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Board and Employee Diversity in the Philanthropic Sector: A Landscape Analysis

By Tom Watson on August 13, 2008No Comment

Philanthropic organizations in particular are starting to recognize and integrate diversity and inclusiveness practices, coming to understand them as necessary and logical management elements in response to globalization, changing demographics and the issues affecting underserved populations around the world.
 
In January 2008, in an effort to find the best way to ensure that philanthropic organizations and foundations were diverse and inclusive in the composition of their boards, staff, grantees, and vendors, California State Assembly Member Joe Coto introduced Assembly Bill 624. AB 624 was proposed in response to a number of studies that detailed the lack of diversity in the composition of foundations’ human resources, grantmaking and governance. One study specifically referenced in the proposal was the 2006 Greenlining Institute report “Investing in a Diverse Democracy: Foundation Giving to Minority-Led Nonprofits,” which stated that the top 50 foundations in the United States provided only 3% of their grant dollars to minority-led organizations and that only 10% of foundation executive directors and board of directors are minorities.

The introduction and passage of the bill was unprecedented in that it would have required private, corporate and public operating foundations with assets of more than $250 million to disclose the race and gender composition of their employees, board members, and other constituents reached through their grantmaking. AB 624 would have also required foundations to disclose the number and percentage of grants awarded to organizations led by or serving members of ethnic minority communities, lesbian, gay, bisexual and transgendered communities, and other underrepresented populations.

In June the bill was withdrawn after a promising compromise was reached among ten of California’s largest foundations who pledged to each make multi-million dollar investments to help organizations serving underserved communities, minority-led and grass-roots organizations, and to provide leadership training to minority and female philanthropic executives, employees, and board members. However, given that the bill’s initial objective was to get foundations to disclose key data related to their diversity initiatives in philanthropy, it came as no surprise that the reaction from the philanthropic community was mixed. Despite the bill being dropped, the legislation raised complex issues and important discussions around the sector’s accountability to measure and develop strategies that would enable them to serve underserved populations in respect of their missions and giving initiatives.

Proponents of “diversity in philanthropy” believe that diversity in any organization is best achieved when it is prioritized and fully integrated into the operations of an organization and supported by executive leadership. Recognizing and leveraging the benefits of diversity from a human resource perspective should no longer need a moral argument and definitely not a legal mandate; instead, incorporating diversity into philanthropy could be viewed as a practical and realistic opportunity for philanthropic organizations and foundations to maximize their strength and impact in the sector to effect greater change.

Diversity is about recognizing and respecting differences based on ethnicity, gender, color, age, race, religion, physical ability, national origin and sexual orientation. Diversity also encompasses a range of individual characteristics including, but certainly not limited to, personal and professional experiences, educational background, subject interests and economic status—all of which influence individual perspectives. Creating standardized measurements of diversity and common definitions of “minority-led” organizations may devalue the process and the intent of giving. There is so much more at stake and the common denominator is to advance the impact of philanthropy by increasing performance; gaining a competitive advantage requires tapping into all of the unique perspectives associated with hiring and recruiting a diverse staff and board.

Corporate America has recognized the advantages of diversifying internally to respond to the diversification of their external markets and consumer bases; in addition, as philanthropic institutions and foundations define diversity in their own context and culture and create giving themes that fund diversity initiatives, they recognize the importance of having a workforce that could better understand the dynamics of diversity and have its internal demographics reflected by it as well.  Studies show that society responds favorably to institutions that publicly embrace diversity because it truly does add value to an institution’s performance, image, and reputation.

Fortunately, demographic trends show that there is indeed a diverse pool of employees available to sit at the table given the population trends in America. Statistically, according to the 2000 census, less than 70 percent of the U.S. population is Caucasian and nearly 30 percent of all Americans are either Black or Hispanic; by 2060, Caucasians will make up less than 50% of the total population. In light of this, it was reported in an article in the New York Times, Minorities Often a Majority of the Population Under 20, that “Racial and ethnic minorities now account for 43 percent of Americans under 20. Among people of all ages, minorities make up at least 40 percent of the population in more than one in six of the nation’s 3,141 counties.” Beyond race, there are still many other communities that add to this nation’s diversity including the LGBT community, disabled persons and senior citizens. All of these figures confirm America’s growing diversity. What does this mean for diversity in philanthropy? Quite simply, there is enormous opportunity to recruit and take advantage of a large pool of talent and leverage each of their personal and professional strengths in the workplace for greater impact and new perspectives.

But the reality is that the philanthropic sector has yet to take some of that advantage, considering that among foundation chief executive officers, just 6 percent are people of color, only 10 percent of board members are people of color, and 33 percent of trustees are women. (Lynn Burbridge, Diversity in Philanthropy: The Numbers and their Meaning, “Meaning and Impact of Board and Staff Diversity in the Philanthropic Field, Joint Affinity Group, May 2002). Moreover, racial and ethnic minority groups receive fewer than “10 percent of all foundation grants each year, even though minority groups represent nearly one-third of the U.S. population and experience many of the nation’s greatest disadvantages.” (Henry A. J. Ramos et al., Making the Case for Diversity in Philanthropy).

The impact of board and employee diversity in the philanthropic field is based on the idea that at the very least, by valuing diversified perspectives, experiences, and resources in-house, philanthropic organizations can be more innovative, more accountable in their decision-making, and increase the opportunities to identify programs and capitalize on new partnerships. For example, corporate contributions and foundations tend to give money where their facilities operate and where they have a high employee base. Given that corporate contributions and foundation grantmaking account for $15.69 billion of total U.S. giving, an employee base that mirrors the nation’s diversity can begin to give back to their communities because they are employed by a good corporate citizen who cares to invest in its human resources.

The challenge for most institutions, whether they be philanthropic or not, is integrating diversity and inclusiveness in a manner that is beneficial and meaningful to shareholders, consumers, employees and members of the local community.  There are, of course, a lot of unanswered questions as to why the philanthropic sector may not as diverse as it could be. The Foundation Center highlights a few in its comprehensive bibliography of resources related to diversity. For example, “Does foundation type, size, or location affect foundation giving practices? Do foundations that give more for science and technology tend to be less diverse grantmakers than foundations that give for human services?  And to what extent is the variation in diverse grantmaking the result of individual decisions within foundation as opposed to characteristics of foundations and their giving priorities?” Such answers would be beneficial to know.  However, the lack of diversity and minority representation in philanthropic institutions raises red flags given the demographic makeup of our society. According to the Diversity in Philanthropy Project, there is no harm or additional cost associated with maintaining a diverse and inclusive staff and board.

Diversity and inclusiveness starts with practical organizational integrations, and there are many resources in the field that support diversity and inclusiveness practices. But one of the first steps of taking advantage of institutional diversity is acknowledging the value that diversity can bring to philanthropy, and then instilling and integrating those values in the culture, processes, functions and goals as the institution carries out its philanthropic mission.

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