California’s Diversity Push Fuels Pressure on Foundations Elsewhere

Following efforts by California lawmakers to spur grant makers in that state to give millions of dollars to minority-led nonprofit groups, foundations in other parts of the country are facing new pressure to open the books on their grant-making practices.

Rep. Jake Wheatley Jr., a state legislator who represents the Pittsburgh area, sent letters to nine big foundations in Pennsylvania in late June asking them to provide a database with details about the recipients of all grants made in 2006.

“Considering the dramatic demographic shifts that are projected for Pennsylvania, I believe that it is imperative for us to begin conversations and share information on how your foundation has worked to empower minority communities,” the letter said.

Mr. Wheatley, a Democrat, said he is looking for ways to help charities in his district that tell him they need more money, and he was inspired by moves in California to get foundations to disclose more information about their grants. “I thought it was an interesting model to take a look at in Pennsylvania,” he said.

The California effort was highly controversial in the foundation world because it involved legislation (AB 624) to require big grant makers to disclose information about the diversity of their giving, staff members, and boards. The bill was promoted by the Greenlining Institute, a public-policy group in Berkeley that says foundations give only a small percentage of grants to minority-led organizations and, as tax-exempt organizations, should be required to account for where their dollars go.

Grant makers contended that the measure interfered with the traditional right of foundations to make giving decisions without government pressure and that reporting requirements were not the best way to bring more diversity to philanthropy.

The author of the California measure, Assemblyman Joe Coto, a Democrat from San Jose, agreed to withdraw it in June after 10 big foundations — including the California Endowment, the James Irvine Foundation, the William and Flora Hewlett Foundation, and the David and Lucile Packard Foundation — promised to announce by the end of 2008 a set of multiyear, multimillion-dollar grants. The money would help strengthen minority-led and grass-roots groups that help minority and low-income people and to provide leadership training to a “diverse pipeline” of philanthropic executives, employees, and board members.

State and Federal Efforts

Now groups that are affiliated with Greenlining are pushing both state and federal lawmakers to get foundations in other states to increase their giving to minority-led charities.

“If diversity and inclusion is important in the government sector, the corporate world, other areas of public life, why should it not be equally important in our most sacred institutions, the philanthropic institutions?” said Luis J. Diaz, president of the United States Hispanic Advocacy Association, in Washington.

Mr. Diaz said his group wants more money to go to Hispanic-led organizations that are serving the country’s huge influx of immigrants. It has already contacted legislators in New Jersey, where Mr. Diaz lives, to discuss the issue and will probably seek out New York legislators next, he said.

The Florida Minority Community Reinvestment Coalition, a group that works to improve the economic footing of minorities, is planning to push both state legislators and Florida members of Congress to fight for more diversity in foundation giving, says Al Pina, the group’s chair. Greenlining made a presentation to 150 heads of Florida minority organizations in May, he says, and “overwhelmingly we got feedback, It’s time, we want to move forward on this issue.”

In Pennsylvania, Mr. Wheatley has asked the Greenlining Institute to help him analyze what percentage of grants and dollars went to minority-led groups from foundations that received his letter. He said three of the grant makers have sent the requested data, including the Pittsburgh Foundation.

“Our grant making is a matter of public record,” said John Ellis, vice president for communications at the Pittsburgh Foundation. “We will be talking with Mr. Wheatley to find out what his interests are.”

The Heinz Endowments has not yet received the letter, but would prefer to sit down with Mr. Wheatley to discuss its giving, said Douglas Root, communications director. The representative seems to be interested in whether foundations are giving enough help to “underserved communities,” he said. “We think we have an excellent story to tell in that regard.”

Different Measures

A study by Greenlining last spring of giving by 25 large, national foundations found that 12 percent of the grants and 8 percent of the money awarded in 2005 went to minority-led groups (organizations with minorities making up at least 50 percent of the staff and board and offering programs designed primarily to serve minorities).

But some grant makers say measuring grants that way undervalues giving for minorities.

Following the California accord, state grant makers released a study that they commissioned on domestic giving by 50 large California foundations. The study, conducted by the Foundation Center, found that in 2005 at least 39 percent of the grants, and 33 percent of the dollars, primarily helped minorities. An estimated 75 percent of grants intended to benefit poor people also helped minorities, even if not explicitly earmarked to benefit them, it added.

Steve Gunderson, president of the Council on Foundations, said foundations should expect more pressure from lawmakers asking them to account for the diversity of their giving. “I have no doubt that once we get through the election and get legislatures convening next year, we will see this in additional states,” he said. He praised the California accord for offering a voluntary, rather than legislative solution — one that “moves away from number crunching” and focuses on strengthening the groups that deliver services.

But he said foundations need to work together to develop common ways to measure whether efforts to bolster such groups succeed. “We’ve got to be able to say, Did the investment work, and if not, why not?” he said.