]This continual sidestepping of one of the core issues behind AB 624 simply magnifies the foundations’ shortcomings in supporting the empowerment of racial/ethnic groups and communities. As the New York organizers have stated straightforwardly, foundations must commit themselves to significantly increasing the share of their grant funds, especially for general support, going to and supporting the development of organizations led by Asians, Blacks, Latinos and Native Americans. If the primary result of the AB624 agreement is vastly increased funding for technical assistance providers rather than significantly boosted grant support for people of color-led nonprofits themselves, racial equity in philanthropy will be ill-served, no matter how much public relations and lobbying the foundations mount.

Rick Cohen is the national correspondent of Nonprofit Quarterly magazine (www.nonprofitquarterly.org). Prior to joining NPQ, he was the executive director of the National Committee for Responsive Philanthropy, a national nonprofit philanthropic watchdog organization. He is a former member of the PRE advisory board.  Rick can be contacted at rick@npqmag.org.

[1] From transcriptions of the May 12 hearing testimony taken directly from a recording provided by the staff of the Senate Committee on Business, Professions, and Economic Development. There is no published transcript of the hearing, though brief summaries have been published by the Minnesota Council on Foundations (http://blog.mcf.org/2008/06/04/AB 624/), the Alliance for Charitable Reform (http://www.acreform.com/AB 624/timeline.html), and the Greenlining Institute (“Foundation Arguments Didn’t Sway Legislators”, http://greenlining.org/documents/view/213)..

[2] Statement by Selected California Foundation CEOs on Strengthening Nonprofit Minority Leadership and the Capacity of Minority-Led and other Grassroots Community-Based Organizations (June 23, 2008) http://www.acreform.com/docs/coalition_release_final.pdf

[3] Rick Cohen, “Negotiating Diversity in Foundation-land and What it Means for the Rest of Us,” The Cohen Report (Nonprofit Quarterly) (June 27, 2008) http://www.nonprofitquarterly.org/cohenreport/2008/06/27/negotiating-diversity-in-foundation-land-and-what-it-means-for-the-rest-of-us/

[4] Rick Cohen, “Philanthropy During the Downturn,” The Economic Crisis and Community Development Finance: An Industry Assessment (Federal Reserve Bank of San Francisco, May 2009) http://www.frbsf.org/publications/community/wpapers/2009/wp2009-05.pdf

[5] Rick Cohen, “Understanding AB 624”, Critical Issues Forum: Measuring What We Value (April 2008) http://www.racialequity.org/docs/final%20layout.pdf

[6] Aurelio Rojas, “Pressed by legislator, nonprofit foundations agree to invest in minority-led organizations,” Sacramento Bee (June 24, 2008).

[7] Suzanne Perry, “California Foundations Back Compromise to Defeat Diversity-Disclosure Measure,” Chronicle of Philanthropy (June 24, 2008).

[8] “Pressed by legislator,” op. cit.

[9] http://greenlining.org/initiatives/democratizing-philanthropy/a-positive-future

[10] Mike Zapler, “Charities will boost funds for minorities,” The Mercury News (June 25, 2008)

[11] “Shaking Down Philanthropies”, Wall Street Journal (July 26, 2008)

http://online.wsj.com/article/SB121702556081886019.html

[12] Paul Brest, letter to the editor, Wall Street Journal (August 1, 2008) http://online.wsj.com/article/SB121755472739003175.html

[13] “AB 624: Death For A Noble Cause”, op. cit.

