In this regard, philanthropy may actually be mirroring the very inequalities in wealth that funders often seek to remedy. For instance, in the US the average small business loan for Black business owners is almost 50 percent less than the national average, and Black-led nonprofit organizations have 76 percent less unrestricted net assets compared to white-led organizations. Endowments of BIPOC1-led organizations are nearly four times smaller than those of white-led organizations—for those that even have endowments. Rather than stepping in to change this, traditional philanthropic giving often appears to be perpetuating a racial asset gap.

General operating support, for example, provides critical and ongoing income for operating BIPOC-led organizations. But it doesn’t necessarily provide the type of compounding assets that build wealth over time and can counter the impact of systemic racism and generations of historical underinvestment in Black and Brown organizations and communities.

As Ed Smith-Lewis, Vice President of Strategic Partnerships at UNCF, explains, “More general operating support for Black-led organizations is great, but what we could really use is help getting off the hamster wheel, so we don’t need to ask for more funding next year too.”

For funders interested in doing this—really walking the talk of building up under-invested communities—it may be time to shift from a charity mindset to an asset building one.

No matter what tools a funder decides to use to go beyond charity and traditional grantmaking, building assets in under-invested communities requires funders to shift existing philanthropic orthodoxies. Through our research and conversations, we’ve identified four key actions that can help an organization shift to an asset-building mindset:

  1. Recognize that the systems that created philanthropy negatively impact BIPOC communities and that there is a need for repair. 
  2. Get proximate.
  3. Get comfortable with transferring and sharing power. 
  4. Consider giving more.

Read the full article about giving more to BIPOC-led organizations by Grace Azenabor, Mariam Mansury, Jasmine Arai, and Gabriel Kasper at Stanford Social Innovation Review.