When young men of color in the city of Boston began disengaging from school, funders thought they had the solution: Fund more education programs. Yet, when the teens were asked about the problem, it had nothing to do with the classroom. Instead, the students said that they didn’t feel safe during their daily hour-long bus rides into predominantly white neighborhoods.

This story, shared by Prosecutor Impact Founder Adam Foss, demonstrates a growing criticism of philanthropy: Those with money (and therefore power) are often the least familiar with the problems they’re trying to solve and the communities they’re trying to help. Foss said that being proximate benefits both the philanthropist’s impact and the community writ large.

“You will not know what you are losing out on unless you go out in the field with your grantees,” said Foss. “The only way you can understand that is to feel it from the people who are leading these conversations.”

As evidenced by the recent Inclusive Impact Action Summit hosted by venture philanthropy organization New Profit, there are plenty of Black, Indigenous, and Latino/a/x leaders across the country who have the proximity, knowledge, and experience to make sustainable change, yet philanthropists tend to rely on their own -- often homogeneous -- networks when deciding who to support.

“The philanthropic sector, rather than looking for opportunities for outsized performance and return on their investment, is crowding the same spaces, looking at the same people, following each other around,” said Jim Shelton, chief investment and impact officer, Blue Meridian Partners.

Fortunately, donors can shift their strategies to support leaders of color who understand the root causes of social issues facing communities and have innovative solutions to address them.

“Be willing to let go of your social connections and spend time to see what works” said Dwight Poler, New Profit investor. “The talent of people – not from my social community, not from my region of the world – is extraordinary. The likelihood of a wealthy, white solution being the answer is small.”

Asset-based Mindsets

Structural and historical barriers have prevented leaders of color from accessing philanthropic capital, but donors’ long-held implicit bias poses another challenge.

Consider these statistics based on research commissioned by New Profit:

  • Black and Latino/a/x individuals comprise 30% of the United States population, but only 10% of nonprofit organizations’ executive leadership and 6% of foundations’ executive leadership.
  • Organizations led by Black and Latino/a/x leaders receive only an estimated 4% of total grants and contributions.
  • Organizations led by Black and Latino/a/x leaders tend to receive a mix of small dollar, short-term and/or restricted funding allocations, as opposed to larger tranches of more flexible funds.

Through its Inclusive Impact initiative, New Profit says its trying to increase equity in the social sector and drive more capital and capacity-building support to Black, Indigenous, and Latino/a/x social innovators. As Tulaine Montgomery, managing partner at New Profit and lead of the Inclusive Impact Initiative, said: “We need to foster balanced partnerships between funders and social impact leaders. Together we can create “brave spaces”¹ where leaders can share the unfiltered truth about the impact of philanthropy’s dominant practices, mental models and policies. Listening to and learning from the leaders we support enables us to build a higher performing, more sustainable sector.” To close the funding gap, many at the Summit said philanthropy must do the deep work of shifting to an assets-based mindset -- seeing the strength and potential of communities of color.

Inclusive Impact“There is a deficit-based mindset [among donors and investors] that continuously says ‘these people are lacking, let me help them.’ Change your perspective: Understand the power inside those communities,” said Jesús Gerena, CEO, Family Independence Initiative (FII), which addresses poverty by investing directly in low-income families.

Throughout the summit, social impact leaders highlighted the innovative solutions they bring to a range of problems, from addressing inequality in higher education in Massachusetts to reimagining how wildland firefighters personally impacted by the criminal justice system can help solve environmental issues in California.

“We are great enough to create new systems,” said Brandon N. Smith, founder of The Forestry and Fire Recruitment Program.

The summit was also a place for frank, and sometimes uncomfortable, conversations. Social entrepreneurs shared stories demonstrating the ways racism exists at many levels. For example, Gerena said some funders have questioned FII’s data -- on average, income rises 20% and savings increase by 150% in two years with FII’s program -- simply “because of the communities we’re serving.” Meanwhile Alexandra Bernadotte, founder of Beyond 12, said that despite her organization’s success and strong reputation, she has been deemed riskier by philanthropists.

Moving Forward with Solutions

As social impact leaders continue to identify and create solutions to some of the world’s pressing problems, many feel that the philanthropic sector has an obligation to address the gaps and flaws in the current system. New Profit has identified four levers for systemic change to improve equity in the social sector including shifting and increasing capital to leaders of color and expanding DEI-related data collection and analysis to improve transparency and accountability.

Social entrepreneurs also recommend these steps for donors:

  • Take stock of what you see as a "risky investment" to try to eliminate implicit bias, and make investments in organizations and leaders who you may at one point have seen as riskier than others.
  • Recognize that social change work is painful and exhausting. Invest in the well-being of leaders doing the work.
  • Support organizations who are creating new systems and supports for marginalized communities.

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¹ “An Invitation to Brave Space,” Mickey ScottBey Jones, https://thepeoplessupper.org/