We want to let you in on an emerging practice. Philanthropists who want to increase impact and reduce waste are turning to diversity and inclusion as tools for effective giving.
Good intentions do not make for philanthropic success on their own. Blind spots cost philanthropists—and the causes they espouse—dearly. A gift can be given for the right reasons to the wrong group. A grant can be generously dispersed, but without careful research. An investment in a social enterprise with great promise can be rendered impotent by a misguided business plan.
To make the most of their philanthropic dollars, donors practice due diligence. Staff, advisors and even donors themselves check financial information, perform site visits and talk to experienced stakeholders. This much is well known.
But when the concepts of diversity and inclusion are added to basic due diligence, the result can create a philanthropy that is both responsive and efficient.
Costly Mistake: An Illustration
One foundation in a major American city wanted to help poor families in a distressed neighborhood. It decided, on its own, to donate car seats to families at the hospital before they went home with their new babies. It was a well-intentioned idea. And generous. Unfortunately, most of the families that received the car seats did not have cars. There was a huge difference between what the foundation thought low-income families in this area needed and what they actually did require. If people from the area being served had been included in the planning, due diligence and decision-making processes, this embarrassing mistake could have been avoided and a real need identified and addressed.
Background & Definitions
Part of the Philanthropy Roadmap series, this guide aims to explain how diversity and inclusion can be used as practical considerations for getting better results.
Diversity is the practice of including a full range of perspectives, ideas and experience in philanthropic decision-making. Inclusion seeks the participation of individuals from diverse backgrounds in the process.
These principles have a strong association with philanthropic efforts to create a more just and equitable society, especially in regard to historically disadvantaged populations. See the Z. Smith Reynolds Foundation case history in this guide.
But any philanthropist—working in any issue area—can benefit from adopting a policy of including diverse voices at all levels of their giving program. The New York Times expressed the idea concisely in a 2008 headline: “Diversity is Productivity.”
“There’s a lot of empirical data to show that diverse cities are more productive, diverse boards of directors make better decisions, the most innovative companies are diverse,” says systems scholar, Professor Scott E. Page of Michigan University and author of the book The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools and Societies. “People from different backgrounds have varying ways of looking at problems, what I call ‘tools.’ The sum of these tools is far more powerful in organizations with diversity than in ones where everyone has gone to the same schools, been trained in the same mold and thinks in almost identical ways.”
In philanthropy, tapping into diverse thinking is common sense. Better-informed funding decisions often require a more comprehensive analysis of both problems and their solutions. The principles of diversity and inclusion also enhance the cultural competency of any giving program—building a deeper and more operational understanding of the diverse people and communities it aims to serve.
In 2010, The Council on Foundations, which represents more than 2,000 foundations and corporations, defined “diversity” as encompassing “the breadth and depth of human difference.” More specifically, the council said diversity “includes but is not limited to differences of ethnicity, race, gender, sexual orientation and identification, age, class, economic circumstance, religion, ability, geography, and philosophy among other forms of human expression.”
In short, diversity is not about pigeon-holing people, it’s about broadening our definition of what it means to be human. It confronts the old thinking of “us and them” and “same or other” and instead points out the simple fact that we are united in being different. We all have differences, and recognizing and respecting those differences is a strategy to harness them as a force for good.
Most sources define this idea as a philanthropic practice which seeks individuals from diverse backgrounds as active participants in the planning, design, implementation and evaluation of programming. The opposite of tokenism, this approach values different perspectives and experiences and aims to make decisions with the people and communities that will be affected.
Getting Started: Key Questions
A good guide never begins with answers. Instead, it lays out questions to help donors create or revise their own strategic giving plan. To get you started, consider the following questions to help refine your thinking. These questions can also orient your discussions with professional, family and personal advisors.
How well do we really know the communities we serve?
Reflecting on this question can be eye-opening as it invites a frank discussion with key partners. Listening to different viewpoints can give new insight to donors and provide ideas to improve programs. Of course, such discussions often include the people who are most affected by a philanthropist’s giving— nonprofits, social enterprises and the communities they serve.
Do we have the right voices at the decision-making table?
Do our grantees have the right voices at their decision-making tables? Diverse staff, board members and advisors—for donors and grantees alike—often invigorate the process of creating and implementing strategy, bringing new ideas and fresh perspectives. In addition, the voices of the populations they serve often provide critical information that can save time, reduce mistakes and inspire better-directed giving.
Are we missing anything?
Effective donors gather the information and advice they need before designing their giving strategy and making specific gifts. This is how diversity and inclusion play a vital role in due diligence.
