California’s Legislation Won’t Achieve True Diversity at Foundations

Diversity once again is proving itself to be a contentious and sensitive issue in the nonprofit world.

Stirred up by a bill in California that would require big foundations to disclose data about

grants to organizations controlled or mainly staffed by racial and ethnic minorities — or “specifically serving” such “underrepresented communities” — leaders of the nation’s foundations are grappling with how to respond.

The legislation is far reaching: It also would require disclosure about the composition of the board and staff of the foundation, as well as data on who owns businesses with which it has contracts. The bill’s supporters say that it is drawing interest from elected officials in other states and in Congress, too.

It might seem that the California measure offers no great dilemma, since diversity is part of the basic American creed, which organized philanthropy strives to advance.

But great difficulty comes with questions of what that means in reality. A disconnect exists between what many foundations say they believe on issues of diversity and how they set their organizational and grant-making priorities.

While foundation openness is critically important and might even stimulate new action on diversity, the California legislation is terribly flawed and will not contribute to profound change in the lives of the huge portion of Americans who desperately need more attention from philanthropy. However, some of foundations’ own voluntary efforts to advance diversity fail to go at it with full force and may end up obscuring some of the changes philanthropy should be making now.

To be sure, the number of racial and ethnic minorities who hold program-officer jobs at foundations has grown significantly in the past two decades and now stands at about 35 percent. Although the number of minorities holding chief-executive jobs at foundations has increased sharply in that same period, distressingly they still total just under 6 percent.

Racial and ethnic minorities remain significantly underrepresented on foundation boards, holding only about 13 percent of trustee and director spots, though that number also has multiplied over two decades.

Women have done somewhat better — they now fill more than 50 percent of chief-executive positions and hold more than a third of foundation board seats.

The focus on diversity is not surprising given that less than 9 percent of grant dollars go to efforts to aid racial and ethnic minorities, according to the Foundation Center. Less than 15 percent of foundation funds flows directly as grants to low-income groups.

Even though portions of many other foundation grants yield benefits to minorities and those in poverty, the percentages still appear much too low to people who think of charitable pursuits principally as providing assistance to those in greatest need.

Nonprofit organizations ought not feel any righteous comfort that the spotlight is on foundations; their record might well be worse. A recent Urban Institute survey found that fully half of nonprofit boards are all white and that only about a third of charities think racial and ethnic diversity is important in constituting board membership.

While reporting such data is important, to reduce these critical issues to a government-required numbers game (and to gaming the numbers), as would the California legislation, is to trivialize them. It is far more important to assess how resources are being allocated and how those decisions are being made — what is the overall grant-making strategy and who gets to decide?

When government gets to define what it means to “specifically serve” particular “communities,” as would happen in California, nonprofit organizations will probably find themselves once again in the same bind they have been in over and over again with limits on acceptable activities.

It is instructive to look at the rules of AmeriCorps, the Legal Services Corporation, or any of the government grant and contract programs for nonprofit organizations to see what policy makers deem appropriate and inappropriate use of resources.

Traditional charitable institutions and direct services are acceptable and are typically eligible for government assistance. Those are necessary, good, and laudable activities, but not sufficient to truly advancing social justice or strengthening democracy. On the other hand, activities basic to community organizing and efforts to build social movements, to educate and motivate people to vote, or to influence public policy and challenge public institutions have not been eligible.

The California bill would not allow foundations to count toward the total of grants for minorities some of the money they might provide for national policy development, advocacy or watchdog groups that advance changes that are of immense consequence to those concerned with diversity, poverty, equity, and justice. Many of those groups are not controlled or run mainly by minorities.

What would help minorities and poor people far more would be for foundations to undertake voluntary efforts to overhaul their strategy-setting and decision-making processes. But too many diversity programs stop far short of that ambition. Instead, they suggest that a demographically varied and multihued work force will help the foundation become more effective at achieving its goals and objectives. That motivates some officials, and any change in the right direction is good.

But it is not enough just to hire more members of minority groups.

There are too many examples, in government and corporations as well as in the nonprofit world, where enriching the racial or ethnic composition of the work force did nothing to change organizational or institutional practices in ways to make them significantly more beneficial to minority or low-income groups.

The reason such effectiveness-driven efforts are insufficient in the foundation world is that the very mission and purposes of most grant makers were framed, defined, and refined by people from elite and privileged parts of our society. And even when foundation trustees and executives reflect a greater (although still grievously skewed) diversity of race, ethnicity, gender, sexual preference, and a variety of other important demographic characteristics, very few come from lower-income backgrounds — and class is a critical issue in America.

Research by Harvard University economists and others has shown that the more people believe that the beneficiaries will be like them, the more willing they are to support spending on social and other programs for those in need.

Thus it is no surprise that foundation priorities have not emphasized grant making to those who are unlike the people on foundation boards or otherwise in foundation leadership positions. This need not be seen as malevolence, but may simply be a function of limits to the known and familiar, of relationship patterns, or of experience and vision, as well as of acculturated personal preferences. But whatever its cause, it is real and consequential for those who have been left out.

Diversity is not a question of opening the door and inviting others into your house. The question is how the house might be renovated so that it best reflects the design decisions of all now in it, of all who now own it, or, more accurately, of all who act as stewards for the house’s true owners: the fully diverse public.

It is vital that efforts move beyond questions of effectiveness in foundations’ narrowly defined grant-making programs and turn to questions about their societal role and what they must truly seek to accomplish as both individual grant makers and for philanthropy as a whole.

Too much is needed and too much is at stake to simply count the number, race, and ethnicity of people touched by various grants, figure out how well they were served, and call it a day.

Diversity in foundations is not about playing with numbers. It is about understanding that holding power and privilege in the hands of traditional elites is an anachronism that cannot well serve either dominant or marginalized groups in a rapidly changing world, nor will trying to do so go unchallenged. One need look no further than the demographics and dynamics of America’s presidential primaries to understand why diversity is an imperative.

Mandates will not work to realize genuine diversity, but neither will voluntary efforts that do not truly go to the core of a foundation’s purposes and the way they are translated to practice.

It is only by coming to an enlightened understanding of this inevitable change, and in the seeming contradiction that foundations need now to fully embrace what unavoidably confronts them, that they can appropriately honor diversity. In doing so, philanthropy can assert a genuine and necessary leadership in our society.

Foundations must demonstrate that they understand that encouraging diversity means changing how power is distributed in the nonprofit world. That is what true diversity is about — it’s not about including new sets of numbers in annual reports or on government forms.

Mark Rosenman works in Washington as director of Caring to Change, a project of the Union Institute & University, which has its headquarters in Cincinnati.