Rethinking Philanthropy: Bridging the Gap for BIPOC-Led Organizations
Of the $557 billion in philanthropic giving recorded in 2023, less than 7% reached BIPOC-led and serving organizations. Philanthropy can and must do better.
Philanthropy has the potential to be a transformative force, addressing critical social challenges on a large scale. However, despite its vast resources, it often falls short—particularly for nonprofit organizations led by Black, Indigenous, and People of Color (BIPOC).
Consider this staggering statistic: less than 7% of philanthropic dollars are directed to BIPOC-led organizations (Chow, 2018). In 2023, charitable giving in the U.S. reached over $557 billion, translating to only $39 billion for these organizations that serve a population representing 42% of the U.S. (Council on Foundations, 2016). As BIPOC communities face significant economic, health, and social disparities, these funding patterns highlight a considerable inequity in the philanthropic landscape.
less than 7% of philanthropic dollars are directed to BIPOC-led organizations
Research indicates that these disparities are deeply rooted in structural racism and systemic inequities affecting both organizations and the communities they serve (Scott & Rodriguez Leach, 2024). This article explores the causes of these disparities, their real-world impacts, and actionable steps that foundations can take to create a more equitable philanthropic environment.
The Real-World Impact of Funding Disparities
Funding disparities are not merely abstract figures; they have concrete consequences for BIPOC leaders and their communities. These groups grapple with urgent challenges, including vulnerabilities to climate change, mass incarceration, and unequal health and education outcomes (Heard-Garris et al., 2021). Unfortunately, the resources allocated to BIPOC-led organizations remain insufficient to meet these critical needs.
A study by Echoing Green and the Bridgespan Group found that Black-led organizations in their applicant pool generate 24% less revenue than their white counterparts, with unrestricted net assets being 76% smaller (Dorsey et al., 2020). In climate solutions funding, only 1.3% of the $1.34 billion granted by national funders reached BIPOC-led organizations (Ramirez et al., 2022). Moreover, organizations with race-conscious missions in Minnesota receive, on average, 12.6% less total revenue than others (Deng, 2024). These disparities reveal a troubling lack of trust in BIPOC leaders, who often must prove their worthiness for support, diverting their focus from essential mission work (Johnson, 2024).
Understanding the Underlying Causes
Several key factors contribute to these funding disparities:
Individual Biases: Implicit biases among philanthropic leaders tend to favor organizations led by individuals with similar backgrounds, sidelining racially marginalized groups (Staats, 2016). Many family foundations also focus on issues that resonate with their personal experiences, creating significant funding gaps and limiting broader community innovation (Foundation Center, 2011).
Workforce Diversity: A lack of diversity within philanthropic institutions leads to funding decisions that overlook the unique challenges faced by BIPOC organizations. With 76% of foundation staff and 88% of executives being white (Council on Foundations, 2016), there exists a critical disconnect in understanding the needs of BIPOC communities and the culturally relevant solutions they create.
Systemic Barriers: Historical disinvestment and discriminatory policies like redlining have created generational barriers for BIPOC-led organizations, exacerbating economic disparities (Rothstein, 2017). These systemic barriers often restrict BIPOC leaders’ access to the social and cultural capital necessary for navigating philanthropic environments effectively.
The consequences of what some call “philanthropic redlining” are profound. Organizations led by people of color frequently struggle to secure adequate funding, limiting their capacity to implement essential programs and stifling local empowerment. This dynamic perpetuates cycles of deprivation and contributes to burnout among BIPOC leaders and their teams (Minkler et al., 2019).
Taking Action Toward Change
So, what can philanthropic entities do to address these disparities? Here are actionable steps outlined in the literature:
Diversify Funding Sources: Broaden funding portfolios to include more BIPOC-led organizations and increase unrestricted funding for flexibility (Scott & Rodriguez Leach, 2024).
Reassess Funding Criteria: Eliminate biases in funding criteria to prioritize community impact over traditional metrics of success (Johnson, 2024).
Invest in Capacity Building: Provide grants that enhance the sustainability and effectiveness of BIPOC-led organizations (Greenlining Institute, 2023).
Build Relationships and Trust: Engage in genuine dialogue with BIPOC leaders to understand their needs and co-create relevant funding strategies (Dorsey et al., 2020).
Monitor and Report Progress: Establish benchmarks for diversity and equity in funding to ensure transparency and accountability (Council on Foundations, 2016).
Imagine a world where everyone is a changemaker, where those most affected by societal issues are empowered to lead change in their communities. This vision is not just aspirational; it is essential for achieving true equity and justice.
A Call to Rethink Philanthropy
In recent years, philanthropy has faced criticism for perpetuating economic disparities, but now is the time to rethink our approach. As Dr. Martin Luther King Jr. eloquently stated in 1963,
Philanthropy is commendable, but it must not cause the philanthropist to overlook the circumstances of economic injustice which make philanthropy necessary.
To genuinely address race-based funding disparities, philanthropic leaders must transform their mindsets alongside their funding practices. Philanthropy can be a vital tool in addressing complex societal problems, but to fulfill its potential, it must evolve from an instrument of charity into a mechanism for justice.
About the Author
Tomas Alvarez III, BSW, MSW, is a doctoral student at the USC Suzanne Dworak-Peck School of Social Work, where he examines race-based funding disparities in philanthropy and designs systems change solutions. He is also the co-founder and leader at Idea2Form, a creative agency specializing in design for social impact. Tomas’ work is dedicated to creating a more equitable philanthropic and changemaking landscape that empowers all communities to thrive.
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