Philanthropy is Neglecting Poor Communities, But What About the Influx of New Funders?

It's a depressing story: American philanthropy has been booming in recent years, but giving to under-served communities has barely budged, even as these populations have been walloped by an economic meltdown and slow recovery. Also, grantmaking that challenges inequities at a systemic level has remained anemic. 

This is the bottom line of a new analysis by the National Committee for Responsive Philanthropy, and it underscores arguments that NCRP has been making for decades. Yet while it's hard to argue with the central point that most funders aren't doing enough for the under-served and have zero interest in challenging current power arrangements in U.S. society, our sense is that the picture is not quite as bleak as the NCRP report suggests. Why is that? Because a closer look at the data used in this report, drawn from the Foundation Center, suggests that there's not a full accounting here of what some of the newer top donors are doing to help poor communities, especially the large-scale grantmaking to urban charter schools and the nonprofits that support them. 

We'll say more about these data gaps in a moment, but first, let's look at the key points of the NCRP reportPennies for Progress: A Decade of Boom for Philanthropy, a Bust for Social Justice:

The analysis found that even after the worst financial crisis since the Great Depression, foundations rebounded fast, and did quite well for themselves overall. Assets grew by 70 percent, or $321 billion, from 2003 to 2013, and following the recession, grantmaking recovered to its 2008 peak by 2011. 

Under-served communities, however—including people of lower income, immigrants, people of color, women, children, and other vulnerable populations—suffered far worse during and in the wake of the recession, and philanthropy has not responded sufficiently. The report said:

(T)he broader philanthropic sector has shirked its responsibility to invest in communities most in need at a time when those investments were most urgently required. Philanthropic funding for the people who need it most has lagged behind booming assets, and foundations have continued to avoid strategies that have the greatest potential to change the status quo.

The analysis looked at Foundation Center data from 2003 to 2013 and found that while giving to under-served communities grew both in dollars and share of domestic grantmaking, it remains “disturbingly low,” going from just 26 to 31 percent. Ninety percent of foundations gave less than half of their grant dollars to benefit under-served communities. 

Strategies and grantmaking practices were similarly disappointing—the share of giving to long-term strategies for social justice was flat, and giving for crucial general support barely increased to just 21 percent. 

NCRP’s benchmarks for philanthropy at its best include 50 percent going to under-served communities, 25 percent going to social justice strategies and 50 percent going to general support, among a handful of other targets.

NCRP found that 20 percent of grantmaking to the under-served came from just 20 large foundations. And yet, those foundations don’t actually prioritize that type of giving relative to NCRP's benchmarks. You see this in the report’s ranking of funders, by the fact that in only a few cases did foundations score high in both dollars given and percentage of their overall grantmaking. However, the report did find a growing group of funders really dedicated to making an impact on these issues. The report found that 75 percent of those funders meeting the social justice benchmark in 2013 were not on the list in 2003. That's encouraging. But we wonder if the overall picture here might look even brighter with better data. 

There are good reasons to think that the Foundation Center's data on grantmaking to help under-served communities leaves out big streams of funding. Take, for example, the data on the Walton Family Foundation's grantmaking. The NCRP report finds that WFF gave $314 million to help under-served communities between 2003 and 2013. Yet between 2010 and 2013 alone, WFF's own grantmaking data shows that it poured some $400 million into direct support of charter schools. The charters that WFF typically supports are in high poverty areas, mainly in cities, and educate mostly kids of color.  

Likewise, data on the Gates Foundation's U.S. giving to under-served communities—pegged at around $1 billion between 2003 and 2013—seems too low. In 2013 alone, the foundation pumped nearly a half-billion dollars a year into its education grantmaking, which has always prioritized boosting under-served students. Meanwhile, there's no mention of the Broad Foundation in the report, which, during the period NCRP studied, gave several hundred million dollars to support charters and other education initiatives, mostly targeted at under-served communities. 

An analysis by the scholar Sarah Reckhow found that annual giving by the top 50 K-12 funders more than doubled between 1998 and 2005. By 2010, it had increased to $1 billion. It has soared further since then, as more new funders have entered the scene. Mark Zuckerberg and Priscilla Chan, for example, committed around $220 million in grantmaking to help schools serving poor kids between 2010 and 2014, starting with the controversial $100 million gift for Newark. Or consider a funder like Stanley Druckenmiller, who gave over $100 million to the Harlem Children's Zone during roughly this same period. 

The surge in giving for urban charter schools and groups that support them, like Teach for America, has been heavily criticized over recent years, and often for very good reasons. But an accurate accounting of grantmaking to under-served communities needs to fully reflect this giving.

It's also important to keep an eye on the other institutions that channel the giving of the new philanthropists. The Wall Street-backed Robin Hood Foundation isn't mentioned in NCRP's report, but in just one three-year period, between 2011 and 2013, it made $435 million in grants to advance its mission of reducing poverty in New York City. NCRP does mention the Silicon Valley Community Foundation, another conduit for new donors, saying it gave $207.6 million for under-served communities over the decade analyzed—a figure that will strike close students of SVCF's grantmaking as too low. Meanwhile, the other top donor-advised funds, whose grantmaking has surged in recent years, are completely absent from NCRP's analysis. Fidelity Charitable made $2.1 billion in grants in 2013 alone, and reported that 10 percent, or $210 million, went to human services. Nearly half of its grantmaking went to education and health, and presumably some of that money benefitted under-served communities.  

Again, NCRP's analysis relies on Foundation Center data, the accuracy of which in turn relies on the proper coding and reporting of grants. With tens of thousands of foundations to keep track of, and the inevitable subjectivity in defining certain areas of grantmaking, you can imagine some of the challenges of creating a complete picture of where funder dollars are going. 

Our larger point, here, is that numerous major new donors have lately arrived in philanthropy with an express commitment to aiding under-served populations, and this surge in new giving runs counter to NCRP's data-based picture of largely static giving to these communities. 

This quibble shouldn't detract from the larger truth of NCRP's important report: Philanthropy is still not doing enough to help under-served communities or push for systemic changes. Which leads to another question: Given the fact that so many foundations, including large ones, identify the importance of helping such populations, and that so many people working in the sector are cognizant of the importance of long-term justice strategies and unrestricted, multi-year grants, why are the numbers still low?

We suppose the short answer is that foundations don’t have to change. They are, after all, really accountable only to themselves and their boards. Even for those that recognize these problems, all the inertia points to one-year restricted grants to well-established groups that can yield short-term metrics to show to trustees. 

In other words, “It’s the right thing to do” seems not to be enough. 

Which is why it's important to have NCRP and others pressing the foundations that recognize the needs of under-served communities to step up the percentages they give. In particular, there are big funders that give large dollar amounts, but could proportionately do much more. If those funders led by ratcheting up those percentages, even a little, it would mean a lot more dollars. But big funders also need to lead by example when they do so, trumpeting their successes so others follow suit. Meanwhile, the core group of funders that have dedicated themselves to these issues and strategies needs to similarly lead the charge and be celebrated for their accomplishments. 

It's not easy to pressure foundations to give to these causes and use these strategies (we’ll try!), but if the outliers can run circles around those dragging their heels and show their successes at every opportunity, others will try to replicate them.