Posted on December 30, 2008

2008: Foundations Urged to 'Embrace' Diversity

It didn't take long for California foundations — indeed, for foundations across the country — to realize that 2008 was going to be a year unlike any in recent memory.

Saying that grant money awarded by foundations in the state rarely reached minority-led organizations, California assemblyman Joe Coto (D-San Jose), with backing from the Berkeley-based Greenlining Institute, proposed legislation in January to address the situation. Drafted in response to a 2006 Greenlining study which found that only 3.6 percent of grant dollars from the nation's top twenty-four private foundations went to minority-led nonprofits — defined as a group whose staff and board was at least 50 percent non-white — Coto's legislation, Assembly Bill 624, would have required large public, private, and corporate foundations in the state (those with assets of more than $250 million) to post the ethnic, racial, and gender composition of their staffs and boards to the Web.

Foundations in California and elsewhere reacted predictably, arguing that the proposed reporting requirements were a violation of privacy and irrelevant to questions of impact and effectiveness. What's more, said foundations, members of minority groups were often beneficiaries of foundation funding, regardless of which nonprofits received grants. That argument was borne out by a research study issued by the New York City-based Foundation Center in April. Commissioned by Northern California Grantmakers, in partnership with regional associations of grantmakers in Southern California and the San Diego area, the study, Embracing Diversity: Foundation Giving Benefiting California's Communities of Color (36 pages, PDF), found that at least 39 percent of the California-focused grants made by the state's largest independent foundations benefited populations of color.

The report also found that the foundations in the state explicitly designated a fifth of their domestically focused grants to benefit ethnic or racial minority populations and awarded about one in seven grants to nonprofits whose missions emphasize service to populations of color. Another 20 percent of domestically focused grants also served ethnic or minority populations by targeting populations such as the "economically disadvantaged." At the same time, the report concluded that the goal of ethnic or racial equity in grantmaking often had to compete with donor intent as expressed through the foundation's mission and/or geographic and field of interest restrictions, and that foundations should be free to choose among many relevant social values while also being receptive to public opinion and the needs of the community.

The debate simmered without resolution until June, when a coalition of ten California foundations — the California Endowment and the Ahmanson, Annenberg, California Wellness, Hewlett, Irvine, Packard, Parsons, UniHealth, and Weingart foundations — issued a joint statement reaffirming their commitment to serve minority populations in the state and promising to announce a comprehensive set of grantmaking activities to that end by year's end. In return, Assemblyman Coto agreed to drop his sponsorship of AB 624, which had passed the assembly but had yet to be taken up by the state senate.

The reaction of the public was decidedly mixed, with critics on the left labeling the foundations' decision a half-hearted "compromise," and critics on the right, including the Wall Street Journal editorial page, lambasting the foundation leaders involved for not standing up to what it characterized as a "remarkable government grab."

Unaffected — for the time being — foundations in other states watched the drama unfold, wondering whether they might find themselves in a similar situation a year or two down the road. In late December, the California foundation coalition released a report, Strengthening Nonprofit Minority Leadership and the Capacity of Minority-Led and Other Grassroots-Based Community Organizations (32 pages, PDF), that detailed a series of new grantmaking strategies designed to help meet the needs of minority and low-income populations in the state. In addition to honoring existing commitments, the report called for more multiyear grants focused on minority-led and other community-based groups, as well as leadership training, board development, and other culturally appropriate capacity-building efforts.

Related News:

Community Foundation of Santa Cruz County Diversity Partnership Fund Reaches $1 Million Goal (10/5/08)

Minority-Led California Charities Anticipate Expanded Foundation Support (8/11/08)

Cleveland Groups Work to Boost Diversity of Nonprofit Boards (7/4/08)

Growth in California Grants Benefiting Communities of Color, Study Finds (7/1/08)

California Foundations to Provide Additional Support for Minority-Led Organizations (6/25/08)

New Report Examines Foundation Diversity (4/29/08)

California Foundations' Diversity Makeup and Grantmaking Questioned (3/14/08)