How can we evaluate the impact of our giving?
Not only are diversity and inclusion important before a gift is given, but they also play a vital role in helping donors understand the impact of their gifts. Quality relationships with people from the communities donors support will surface quality information about the outcomes of giving. Assessment can and should be designed to incorporate the feedback that comes from diverse and inclusive perspectives.
How does our investment policy align with our giving policy?
The largest part of any foundation’s endowment is usually invested to achieve market returns. Do the companies you invest in have policies on diversity and inclusion that match your own? If there is dissonance, how might that be resolved? Some donors seek to align at least part of their endowment investment policy with their philanthropic goals.
Dispelling the Myths
Diversity: Fact vs. Fiction
Diversity is not about minority quotas. In fact, the minority/ majority duality is rapidly becoming a relic of 20th century thinking. The new approach for philanthropy is to strive to be inclusive. This might mean including voices from the populations served by a philanthropy. It also can mean attempting to reflect the real diversity in our country to tap into new energies and ideas.
Minority or Majority?
The Bureau of the Census has projected that so-called “minority” groups will in fact become the majority in the United States by 2042. By 2023, more than half of our children will come from these groups. These trends are likely to influence the problems philanthropists address as well as their proposed solutions. Doing due diligence through diversity and inclusion can offer a way to keep up with a changing world and make sure donors’ giving strategies are as relevant as possible.
Here are some areas where misconceptions can mislead donors:
Inclusion is just for big foundations with many staff members and large boards.
A small family foundation may want to consider cost-effective ways of making more inclusive decisions. One approach can be as simple as seeking out thought leaders engaged with target populations and asking them what they think of a certain philanthropic strategy. Another might be to create voluntary grantmaking advisory committees. This kind of due diligence can reveal faulty assumptions as well as encourage new thinking, thus saving money and invigorating strategy
Diversity is prescriptive.
Just the opposite. The new idea is not to set a limited definition of who qualifies as diverse, but instead look first to see who is actually out there in the community and to reflect that reality. In fact, diversity is not even limited to race, gender, sexual orientation and ethnicity.
Being inclusive means sacrificing your independence as a donor.
Inclusion is not cause-specific. It works on both the supply and the demand sides of philanthropy. Rather than limiting donors to a particular path, it opens up possibilities by improving the amount and quality of information available. It helps philanthropists build their own relationships with important partners which open new learning opportunities. Seeking out and including diverse views does require time and effort from the donor. But it can pay off in more precisely targeted, better evaluated giving.
Bringing Inclusion & Diversity Into Your Philanthropy
No guide will ever replace the experience and benefit of trusted advisors—both personal and professional. However, the following basic steps can be an important beginning for donors who seek to improve your philanthropy through diversity. More information on developing an overall strategy can be found in the title guide of this series, Your Philanthropy Roadmap.
What does being inclusive mean to you as a donor? In the end, the definition that matters most is your own. It will grow from your own values and motivations. There is no wrong answer here. It can work on a “people” level in regard to staff, board, advisors and consultants or on the “program” level of what problems you want to address and the ways in which you want to address them. The Delphic Oracle described the best starting place for philanthropy thousands of years ago in Greece. It took just two words: know thyself.
Now is the time for asking questions. Is your current approach the best one to create impact in your desired area of giving? Do you have enough input from grantees, potential grantees and members of the target population you serve? Does your approach have resonance with the people on the ground and with the professionals who serve them? Talk to other donors working in your field. Have they found inclusion useful? How? Solicit ideas from different stakeholders as to what they think would work. Examine best practices of other philanthropists. Even if you stop after this step, you are likely to benefit from new insights. This is the beauty of diversity. It demands that we ask questions. And the minute we do that, we can begin to learn.
Create a Prototype Plan for Inclusive Giving
Together with your advisors, list some ideas that you think you can realistically implement. Share them with key and diverse people. This need not be expensive to do. It can be as simple as asking your advisor to find the top three opinion leaders on your issue so you can run your approach by them, make sure it makes sense to them and learn from any comments they might have. Here, diversity does you a service by evaluating your plan before you spend money implementing it. Respectfully listen to the feedback, thank the people for their ideas and perspectives and then revise and refine the plan.
Evaluate and Learn
Try it for six months or a year or whatever time period you think is appropriate, then contact the same stakeholders and ask for an honest appraisal. Revise accordingly. More detail can be found on evaluation in our “Assessing Impact” guide.
