The Philanthropic Sector's Shift Toward Racial Equity

In many ways, the philanthropic sector seems to be a microcosm of the greater world. There are needs that need to be addressed, and funders and nonprofit organizations work to meet those needs. When the world changes, so does the sector. Just like the broader world, some portions of the philanthropic sector have been fairly resilient to change. GrantStation's researchers look at about a thousand funders every month, making sure that our profiles match a funder's current interests. While some funders update their funding focus frequently, others have held steady for a decade or more.

But the past two years have brought an upheaval of life that we probably haven't seen in this country since the 1960s. Two large events—the COVID-19 pandemic and the racial justice protests in the wake of George Floyd's death—have created fast change, in our lives and in the philanthropic sector.

The pandemic has resulted in an increase in the availability of general operating support. As the spread of the disease put everything in flux, funders expanded their support offerings to try to help keep organizations afloat. Though the pandemic has shown itself to be far from over, many funders have moved on from their COVID-based funding programs, but so far it looks like the availability of general operating support is here to stay.

The racial justice protests, however, have created a large ideological shift for many funders. As our researchers have made their updates, we've seen a large number of funders add a racial equity focus to existing programs, or create new programs geared toward BIPOC (Black, Indigenous, and people of color) populations. Some have even reworked the entirety of their funding structure to address this issue. I started working at GrantStation over 15 years ago, and I can't recall seeing a shift anywhere near this magnitude in all that time.

Last month, the Chronicle of Philanthropy examined this shift. Over the last decade or so, some writers and commentators have pointed out that the philanthropic sector has mirrored the broader culture in its indifference to the effects of racism. But change is happening fast: "From 2011 to 2019, donations to racial equity totaled $3.3 billion but increased to at least $4.2 billion in 2020 alone." Of course, there are challenges in determining this type of data: what exactly is considered a donation to racial equity, are we looking at contributions other than just grants, and are we including grassroots efforts? But there has definitely been a movement to broaden this type of funding and these types of programs.

Back in June, GrantStation's Sid Davis looked at a survey that asked respondents to pick three issues that they thought would take hold of the philanthropic landscape over the next 25 years. They put climate change on top, with inequality in second place, and diversity and equity rounding out the top three. We've seen some funders add a climate focus, but they have mostly been organizations that already focused on environmental issues. Some funders also have added priority consideration for organizations addressing low-income people and communities, but there haven't been many I've seen restructuring entire programs around the issue. So what is it about the racial equity issue that has brought it to the forefront for funders?

For many communities, racial equity is an issue that touches numerous sectors: education, healthcare, social services, and more. We can see the effects everywhere. While we could say the same thing about inequality, there haven't been as many nationally visible manifestations bringing it to our collective attention. (Though the battle for higher wages in the wake of the pandemic may end up doing so.) Similarly, climate change is obviously a huge issue, but it may be several years before there are enough sparks (in the way of forest fires and extreme weather events) to push people to real action.

It is the nature of the sector to be reactionary, not proactive. It can be difficult for organizations to address an issue before it fully arrives. As much as we like to think that nonprofits have the ability to change the world, sometimes the world has to change before nonprofits can change.

In the case of racial equity, though, it's an issue that has hovered over our country for decades. But it is, ironically, the issue's endurance that has helped it slip into the background. It has been with us so long, it became this thing that those of us outside of directly affected communities just chose to ignore. It took an inciting event to push it back into our collective consciousness. Hopefully, this focus on racial equity is here to stay until even more real progress is made.

Adding a focus on racial equity can help your organization in several ways. First, it will help you identify needs in your community you may have been overlooking. By adopting an adjusted worldview, you can get a new perspective on your work and see ways to improve it. Also, as more funders are adding an equity focus, changes in your organization will make you more attractive to potential funding.

How does your organization go about implementing this adjustment of your focus? Purpose, an organization advocating for an open and just world, offers the following advice:

• Assess your current position on racial equity, both internally (with your own volunteers and employees) and externally (your partners, community, and outward work).
• Determine what your goal is. How can you articulate this goal both internally and externally?
• Form a plan or roadmap for how you will reach this goal.

(Harvard Business Review also offers some useful tips for advancing racial justice and equity at your organization.)

Changing the world often doesn't happen quickly. In regards to racial equity and justice, it's a struggle we've been fighting for hundreds of years. But you can take the first step of making changes to your organization, and that can start today.