Do you know much about philanthropy? Most people don’t. If you don’t either, here’s a statistic to start you off: An overwhelming 82% of 8,900 private and community foundation board members across the U.S. identify as white despite only representing 58% of the U.S. population (Council of Foundation, Politico). Philanthropy’s decision makers are not exactly representative of the general public, yet their influence has ripple effects on marginalized communities.

But why would you need to know anything about philanthropy? And why does it matter that wealthy white people control philanthropy? Bill Gates and Warren Buffet can do whatever they like with their money. It doesn’t affect us, and we should just be grateful they are “giving back,” right?  

Wrong.

We need to know how philanthropy works and affects us for two reasons:

  1. It’s not their money. Once an individual puts money in a foundation or donor-advised fund (DAF), a fund that holds money for charitable purposes, it’s not theirs anymore. They receive a tax break for making the donation, which is often the impetus for creating foundations and DAFs in the first place (Foundation Source). They agree to “relinquish dominion and control” of the funds (Cornell Law); they do not own the money anymore. The money then belongs to the foundation or DAF. The organization or fund may include their name, but they don’t own that either – no one does. It exists to serve the public good.
  2. Philanthropy affects our options and access to services and support in big life-altering moments and small everyday choices. That money funds everything from after-school programs to cancer research, food banks to the opera, community gardens to climate change solutions. Philanthropy decides which programs and what communities get funding. Though foundation staff usually make recommendations, the board chairs and members have the final say on all these decisions.

Take Action

  • Learn about Participatory Grantmaking, A Just Transition, Whole Philanthropy, and other alternative models of philanthropy that center representation and Black and Brown community voices.
  • Familiarize yourself with the decision-makers and private foundations in your community here. Check if they have a website with a list of their board members, and learn about them to understand if they represent your community. If they don’t, or there isn’t a website, contact them to ask what steps they are taking to include the community in their decision-making process.
  • Find a community foundation near you. Email them to ask how they are centering representation and community voice. Ask for their most recent board meeting notes, a breakdown of their board demographics, their DEI commitment, and how they plan to increase representation if it doesn’t match the community. And inquire about how you can get involved or learn more about their grantmaking process.

But doesn’t the money donated from private philanthropy pale in comparison to the total money that comes from individual giving from the general public? 

Yes and no. The key is not the total dollars donated, but the influence wielded with the grant. Foundations exert way more influence than you and I and have an outsized power on nonprofits and community organizations. Unlike money received from an accumulation of small donations, grants from foundations typically come with conditions and requirements on how to spend the money. Board members decide if money flows to your community or one that looks more like theirs. They determine if it goes to programs they believe are important or ones your community knows are necessary. And they dictate whether the money is allowed to pay nonprofit staff livable wages or restricted to only materials — restricted funding is a widespread practice (Candid) that contributes to nonprofit community workers being underpaid and overworked (NonprofitAF) and disproportionately affects Black-led nonprofits (Echoing Green). 

Who holds foundations accountable? And why is it important to question/challenge the power dynamics of philanthropy?

Currently, there is very little accountability for foundations and their boards. One of the few concrete standards of activity is a rule requiring all foundations to spend at least 5% of their endowment each year (NCFP). Unfortunately, in most cases, this actually acts as a ceiling for grantmaking (Beyond 5%). Foundations often calculate their grantmaking budgets so that they spend as little as possible over 5%, leaving the other 95% of their endowment to sit (and grow). There are no specific professional standards of performance, no requirements to report on successes and failures, no regulatory bodies, and no philanthropic version of the Hippocratic Oath to ground decisions. Most grantmaking decisions are made privately with few people privy to the process or discussions since there are no transparency requirements. In fact, 90% of foundations don’t even have a website (Glasspockets). 

None of this is to say that foundations and their board members are bad, power hungry, or racist. We see many white foundation staff actively doing the work through programs like the Capital Collaborative. It’s just that the system that currently governs how philanthropy flows upholds white supremacy. And if everyday citizens and communities of color don’t know how that system works — or, more accurately, doesn’t work — we can’t agitate, advocate for, imagine, design, or demand change to a system that quietly affects us all.

When we incorrectly believe or misunderstand that the contributions to foundations and donor-advised funds still belong to the founders, we reassign ownership of the foundation and the funds to them. This perpetuates a concentration of power at odds with representation, inclusion, democracy, and community. 

Our understanding influences who holds power. 

And in the case of philanthropy, power is often held by people who are furthest away from the communities served, spend the least amount of time studying the history, context, and data of issues being addressed, and are most likely to be involved in philanthropy due to family obligation, professional expectations, or the idea of “legacy.” 

We need ultimate decision-making power and board seats to be in the hands of a broad range of people who are from the communities served; who spend their careers studying the history, context, and data of issues being addressed; and who are involved in philanthropy due to a personal mission to serve their communities or a deeply held belief in a radically different future.

If founders truly divested control of foundation and DAF funds to diverse groups like this, money would flow more freely to Black and Brown communities. By maintaining control through board seats, founders and founding families exert undue influence in Black and Brown communities – by commission or omission – and carve out for themselves another well-heeled version of the white man’s burden.

Key Takeaways

  • Foundations influence and determine what nonprofits and other institutions are able to provide to your community.
  • Foundation board members are disproportionately white and are decision-makers on programs and initiatives in Black and Brown communities.
  • Understanding how philanthropy works is vital when advocating for change and more diversified power over how money flows to our communities.

The Capital Collaborative by Camelback Ventures works with white funders and social impact investors who want to deepen their individual and organizational commitment to racial and gender equity in philanthropy — but may not know how. You can learn more about how to get involved by submitting an interest form for the Capital Collaborative’s 2023 cohort or signing up for the newsletter.