How Racial Equity Supports Better Grantmaking Practices

Exponent Philanthropy is on a journey to understand, embrace, and champion equity, and we are embedding it in our programmatic and research efforts. Much of our 2020 Foundation Operations and Management Report centered around exploring how racial equity relates to good grantmaking and governance practices.

The relevance of racial equity

Our survey defined racial equity as, "the systematic fair treatment of people of all races that results in equitable opportunities and outcomes for everyone." We asked foundations to rate the relevance of racial equity to their mission, and more than a third (34%) said it was “very relevant.”

Interestingly, foundations with at least two people of color on their boards and foundations with all female or nonbinary board members, considered racial equity significantly more relevant to their foundation mission than did boards without. Foundations with all white or all male boards can still engage in racial equity work, but bringing more diverse perspectives onto the board is the best way for a foundation to advance conversations around racial equity, and make the work more central to their mission.

Good grantmaking practices align with racial equity

We surveyed foundations on an array of grantmaking practices—from monitoring grantee accomplishments to engaging constituents in the grantmaking process—and analyzed the relevancy of racial equity as it related to the grantmaking practices.

The foundations rating racial equity “very relevant” to their mission were more likely to carry out each of the grantmaking practices above as compared to foundations rating it “not relevant” or “somewhat relevant.”

Stepping outside the survey, members say these strategies also play an outsized role in advancing racial equity:

• Streamlining and simplifying grant requirements helps de-emphasize traditional long-form applications. It offers alternative ways to collect and share information, reducing some barriers to entry, and affording more organizations a shot at philanthropic dollars.
• Collaborating with other funders to learn, support a cause, or pool grants, has its advantages including more large scale work, shared risks and new perspectives.
• Engaging constituents in the grantmaking process helps funders make more informed decisions without preconceived ideas on what they think grantees need.

Interestingly, general operating support and multiyear grants were fairly common regardless of the relevance of racial equity to a foundation’s mission. But we’ve heard from funders and grantees working to advance racial equity that these two types of grants are essential.

Further, general operating support and multiyear grants are increasingly common amongst lean funders, and not just for those focused on racial equity. No matter your funding focus, multiyear general operating support grants afford recipients the security to think long term to better create change and solve problems.

There is still work to be done

Despite the positive findings we identified in this year's report, there is still work to do to increase the number of diverse voices in philanthropy and understand how racial equity relates to even more grantmaking practices.

The racial and ethnic diversity of foundation boards and staff was low compared to the overall population and number of foundations (65%) that consider racial equity “somewhat” or “very relevant” to their mission.

• Of participating foundations, 74 percent reported having no board members of color (i.e., their boards were comprised entirely of people who identified as white)
• More than three-fourths (78%) of participating staffed foundations had no paid staff members of color (their staffs were fully comprised of people who identified as white). And this trend continued for CEOs—90 percent of participating foundations with full-time CEOs had someone in that role who identified as white.

Though philanthropy is still dominated by people who identify as white, an important lesson to keep in mind here is that those who are engaging in racial equity work, and working to bring more diverse perspectives into the field, are the foundations more likely to be engaging in other types of philanthropic best practices. In addition to rethinking barriers to entry, rethinking data collection, and knowing the stresses on their grantees, these grantmakers are also streamlining grant requirements, collaborating with other funders, engaging constituents in the grantmaking process, and providing financial support to grantees for evaluation.

As the philanthropic sector aims to build trust, strengthen relationships, and address the systemic power imbalances in our society, trusting nonprofits and the people they serve is crucial. Regardless of a foundation's funding priorities, it can make the world a more equitable place for all of us.

About the Foundation Operations and Management Report

466 foundation members of Exponent Philanthropy completed the 2019 survey for a response rate of 26 percent. The majority of respondents self-identified as family foundations (53%) or independent foundations (39%), and respondents were relatively evenly distributed across the United States. For more information, access the full report on Exponent Philanthropy’s website.