[14] Janet Murguia, “A Small Step in the Right Direction”, Sector Leaders Respond to AB 624 and the California Compromise (Diversity in Philanthropy Project, n.d.) http://www.diversityinphilanthropy.org/voices/clegislation/commentaries.php#link5

[15] Mark Winston Griffith, “The Foundation Fundraising Blues”, Gotham Gazette (October 2003) http://www.gothamgazette.com/article/communitydevelopment/20031007/20/551

[16] Cf. Jessica Chao, Julia Parshall, Désirée Amador, Meghna Shah, and Armando Yáñez, Philanthropy in a Changing Society: Achieving Effectiveness Through Diversity (Rockefeller Philanthropy Advisors, April 2008), pp. 6-10

[17] MARGA Incorporated, Race, Culture, Power, and Inclusion in Foundations: A Report Conducted for the Annie E. Casey Foundation (March, 2005), p. 13

[18] “Diversity in Corporate America: Still a Work in Progress”, Knowledge@Wharton (March 16, 2006) (http://knowledge.wharton.upenn.edu/article.cfm?articleid=1406)

[19] http://www.diversityinphilanthropy.org/voices/clegislation/commentaries.php#link5

[20] As of 2000, the white non-Latino proportion of the rural population of the U.S. stood at 69.1 percent, though obviously excluding many undocumented workers and families. A significant part of rural population growth has been Hispanic, including in California, cf. Race, Place, and Housing: Housing Conditions in Rural Minority Counties (Housing Assistance Council, 2004). California is one of seven states with more than 100,000 nonmetro Latinos, cf. Rogelio Saenz, A Profile of Latinos in Rural America (Carsey Institute, 2008)

[21] From letter of invitation dated August 20, 2008, sent to participants in the Oakland, California, convening scheduled for August 25, 2008.

[22] The John S. and James L. Knight, the Picower , Publix Super Markets Charities, Ted Arison Family Foundation, Wallace H. Coulter Foundation, Arthur S. DeMoss Foundation, Turner Global Foundation, Inc., Jessie Ball duPont Fund, and the Flight Attendant Medical Research Institute, Inc.

[23] The Foundation Center, Top 50 U.S. Foundations Awarding Grants in the State of Florida, circa 2006 (http://foundationcenter.org/findfunders/statistics/pdf/03_fund_geo/2006/50_found_states/f_fl_06.pdf)

[24] Interview with Al Piña (September 5, 2008)

[25] According to the website of the United States Hispanic Advocacy Association (USHAA), the Coalition includes Greenlining, FMCRC, The East Los Angeles Community Union (TELACU), the Hispanic Business Council, and the USHAA itself (http://www.ushaa.com/Resources/Default.aspx?CategoryId=22).

[26] Ian Wilhelm, “Taking Foundations to Task: Activist Seeks to Force Grant Makers to Do More to Help Poor Minorities,” Chronicle of Philanthropy (March 26, 2009)

[27] The Annenberg Foundation, the Heinz Endowment, the Vera I. Heinz Endowment, the Richard King Mellon Foundation, the William Penn Foundation, the Alcoa Foundation, the Comcast Foundation, the Pittsburgh Foundation, and the McCune Foundation.

[28] Interview with Representative Jake Wheatley (September 22, 2008).

[29] Rick Cohen, “Can Diversity Make the Cut?” The Cohen Report (Nonprofit Quarterly) (June 3, 2008) http://www.nonprofitquarterly.org/cohenreport/2008/06/03/can-diversity-make-the-cut/

[30] Rick Cohen, “A Conversation with California Congressman Xavier Becerra,” The Cohen Report (Nonprofit Quarterly) (January 16, 2008) (http://www.nonprofitquarterly.org/cohenreport/2008/01/16/a-conversation-with-california-congressman-xavier-becerra/ )

[31] Cohen, “House Hearing: Good Hitters vs Weak Pitchers”, The Cohen Report (Nonprofit Quarterly) (August 2007) http://www.nonprofitquarterly.org/content/view/494/

[32] NCG/SCG/SDG Diversity in Philanthropy Advisory Committee: Initial Report (http://www.ncg.org/assets/diversity/CADiversityAdvisoryCommitteeRecommendations.pdf), p. 3

[33] Lawrence T. McGill, Algernon Austin, and Brielle Bryan, Embracing Diversity: Foundation Giving Benefiting California’s Communities of Color (Foundation Center, 2008)

[34] The NCG/SCG/SDG committee highlighted the report’s attribution of insufficient core support for nonprofits serving communities of color to the organizations’ lack of size and capacity; the committee noted that the “relative paucity of core support is a cause, not a reflection of low capacity in ethnic-serving nonprofits and in organizations rooted in ethnic communities.”

