"It's Got to Be an Entire Organizational Shift." How Funders Can Better Support Black-Led Nonprofits

Although racial justice was already a focal point for many funders, it took on an even bigger role for institutional philanthropy following the murder of George Floyd and the massive protests that followed. At the time, funders pledged billions of dollars to advance racial equity and racial justice. And as Inside Philanthropy wrote last year, many of the biggest pledges made back then are well on their way to being fulfilled, and a lot of the funding went to organizations led by people of color.

However, despite the strides that have been made, it’ll come as no surprise to most readers that many people-of-color-led organizations, especially those that operate on a smaller scale, still struggle to access funding. And although trust-based practices are more prominent in the philanthropic conversation than ever, change has been slow.

A new report from the Young, Black, and Giving Back Institute (YBGB) highlights how funders can better support Black-led and Black-serving nonprofit organizations.

Founded in 2014, YBGB originally focused on convenings and training for Black leaders and Black-serving nonprofits. It has since shifted its focus to grantmaking and capacity-building to better equip those nonprofits to find solutions to their communities' most pressing needs. YBGB also seeks to close the racial gap that exists in institutional philanthropy and runs Give 8/28, which it calls the only day dedicated to promoting donor support for Black-led and Black-benefitting nonprofit organizations.

YBGB’s report focuses especially on organizations with operating budgets of less than $500,000, many of which operate on less than $30,000. YBGB has for the majority of its existence counted itself among that group, operating with a budget of approximately $25,000. It was thanks to a $50,000 grant from the Nielsen Foundation's Data for Good program in 2021 that YBGB was able to craft this report. It now operates with a $90,000 budget.

"The reason why the report became something is we wanted to do some more research and delve more to really find out what are the barriers from the organizations that we knew," said YBGB's founder and CEO, Ebonie Johnson Cooper. "The question for us was, where is the funding coming from? What barriers are being presented when it comes to institutional funding?"

Overlooked and underfunded

YBGB's report reiterates much of what is already known about the struggles Black-led and Black-serving nonprofits face when it comes to funding. It outlines how Black-led nonprofits, often grassroots, hyper-local and grounded in communities, seek capacity-building support and diverse, authentic and trusting funding partnerships. YBGB also highlights the fact that while Black-led organizations feel comfortable speaking with institutional funders about their challenges, they also feel they have to adapt their message to some degree to appeal to white-led philanthropic institutions.

Citing a 2020 report from Bridgespan and Echoing Green, which was published prior to the funding surge that took place later that year, YBGB also notes that nonprofits led by people of color receive far less support than their counterparts led by white people.

Among the nonprofits it surveyed, YBGB says 86.5% always or often have difficulty accessing a large and diverse number of funding sources, and 72.7% always or often have trouble identifying or cultivating new funders. More than half said their organization would shut down if they lost one or two of their key funders. Survey respondents also reported that they feel overlooked by funders.

The report offers several recommendations for funders. One of its biggest recommendations — nothing new in terms of criticism of the philanthropic status quo — is for funders to provide long-term, capacity-building grants rather than grants for specific programs. In other words, funders are encouraged to provide multi-year, unrestricted support. This is especially crucial for smaller organizations, many of which are volunteer-run or rely on a small part-time staff of less than four people.

At Inside Philanthropy, we’ve spent a good deal of time looking at why many funders have been so slow to embrace a less restricted style of giving. Some of the reasons we’ve identified, like a lack of trust and a devotion to metrics-heavy strategic philanthropy, certainly apply here. But one key reason we’ve discussed — funders’ desire to back “impact” rather than “overhead” — seems difficult to apply in the case of organizations operating on volunteer support and less than $30,000 a year.

Another of YBGB’s recommendations for funders is to create funding streams for and alongside Black-led and Black-serving nonprofits, centering the needs of the communities they serve. Inside Philanthropy's deep dive into philanthropy’s racial justice pledges following Floyd's death found that very few funders actually include communities in their grantmaking decisions. Shifting this practice would prove to be of great benefit for the grassroots nonprofits that work closely with their communities.

Funders can also provide funding for technical assistance to cultivate, retain and diversify donors.

The path toward trust

YBGB notes that Black-led and Black-serving nonprofits are part of a long history of mutual aid within Black communities. "Mutual aid and self-sufficiency is something that we've always had to do," Cooper said. "All of the things that seem normal and regular now were not afforded to us… The idea of community self-sufficiency, collective mobilization, collective care has always been what we've had to do."

The need for mutual aid stems from the systemic exclusion Black Americans have faced — and continue to face. "I think the beauty in Black communities and Black collective care has been that we've always figured out a way, no matter what it is, and so the funding right now of very normal Black practices of care [is] new to institutional philanthropy, but it's not new to us,” Cooper said.

That speaks to an idea that has become central to many in the progressive nonprofit world: that because Black-led and Black-benefitting nonprofits are often grassroots and grounded in their communities, they are better equipped with the knowledge needed to generate solutions. Funders, the thinking goes, can be more effective by providing grants to these grassroots organizations and by including community input in their grantmaking.

YBGB suggests funders build authentic relationships with Black-led organizations. This will help them understand the long history of Black-led social change efforts and to honor both formal and informal networks — like mentoring networks and Black church support — that keep Black communities together.

One of the biggest mistakes funders make is taking a one-size-fits-all approach to their grantmaking, according to Cooper. "We're not a monolith," she said. "We're not a homogenous group of people or nonprofit organizations… You have to honor the fact that every organization does things differently. Every organization is not necessarily looking to achieve the same thing." In this vein, YBGB recommends funders have regular feedback sessions with Black-led nonprofits to better understand their needs.

For Cooper, more Black leaders in positions of power would make a big difference in closing funding gaps. "I think it's a question of who is in positions of power, leading boards and leading nonprofit organizations. I think that is where you'll begin to see the shift, where you start seeing the power shift."

A final recommendation is taking a hard look at the systemic issues Black communities face. YBGB suggests that alongside their grantmaking, foundations can offer support through social policy, direct services, organizing and leadership support to build a strong ecosystem of support for Black communities.

Cooper did acknowledge that some funders have made positive changes to their grantmaking, but at the same time, many of those changes have taken place at a granular level and it may be too soon to see an impact. At some point, not taking action becomes a choice, Cooper said, especially given that the information needed to make changes is already out there. But rather than dwelling on the reasons behind the ongoing underinvestment in Black-led nonprofits, Cooper’s focus remains on what is going to move the needle for these organizations.

"You can't just have a Black fund and all your other practices are just like they used to be before. Is this performative? It all has to work together. You have to do a whole entire system change at your organization for it to really work… It's got to be an entire organizational shift. It just can't be one simple policy, or one pledge for a year. It's not going to work."

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