The keen observer will note that by following this rough guide you will be doing more than creating a policy and plan for inclusion. You will be building relationships with key players in your chosen area of philanthropy. Any business person worth his or her salt knows that relationships are at the heart of any collaboration. The respect shown through requesting input and listening to it can help you refine or even re-define your larger goals. Once again, this is the added value of inclusion and diversity. They are relationship builders and policy shapers. You, the donor, remain in the driver’s seat the entire time, but your journey will be more fruitful.
Participation is the Key
Inclusion is more than just a word
The D5 organization, which works to increase understanding of the issue, makes this point:
“While a truly inclusive group is necessarily diverse, a diverse group may or may not be inclusive.”
The key is the extent to which diverse individuals participate in the decision-making process.
At one extreme, façade-like “inclusion” can lead to tokenism. This is the “tell us about your people” stereotype which assumes an individual can speak for an entire population.
Consider this situation: Illinois state figures show that of Chicago’s more than 400,000 public school students in 2010, 45 percent were black, 42 percent Hispanic and nine percent white. Now, imagine a funder wanted to improve educational results among those students. Would an all white board and advisors be able to capture the full range of perspectives needed to design and support a relevant giving program? Would one black voice, one Hispanic voice and for that matter, one white voice, be able to do the job of representing tens or hundreds of thousands of students?
Philanthropic observers say that, for the most part, the diversity discussion among most foundations and donors has evolved beyond such tokenism.
But what if a donor were to disregard the ideas of diversity and inclusion entirely, carrying on with their work as normal? What would be the danger in that?
To put it bluntly, they would put their philanthropy at risk through inadequate due diligence. They would increase the chance that their grantmaking would proceed based on assumptions.
Assumptions that could be wrong. Assumptions that could lead to decisions made in isolation from the actual work done. Assumptions that could pour money down the drain and turn potential opportunities into dead ends.
Diversity as a uniting force
The names are familiar:
Marguerite Casey Foundation Robert Wood Johnson Foundation Rockefeller Brothers Fund The California Endowment The Prudential Foundation The Rockefeller Foundation W.K. Kellogg Foundation David and Lucille Packard Foundation
But their coalition, called D5, is new. And its purpose is unprecedented.
These foundations, along with 11 other philanthropic partners, are seeking to form “a single, workable strategy for the field” that allows funders to “achieve greater impact in an increasingly diverse world.”
The California Endowment has taken a leadership role as a funder of the project, making a $4.05 million grant in 2011. A longtime supporter of efforts to diversify the philanthropic and nonprofit sectors, the Endowment sees diversity as essential to its mission to improve health in underserved communities in California, a state with one of the most diverse populations in the country.
“We need philanthropy to look more like America, so we can better respond to America’s issues,” says Dr. Robert K. Ross, President and CEO of the California Endowment. D5 seeks to provide innovative leadership to help all funders think more creatively about diversity and inclusion. D5’s aims include:
- Encouraging diversity among new CEO, staff and trustee appointments to more closely match actual U.S. demographic trends
- Increasing annual funding for diverse communities
- Developing research capacity to measure philanthropy’s progress in diversity
- Providing an array of exemplary policies, practices and educational resources to help funders become more diverse, equitable, and inclusive.
“The D5 strategy is designed to meet philanthropic institutions ‘where they are’ on the issue of diversity,” says The Endowment’s Dr. Ross, “and help them take the next step in a way that is mission-supportive, results-oriented, and not too scary.”
Rockefeller Philanthropy Advisors serves as the national program office for the D5 coalition.
Using diversity as a lens for funding
The Z. Smith Reynolds Foundation
Philanthropy often seeks to counter injustice through grantmaking.
The Z. Smith Reynolds Foundation seeks to promote “social, economic and environmental justice” through its grantmaking policy as well.
Named after the son of the founder of the R.J. Reynolds tobacco company, the foundation has worked since 1936 “to improve the quality of life for the people of North Carolina.” But in 2005, the board made a significant decision—to use diversity to evaluate all their funding.
“The Foundation’s grantmaking policies reflect the belief that organizational performance is greatly enhanced when people with different backgrounds and perspectives are engaged in an organization’s activities and decision-making process. Thus, the Foundation actively seeks to promote access, equity and inclusiveness, and to discourage discrimination based on race, creed, ethnicity, gender, age, sexual orientation, socioeconomic status, and other factors that deny the essential humanity of all people. This principle is a lens through which all of the work of the Foundation is viewed.”
Under this policy, the foundation reserves the right to decline proposals from organizations with board and staff who do not reflect the diversity of the community in which they work. It can also stop payment on grants already approved if the grantee is making no reasonable effort to achieve diversity.