             The topics of race and racism have hit the headlines in the last few months, in both electoral politics and philanthropy, providing an opening for a national discourse that we seldom have in our country.  Yet too many of those discussions have been sensationalized and divisive rather than constructive.  In the current political season, race has been at the forefront of many media conversations but, with the notable exception of Senator Barack Obama’s landmark Philadelphia speech and the observations of a few other thoughtful commentators, it has rarely received the sober treatment that it so desperately needs. 

William Schambra’s op-ed in the May 15th edition of the Chronicle of Philanthropy titled “Why Are Foundations Supporting Racism?”* is an example of how inaccurate and inflammatory the conversation can get. The way in which we frame race and racism can make all the difference between making progress toward our national ideals of equality and justice and deepening the divisions among us, particularly the divisions along lines of race, place, class and citizenship. 

With the historic possibility of an African-American candidate becoming our next president, some take comfort in the idea that we have achieved a post-racial,“colorblind” society. The philanthropic and non-profit sectors that have played such an important role in promoting racial justice ought to know enough to avoid this false assumption. Moreover, they must be vigilant about and confront those who would cast as “racist” or “un-American” any effort that tries to understand the causes of continued racial disparities and takes up the hard work required to eliminate them.    

Despite the meaningful progress we have made to root out blatant discriminatory practices, people of color are sinking faster into poverty from middle class status. Between 1964 and 1973, 24% of African-American families were in the bottom of the national income distribution. This proportion grew to about 39% over the next two decades.  The median net wealth of African American and Latino households stands at less than 10% of the median net wealth of their White counterparts.

             Why is this?  What can we do better to achieve real equity and equality of opportunity?  Simple, single-cause approaches may be appealing but will do little to address the problem.  Evolving, yet persistent, racialized poverty is the result of a complex set of interactions between institutions and public policies that have accumulated over time. With greater understanding of these dynamic interactions, we are more apt to identify proper interventions in one area that could have a positive effect across others, changing the life opportunity for impacted groups.  Foundations, notably the Ford, Mott, Annie E. Casey, Kellogg, Akonadi Foundations, the Open Society Institute, and Atlantic Philanthropies have supported a number of grantees, including those who have joined to write this letter, to develop and apply a comprehensive, structural race analysis to help identify such solutions.

These organizations have shown how structural racism today is manifested in seemingly neutral and benign public and institutional policies and practices that many of us take for granted.  They recognize that one of the main ways in which structural racism operates is through the interrelationships among critical opportunity-shaping sectors like education, employment, home ownership, and criminal justice. 

Personal choices obviously matter. But structural racism recognizes that, while personal agency is an indispensable element of success in America, the ways in which some individuals and communities are positioned in the wider society can also seriously undermine their prospects for getting access to or benefitting from the opportunities they truly merit.

The subprime lending crisis, an issue of concern to many foundations, provides an excellent example of how the lens of structural racism enables us to see the ways in which public policies and institutional practices interact to reproduce racial disparities and, if left unaddressed, result in negative outcomes far beyond communities of color.

            African Americans and Latinos still live mainly in segregated neighborhoods; these Americans and these neighborhoods are being hit especially hard by the foreclosure crisis.  In 2006, African Americans and Latinos in the United States were twice as likely as Whites to receive high-cost loans, even after adjusting for loan amount and borrower income.  The historical legacy of redlining policies, which has denied loans to applicants within certain areas, and the scarcity of bank branches in minority communities today, have limited minority access to standard financing options, and predatory lenders have filled the vacuum.  An analysis of 34 high cost loan companies in Cleveland in 2006-2007, for example, found that they were responsible for 20 percent of mortgage loans in minority communities and only 4 percent of such loans in white communities.  The securitization of the mortgage market, which shifted lending services from local savings banks to investments banks and avoided the regulations placed on traditional lenders, has increased the volume and short-term profitability of adjustable rate mortgages. 

