Photo by Mikelya Fournier on Unsplash
There is a custom in our town. If you want a BIPOC person, especially one leading a nonprofit, to address your club, church coffee hour, or other group interested in learning more about the issues related to economic justice they are working on, you pay them an honorarium of $250 or $300. In a group of mostly white people focused on learning to care for the area within its watershed using the lens of Doughnuteconomics.org, they asked why that was the case. “Why should you pay a person with brown skin to come talk to us when you wouldn’t pay a person with white skin to talk to us?” one of the members asked. Another said that if travel to the farm where the group meets was a problem, they could chip in for gas money, but why would something else be needed?
I did some research on the difference between Black and white led non- profits, nationally. What I found was surprising; there is obvious disparity in foundation funding. Black and brown led nonprofits get smaller grants that take longer and have more strings attached than the grants secured by white led nonprofits.
The real reason Black and brown leaders can’t afford to do the community engagement work that white nonprofits do is more complex and requires some context. Black led groups get 24% of the unrestricted operating grants from foundations, while white groups get 76% of those grants. Unrestricted grants provide the money that lets you hire staff and gives you financial reserves to have breathing room to keep the work going in the frequent droughts between the targeted program grants. It is the most valuable money a nonprofit can get, and, for the most part, small, Black nonprofits don’t get them at all. The Black led groups who get unrestricted operating grants are often the largest and most connected with relationships to the establishment
Program grants often give a nonprofit money for the program, but they most often prevent nonprofits from using that money to hire or pay existing staff to do that work. One longtime observer says it’s like foundations want to pay for the soup, but not the soup bowls.
You can greatly simplify the work of a nonprofit into three buckets: doing the work, raising money to do the work through writing an endless series of grants, and community engagement, speaking to groups in the community to enlist allies and donations.
White led nonprofits, which get 76% of the most valuable kind of philanthropic dollars, can afford to leave the office and speak to a group because they have professional staff that keep the work going while they are out. This group that asked the question, why do we pay the Black speaker when we didn’t pay the white speaker, had had the executive director of a white led nonprofit come out to speak to them two weeks before. That director had also brought along a consultant.
“If I leave the office, the work stops” said one highly accomplished Black nonprofit leader. I’m running from pillar to post to keep the light on and the work alive, and I’m the chief cook and bottle washer.”
That’s why the honorarium to pay for community engagement exists: to cover the cost of them stopping the work of the non profit’s programs, from after school feeding programs, community economic development, to whatever the identified need is, and the constant grantwriting.
Black nonprofits “get 25 cents on the dollar (of the most valuable funding),” said Cheryl Dorsey, the African American leader of Echoing Green, an extremely well-funded social enterprise nonprofit who commissioned the Bridgespan study.
“They are living hand to mouth, without the money that gives (white nonprofits) breathing room when other grants don’t come through. General operating support is a vote of confidence and relationship” that Black nonprofits don’t have, Dorsey said. For nonprofits working with Black young people and men, the disparity in unrestricted net assets is even higher; Black led nonprofits working with Black youth net assets are 91% smaller than white led nonprofits working with Black youth, according to the Bridgespan study.
To overcome the racially linked disparity in funding, many Black led nonprofits have found ways to create earned income through community gardens selling value added products, or consulting and training, or any other ways to pay staff to do the work that program grants don’t give them the money to do.
In Western North Carolina, Stephanie Swepson Twitty and Eagle Market Streets Development Corporation, working with us at Neighborhood Economics, is working on a solution.
Eagle is creating a philanthropic marketplace, using the $2.6 billion Impact Assets multi -donor donor advised fund platform to help overcome the hidden structural injustice in philanthropy that shows up in Black led nonprofits.
The Repair Fund, on the philanthropic marketplace, will offer unrestricted operating dollars to the Black led nonprofits working in the nine Black neighborhoods in Buncombe County, NC that have been displaced.
Watershed Fund will offer nonprofits working in marginalized neighborhoods patient growth capital for their earned income projects. While for-profit businesses that have capacity to scale often have access to growth capital, there are almost no sources for growth capital for nonprofits. Often these NPO’s have managed to create viable earned income projects, but they aren’t robust enough to take on debt. The growth capital created will be available to eligible NPO’s in the form of recoverable grants, paid back through revenue share to the Repair Fund–managed by EMSDC.
It is anticipated that the money for the sister-funds will be raised through a mix of foundation grants, public sector dollars, contributions from local tourism-related businesses that want to be on the right side of the reparations issues, along with community and church engagement. The software for the online marketplace should be online in a few weeks.
Stephanie says: “As non profit organizations, we continue to struggle to help our communities and funders who support them to understand, 501(c)(3) is an IRS determination. It is a designation given to organizations structured for charitable purposes. Not for Profit does not, by any stroke of the imagination suggest, “no profit”. It is a moral imperative that NPO’s themselves and those who fund them understand this organizational structure is a business model that must “turn a profit” to support their administration and normal business operations–salaries, benefits, insurance, etc”.