Philanthropy’s Race Problem

A new compromise from foundations might be causwe for some optimism.

By Orson Aguilar Nov 25, 2008

The everyday challenges faced by the people in many neighborhoods seem far removed from the American Dream these days: the lack of good housing and jobs, poor health, immigration raids, the foreclosure crisis, failing schools and all-too-common homicides.   

As advocates for economic empowerment and racial equality, my peers and I struggle daily to find homegrown solutions to these problems. We spend our time, often with limited resources, working nights and weekends to address the social and economic hardships faced in our communities. Most of us spend countless hours fundraising, often with limited success, to address the challenges we face. We wonder why we are all so broke while billionaires spend upwards of $40 million to take a trip to outer space.

Advocates for racial justice who struggle for years or decades at a time to bring opportunities to our nation’s underserved communities should have hope. It appears that just beyond the desert there is a rainforest flowing with philanthropic dollars. Consider this statement from the Foundation Center’s website: “The country’s more than 72,000 grantmaking foundations increased their giving to $42.9 billion in 2007, an estimated 10 percent gain over 2006.” The Foundation Center goes on to report that there was a 12 percent growth in foundation assets in comparison to the previous year.

Unfortunately, communities of color did not receive their fair share of this $42.9 billion.  

While there is no available data on grant-giving to communities of color for 2007 yet, there have been numerous studies and reports over the years showing that foundations are not serving people of color on an equitable basis. Steve Gunderson, a former Republican congressman and now president and CEO of the Council on Foundations, admitted in a 2006 video on philanthropy that “foundations do not adequately serve minorities on a percentage basis.” What Gunderson meant in his interview was that foundation dollars are not equally distributed amongst all U.S. residents and that some groups, in this case communities of color, were being short-changed by the foundation community. Some would call this the equivalent of receiving a check marked “insufficient funds.”

In fact, the Applied Research Center published a study in 2004 entitled Short Changed: Foundation Giving and Communities of Color. A major finding in the study was that “grants to communities of color fell from a peak of nearly 10 percent of all grants in 1998 to 7 percent in 2001.” The findings coincide with data from the National Committee for Responsive Philanthropy and with the work of former Secretary of Labor Robert Reich, who estimates that a mere 10 percent of philanthropic dollars reach the poor and underserved. The Greenlining Institute, a multi-ethnic public policy institute in California where I am the incoming executive director, followed up with a report in 2006 that found a mere 3.6 percent of grants in 2004 invested in organizations led by people of color.

Despite this history, the foundation community has disputed these studies, attacking them on the grounds of what they call poor methodology and unreliable data.  At Greenlining, we requested meetings with foundations on numerous occasions to determine what the best methodology would be for tracking grants to communities of color, but we didn’t receive a response. And on many occasions, we requested diversity data from foundations, only to be turned away or completed ignored. These, of course, being the same foundations that demand diversity data from prospective grantees.

Given the methodology disputes and lack of cooperation from foundations in sharing data, leaders in the California state legislature introduced The Foundation Diversity and Transparency Act (A.B. 624) that would have required foundations with assets of $250 million and more to report basic diversity data on an annual basis. Had it passed, it would be the first of its kind in the nation. Instead, a compromise was brokered in June. Ten of California’s largest foundations agreed to come up with a plan by the end of this year to invest millions in nonprofit organizations that are led by and that serve people of color. They also agreed, at least on paper, to diversity and to nurturing a new generation of leaders from communities of color.

Yes, many of you might be rightly asking, “Where are the details?” I agree. The details are vague, but the promise and commitment from the 10 foundations are strong, and I will be one of many who will work diligently to ensure that this historic partnership is not for communities of color but rather with communities of color. This is an important distinction that will lead either to the success or failure of this important campaign.   

But the journey to reach this compromise is telling. Philanthropy groups hired three lobbyists to kill A.B. 624 even though the legislation would have been consistent with other pieces of state legislation that require government bodies and corporations to track and disclose race and ethnic data.

Philanthropy’s frenzied response to A.B. 624 was surprising, to say the least. We witnessed respectable community advocates use terms such as racial mandates, racial quotas and affirmative action—as if Ward Connerly has succeeded in making that a negative concept—to describe A.B. 624. Foundations withheld funds to organizations supporting A.B. 624, and some were creating a campaign of terror by threatening to pull funds from the fortunate few organizations that receive grants, saying they would leave California altogether if A.B. 624 passed.

Fortunately, the debate around A.B. 624 has led to other positive developments. The Council on Foundations, the premier association representing foundations, hosted a historic super summit in May with discussions on race as a strategic focus. In addition, the Northern California Grantmakers has commissioned its first study on race in philanthropy. The results were expected to be released this summer as this issue went to print. These may be described as baby steps, but nevertheless, they are good steps.

Other states are responding as well. Community leaders in Florida, New York and New Jersey are urging their lawmakers to introduce similar legislation, and lawmakers in Pennsylvania are currently conducting background research to determine if a similar bill would be appropriate for their state. We hope these efforts across the country will encourage the U.S. Congress to take the next step and make this a national public policy issue.

While many feel sadness and anger at philanthropy’s efforts to kill A.B. 624, and some are naturally wary of what is to come from the new compromise, we are optimistic that these difficult debates and discussions might give birth to a new philanthropic reality that offers a better future. Foundation leaders who are ready to embrace racial equity will find many new allies like us ready to join them in building a new and more effective philanthropic movement that will once and for all fix our schools, stop the killings and make our country a symbol for how communities can live together without large disparities in health, wealth and opportunities.