This complex of interrelated policies, institutions, and practices together produce racial disparities that further depress the wealth and wellbeing of minority communities, and therefore exhibit structural racism. 

The disproportionate impact of subprime mortgage foreclosures on racial minorities is clear: Foreclosure means a loss of the wealth invested in a home, the abandoned buildings cause declines in neighborhood property values, and the vital asset wealth that minority homeowners have long sought is lost.   The structural racism analysis does not assert that any individuals involved in mortgage finance were motivated by prejudice or bigotry. Rather it suggests that the cumulative effect of regulatory policy, institutional practices, and self-interest has been to harm minorities disproportionately – but to ultimately impact society more broadly.

Having located the causes of racial disparity in the subprime crisis, we can consider possible remedies.  For example: greater regulation of mortgage finance would prevent the proliferation of high cost loan products which precipitated the crisis in the first place; financial education in poor minority communities would minimize the capacity of predatory lenders to mislead their clients; municipal efforts to manage abandoned foreclosed properties would prevent neighborhood decline.  The contention of the structural racism analysis is that as we explore these and other viable policy solutions, we must specifically consider the problem of racial disparity, and how new policies and programs will reduce that disparity. 

Acknowledging the problem of structural racism in this way does not malign fundamental American values, virtues, or accomplishments.  On the contrary, America’s values of democracy, equality, and liberty are best served by our willingness to understand, confront, and dismantle structures that undermine those values.  America’s historical legacy shines brightest in our struggle against racism, from abolition to the Civil Rights Movement.  But our past successes must serve as encouragement for future gains, not as an excuse for complacency and inaction in the face of persistent racial inequalities. 

           More foundations and nonprofits must make the distinction between colorblindness as a desired outcome and colorblindness as a strategy.  Colorblindness is a desirable endpoint, but a colorblind strategy ensures that racial disparities will continue.  Conversely, policies that flow from the structural racism analysis as applied to education, health care, incarceration, and more, target racialized disparities and by this means benefit Americans of all races.  Moreover, as we have seen with the subprime mortgage crisis, problems that incubate in communities of color can become national epidemics when we ignore our structural interconnections.  A structural racism perspective simply reminds us that all Americans are still affected by our nation’s past, must work together in the present, and share linked fates in the future.

Rinku Sen, President and CEO, Applied Research Center www.arc.org; Anne C. Kubisch, Director, Roundtable on Community Change www.aspenroundtable.org, The Aspen Institute; Maya Wiley, Director, Center for Social Inclusion www.centerforsocialinclusion.org; john powell, Executive Director, Kirwan Institute for the Study of Race and Ethnicity www.kirwaninstitute.org, The Ohio State University; Lori Villarosa, Executive Director, Philanthropic Initiative for Racial Equity www.racialequity.org; and Dan Petegorsky, Executive Director, Western States Center www.westernstatescenter.org. 

 * The outrageous title “Why Are Foundations Supporting Racism?” appeared in the print version, which landed on thousands of desks across the country.  Even Schambra objected to it and it was changed online. The Chronicle deleted this reference from our letter — which was submitted as an op-ed under the mistaken notion that they might respect some parity of placement and headline to offset the misrepresentative and incendiary piece they had run the week ahead.

Please share your reactions or concerns about the current debate. We are posing a few questions to get started, but invite you to pose others as well.

 What racial/ethnic and gender and sexual orientation information do you find your funders asking you for—or do you as a funder ask for–either in applications, in program reports, or other less formal mechanisms? Have you found it to be too onerous? Has it impacted your own awareness of trends or possible disparities?

In thinking about racial equity, how important is it the funding goes to people of color-led nonprofits, or is it sufficient to assess how much funding is going to grants that serve communities of color? Are there other factors that you think should be measured?

**To comment on this post, please click the “comments” link above. Please fill out the comment box and hit submit. Comments will be published pending approval. We look forward to your input .**

This is the Philanthropic Initiative for Racial Equity Critical Issues Forum Blog. This page is still under construction so check back for updates.

- PRE