Significantly, the Z. Smith Reynolds Foundation promises to work with grantees to help them move towards board diversity. Its Foundation Diversity Policy can be found on its website here. In its grantmaking, the foundation prioritizes efforts to serve low-income communities of color, supporting programs to include people of color in organizational and community decision-making. In 2011, the foundation launched a new initiative—to advance understanding of racial equity, to help combat structural racism and to offer grants to fund training, assessment and planning to create more racial equity in their grantees’ areas of influence.
Investing in diversity and gender equality
As a philanthropist, Jacki Zehner a catalyzing force. Working with many other funders, she’s helped to build the Women’s Funding Network (where she serves as vice-chair of the board) and the Women Moving Millions campaign (serving as a co-chair) which together have raised more than $182 million worldwide to invest in women-led solutions to critical social issues like poverty and global security.
As a businesswoman, she became the first female trader and the youngest woman to be made a partner at Goldman Sachs in 1996. She was just 32 years old. As an independent investor and consultant these days, she continues to work for more gender balance in the workplace and to seek social change through leadership, wealth and philanthropic advising.
To Zehner, who is president of the Jacquelyn and Gregory Zehner Foundation, giving or investing in diversity can make the world better for everyone. In 2011, she wrote: “By thinking about gender when investing, we can use the markets to narrow the gender gap which, as studies show, has the additional benefit of fostering economic growth and creating jobs. Moreover … in addition to positive economic and social implications, increased political stability is also highly correlated to the status of women and girls. In other words, greater gender equality results in greater economic and human security.”
Research about who gives and to what causes support Zehner’s work: The National Council for Research on Women reports that women make up a reported 43 percent of the U.S.’s top wealth holders (individuals with assets of $1.5 million or more). As donors, they often make contributions based on personal preferences rather than those of spouses or other family members. They often pool resources with like-minded women through funding circles, women’s foundations and associations. And because women live longer than men, they are expected to manage much of the $41 trillion in charitable giving that is projected to take place over the next 50 years.
To support the most vulnerable, you must go the extra mile
The San Francisco-based Rosenberg Foundation believes that in order for democracy to thrive, “every person in California must have fair and equitable opportunities to participate fully in the state’s economic, social, and political life.”
Established in 1935 at the bequest of California business leader Max L. Rosenberg, the Rosenberg Foundation casts itself as an ally of the state’s most vulnerable residents. Its work has ranged from supporting efforts on behalf of Japanese American families returning from internment camps to more recent work to reduce the incarceration rates for women.
An unorthodox strategy is vital to the foundation’s approach. It relies on its diverse staff and board to identify and support community organizations that it believes have been overlooked by mainstream funders.
President Timothy P. Silard says Rosenberg works with partners in philanthropy, government, advocacy, nonprofits and other sectors, hoping to “engage new voices” in their work.
Ben Jealous, President and CEO of the NAACP and a former Rosenberg president, said the Foundation’s hands-on approach requires additional time and resources. He says it’s worth it.
“Investments in old-fashioned research, prospecting, and deliberation allow the Rosenberg Foundation to identify people who have the capacity to deliver transformative results … These talented individuals would otherwise have been excluded from the process because they lacked access to the requisite networks and credentials needed to ‘break in’ to the foundation world. Because we spend more time meeting with people who have received little to no support from our peers, the people we support, like our board, look like California.”
“I am proud of the Foundation’s successes in not only pursuing, but also achieving that diversity. It feels good to be inclusive. It feels better to be successful. Achieving the latter often means truly investing in the former.”
Lessons Learned: Don’t Lead with Money
The Northwest Area Foundation
Founded by James J. Hill, the son of a railroad pioneer, the Northwest Area Foundation “serves the eight states where the Great Northern Railway once operated—magnificent country including portions of the Great Plains, Rocky Mountain West, and Pacific Northwest.” According to its President Kevin F. Walker, the goal is to reduce poverty and build sustainable prosperity in this region.
It’s a huge task.
In 2010, more than 46 million Americans—15.1 percent of the total population—lived below the official poverty threshold. The poverty rate for Native Americans, who are central to the foundation’s mission, is typically far higher. In some communities, it ranges from 20 to 50 percent of the population.
But Walker brings a positive candor to the foundation’s philanthropy. In an article written in 2008, he states: “Native communities are replete with evidence of failed philanthropic and economic development undertakings by outsiders, and we at the Northwest Area Foundation have had our share of failures as well as successes.”
Here are three lessons Walker says were learned from their experience. And although their experience is with Native American populations, there are lessons for all philanthropists about the importance of including grantee and client perspectives in decision-making.
