One big question over the past several years has been whether funders would maintain funding for organizations serving communities of color in the aftermath of the pandemic and the murder of George Floyd. The results, in a nutshell, have been mixed.
The newest entry into this field of research is a Lilly Family School of Philanthropy report titled “Communities of Color Index: Measuring Giving to Communities of Color,” which explores key characteristics of organizations serving communities of color and the amount of philanthropic support these nonprofits receive from individuals, foundations and corporations. The study is supplemented by the Communities of Color Index (CCI), the “first systematically generated landscape” — effectively, an online database — of organizations dedicated to serving communities of color in the United States.
The two resources land at a tenuous time. With some funders backing away from 2020-era racial equity commitments and the Trump administration’s funding cuts squeezing groups serving communities of color — organizations that are disproportionately more reliant on federal dollars — the Lilly School hopes nonprofit leaders and fundraisers use the CCI to inform their strategies. In addition, donors and grantmakers can leverage the CCI to identify funding patterns and gaps.
“Communities of color have always had robust philanthropic practices, but research on charitable giving and other philanthropic engagement by and for these communities — and many other communities — is less prolific,” said the Lilly Family School of Philanthropy in a statement to IP. “This research provides a new, data-driven resource for nonprofits, funders, scholars and others to better understand these aspects of the philanthropic landscape.”
Here are three takeaways from the Lilly School’s Communities of Color Index and research report.
The CCI tracks nonprofit organizations dedicated to serving communities of color
To be included in the CCI, nonprofits must be “primarily dedicated to serving communities of color (with approximately 80% or more of program expenses serving this purpose for organizations that do not exclusively focus on communities of color).” Users can search for nonprofits by selecting from five categories: Asian American, Native Hawaiian or Other Pacific Islander; General or Multiple Communities of Color; Black or African American; Hispanic or Latino; and American Indian or Alaska Native.
Researchers exercised what the report calls “a certain degree of judgment in creating the CCI.” For example, their attempt to include cultural organizations that serve a specific community in the U.S. was hampered by the fact that “available information on these organizations often made it challenging to make this distinction.” (Check out page 32 in the report for a more thorough rendering of the CCI’s methodology.)
I took the CCI for a test drive, entering “Human Services” as a nonprofit category and “Monterey County” as the location. (Users can also search by city or zip code.) The CCI generated 11 nonprofits, each with its own page listing its website, program information and financials. I could see how the CCI could be a useful tool for funding leaders looking to identify previously disengaged organizations serving communities of color.
Giving to organizations serving communities of color peaked in 2021 and leveled off in 2022
The report found that giving to organizations serving communities of color increased from $9.8 billion in 2019 to $13.4 billion in 2020, before peaking at $16.6 billion in 2021 and dropping to $16 billion the following year. “Even following large growth in 2020 and 2021,” the report reads, “CCI organizations comprise 2.9% of overall charitable giving.”
The findings mirror reporting conducted by IP’s Martha Ramirez and Tate Williams, who, as of August 2022, found that out of the nearly $1.8 billion committed by a sampling of 11 major funders in the aftermath of the summer of 2020, about $540 million had been distributed. Two years later, against the backdrop of growing backlash toward racial justice efforts, Ramirez noted that some funders were quietly retreating from 2020-era commitments.
The Lilly School report notes that future iterations of the CCI will determine if the decline in funding to organizations serving communities of color from 2021 to 2022 was “sustained over multiple years.” If so, we might partly attribute the drop to Ramirez’s 2024 concerns that funders did, in fact, “bow to the pressure” from risk-averse board members and lawyers. And that’s not even getting into funders bailing on explicitly race-centered funding following the Trump administration’s moves this year.
We must also acknowledge a prosaic financial reality. I suspect that sometime during that 2020-2021 period, some foundation leaders realized that if they made new racial justice funding commitments permanent and didn’t cut funding elsewhere, their grantmaking outlays could exceed their annual 5% payout rate and threaten the foundation’s perpetuity. As a result, they had to make some difficult choices, including dialing back 2020/2021-era support for grantees serving communities of color.
In what is arguably the report’s most timely takeaway in light of Trump’s cuts, authors found that organizations serving communities of color “appear to be disproportionately reliant on government grants compared to non-CCI organizations.” The study notes that “it is possible that disparities in private funding, coupled with challenges in establishing long-term reserves, may drive CCI organizations to depend on renewable sources of funding like government grants to fulfill their missions.”
Related Inside Philanthropy Resources:
For Subscribers Only
The report explores the concept of “shared-identity philanthropy”
“Communities of Color Index: Measuring Giving to Communities of Color” also explores how individual donors engage in what the authors call “shared-identity philanthropy.”
Basically, it’s the idea that when donors and recipients share the same identity (e.g., both Asian American), “donors may perceive those causes as more important and contribute more.”
Examples of this mindset include prodigious support from wealthy Black Americans, including Oprah Winfrey and Robert F. Smith, for the National Museum of African American History and Culture, and Hispanic American donors’ contributions to the Smithsonian Latino Center.
Additionally, the report notes that “high-net-worth African Americans, Asian Americans and Hispanics are more inclined than white households to donate to other racial, ethnic, and tribal groups” — as in, to organizations serving other communities of colors besides their own.
The proliferation of this type of giving is one of the report’s more encouraging takeaways. That said, we also have to acknowledge that donors of color, in the aggregate, are hamstrung by deeply entrenched racial wealth gaps.
A separate report by the National Community Reinvestment Coalition found that in 2022, the median white household held $284,310 in wealth, more than six times that of the median Black household at $44,100 and four times that of Hispanic households at $62,120. So while nonwhite households give generously to organizations serving communities of color, the data suggests they’re making those gifts from a proportionately lower income baseline, on average, compared to their white counterparts.
In contrast, foundations have well over a trillion dollars sitting in the bank. Why have institutional funders, to quote the Lilly School’s report, “historically struggled with sustaining long-term commitments to communities of color?”
While the report doesn’t explicitly address this question — and setting aside foundations’ unwillingness to exceed their 5% payout — it does briefly allude to some of the reasons for the funding disparity. For instance, authors cite W.K. Kellogg Foundation Chief Transformation & Organizational Effectiveness Officer Alandra Washington’s observation that traditional philanthropic models have typically lacked meaningful representation of people of color in leadership roles.
Meanwhile, funders may erect barriers to entry by making organizations that lack the resources to hire grantwriting consultants fill out onerous applications. We’ve also heard plenty of stories of nonprofits that received a grant only to lose out on future funding because their leaders insufficiently filled out (figurative) reams of metrics binders.
These challenges underscore a theme running through “Communities of Color Index: Measuring Giving to Communities of Color,” which is that it’s up to funders to determine if they are sufficiently supporting organizations serving communities of color and engaging in the due diligence to get new groups on their radar.
And therein lies the utility of the new online CCI tool. There was a time when funders argued that their desire to support these groups was hampered by a lack of actionable data or visibility into nonprofits doing the work. Now, with resources available that track organizations serving communities of color across the U.S., they can’t fall back on that excuse. Whether they can handle the risks — real or imaginary — now associated with funding in a way the U.S. president doesn’t like is another matter.
