Racial Justice Grants Are Surging, but Donors Seek Advice

December 30, 2020 12:30 PM | Philanthropy Delaware (Administrator)
(December 22, 2020 by Abby Schulz Barron.com) - Many donors want to make grants to organizations on the front lines of fighting for racial justice and equity in the wake of protests sparked in the spring after the death of George Floyd in Minneapolis. 

As a result, money has poured into organizations fighting for racial equity. Overall, US$12.1 billion has been granted to racial equity nonprofits so far this year, according to the latest figures from Candid.

Of that total, US$1.4 billion was granted by individuals, 80% of which, or US$1.12 billion, solely by MacKenzie Scott, the author and ex-wife of Amazon.com founder Jeff Bezos. Scott’s grants, in fact, account for more than 9% of all racial equity funding this year, according to Candid. 

Individual donations don’t include independent foundations, which represent private and family giving vehicles, which gave a total of US$2 billion, Candid says. Also, community foundations, which include donor-advised funds for individuals, granted US$58.9 million to racial equity this year.  

The issue for many individual donors is they don’t know where to begin. That’s in part because groups often doing the most effective work are small, grassroots organizations that may fly under the radar of most donors, or don’t fit the criteria donors have used in the past for selecting nonprofits for funding. 

As a result, most nonprofits in a position to address racial inequities are underfunded.

“When you look at patterns of wealth and income inequality that impact individuals and families by racial and ethnic groups, that same gap exists in nonprofit organizations,” says Dianne Chipps Bailey, Bank of America Private Bank’s national philanthropic strategy executive. 

That is, nonprofits led by racially diverse individuals who are serving those communities “tend to be undercapitalized, and then are more vulnerable to closure at a time when many are understanding how important these organizations are because they are proximate to the issues philanthropy is desiring to advance,” Bailey says.

For donors, it creates an “interesting opportunity for self awareness and reflection,” and to be “really strategic about their giving in ways that create positive impact, but also can be a lifeline to the sector,” she says. 

Bailey’s group at Bank of America Private Bank put out a guide this year for donors new to giving to racial equity that begins with seeking out and prioritizing organizations and individuals most affected by racial inequities, according to the guide. 

It’s also important to become educated on the issues and needs of these communities, but to do so in a way that doesn’t burden already under-resourced organizations. “Don’t rely on them to educate you about race-related issues,” the guide said, and consider compensating groups for their time and information.

One effective strategy favored by Bailey is to provide funding to local giving circles, which pool resources from several sources to provide high-impact gifts in their communities. 

“The reason [giving circles] are aligned with racial-justice giving goals is because many of these organizations are identity-based and hyper-local,” Bailey says. “They are the boots-on-the-ground philanthropists that know their communities and what they need.”

Historically, nonprofits led by Black, Latinx, Asian American, Pacific Islander, and Native American individuals not only get less money than groups led by white individuals, the grants they do receive often include more restrictions, according to the guide. 

For example, Black communities and organizations have 45% less revenue than groups led by whites, while Latinx communities and organizations receive only 1.3% of philanthropic dollars despite representing 18% of the population, the guide said. 

Given this disparity, Bank of America recommends donors consider shifting their granting criteria to bring in smaller organizations, and to “remove any unnecessary logistical, technical, or technological barriers to requesting funding.” Instead of requiring an organization to fill out an application, for example, seek out the information needed through publicly available sources, including tax filings.

“Many funders would be surprised by the level of information that’s in an audit and in a Form 990,” Bailey said, referring to an Internal Revenue Service filing required of tax-exempt organizations. 

Also, Bailey suggests donors provide unrestricted funding—giving nonprofits the freedom to direct dollars to where they are needed most—and to recognize that the problems these groups are addressing won’t be wiped out overnight. The average grant, Bailey notes, is US$50,000 over 18 months.

“These problems are hundreds of years in the making,” she says. “The idea we could unwind [them] within a typical grant cycle of one-to-three years is naive.”

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