One size doesn’t fit all.
“There are nearly 600 federally recognized tribes in the U.S., including 74 in our region alone. Each is a sovereign nation with a unique culture. Urban areas can be home to members of hundreds of tribes. One of our foundation’s missteps in recent years was to spur the development of a single anti-poverty strategy for urban Indian communities all across our region. This was a misguided effort that took too little account of the diversity of these communities.”
Don’t lead with money.
“Where need is so profound, the funder who arrives with big promises and a bulging wallet will spark intense competition for control of the resources. Acting on this lesson is tough for foundations because money is central to what we have to offer. Nonetheless, it is imperative to structure philanthropic engagement in Indian Country in such a way that the communities’ assets and aspirations, not the distorting power of the dollar, drive the activity.”
“Arriving on a reservation or in an urban Indian community with hard-and-fast pre – scriptions for how to make things better simply won’t work. Many Native people have suffered miserably in urban areas for decades. Reservations, meanwhile, face problems whose source is as obvious as it is over – whelming —the dispossession of indigenous nations throughout the history of European settlement on this continent, a process we are still living. Effective philanthropy must engage, listen, learn, and adapt, not dictate.”
In 2011, the foundation announced grants worth $1.59 million to fund the Native American Social Entrepreneurship Initiative. Developed as a result of roundtable sessions held with Native American leaders, the program aims to support Native financial institutions which in turn could spawn new social enterprises and jobs.
A family foundation uses diversity to evolve
Jessie Smith Noyes Foundation
“There’s an arrogance about a foundation that deals with a constituency without having that constituency represented.”
Those bold words come from Ann Wiener, granddaughter of Charles F. Noyes, and Victor DeLuca, president of the foundation Charles Noyes created in 1947. In 2010, the Foundation had an endowment of $43 million and made around $2.5 million in grants.
Mr. Noyes named his New York City-based foundation for his wife Jessie Smith Noyes with the aim of funding scholarships for future leaders. Significantly, he made a point of specifying that 50 percent of all scholarships should go to nonwhite students.
Since then, the family foundation has evolved. It no longer funds scholarships. Instead, it supports “leadership organizations that can make a difference.” From an all white board made up of family and friends, the foundation has evolved to a board with a majority of non-family members and a mix of male, female, straight, gay, single, married, Hispanic, Asian, black and white trustees. And in an important extension of the founder’s views, it honors diversity in its grants.
“We don’t know all the answers about diversity,” a brochure created by the foundation states, “but we do know it’s worked for us.”
In specific, the foundation credits its efforts to “bring on staff and board members of color” with sparking its work for environmental justice and sustainable communities. The changes began in 1989, and now, “diversity is less the thing we struggle to create and more the air we breathe.”
“We use many factors to select board and staff members, ranging from compatibility with values and mission to commitment to serve to having a sense of humor,” wrote Ms. Weiner and Mr. DeLuca in 2009.
Philanthropists want value for their money. Naturally, they measure the effectiveness of their giving through its impact in communities both near and far.
But donors should not ignore the process of their giving. For the “how” of philanthropy has a huge bearing not only on results, but on the way their philanthropy can respond to those results and itself evolve.
An investor in stocks diversifies to reduce risk. A donor might look at philanthropic diversity in a similar way. By bringing more voices to the decision-making table, donors can glean vital information and create ongoing relationships which can reduce the risk of making costly mistakes. Of course, nothing can entirely eliminate risk in either the for-profit or the philanthropic worlds. But wise donors often test the markets for their programs by listening to diverse stakeholders from all levels of society.
One of the most effective (and risk-reducing) habits of philanthropists is simply to ask pertinent questions.
Donors might move forward right now by asking this: What would be sacrificed if we took more time to listen to and learn from diverse voices before making philanthropic decisions and while reviewing our strategy and grants?
Learning requires patience in any field. In philanthropy, the rush to give—even in emergencies—can lead to disappointment. When we gather information from diverse sources, our decisions, by definition, gain a broader base and therefore greater potential for success.
A group of foundations providing leadership and resources to help all funders think more creatively about diversity and inclusion.
Here donors can find “giving vehicles established by and for members of racial, ethnic, tribal, gender-and sexual-orientation-based communities to address critical issues within those communities.”
A video by the D5 coalition which tells the stories of several diverse donors and what inspires their creative and effective philanthropy.
Information, case histories and networking opportunities. The goal is “to increase the amount and effectiveness of resources aimed at combating institutional and structural racism in communities through capacity building, education and convening of grantmakers and grantseekers.”