Rethinking equity: The changing role of funders in philanthropy

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Philanthropic organizations have long been working to address social inequality in Canada, focusing on issues like poverty, illiteracy, hunger, and homelessness. But today, they are grappling with another critical notion: equity.

“I don’t think inequality will ever vanish, but equity is something different,” says Amrita Mishra, Project Director at the Indo-Canadian Women's Association. “Equity, or making the journey to achieving it, starts with acknowledging that we live in a world that’s unequal, and then trying to ameliorate the impact of those inequalities, or at least being careful not to exacerbate those inequalities.”

Since funders hold power and resources, and are not typically representative of the communities they serve, it’s particularly important they look inward and address issues around equity, diversity, and inclusion. In this article, we asked the experts to weigh in on how the role of funders is changing in this respect, and what more needs to be done.

Sadia Zaman, CEO of Inspirit Foundation, says that while these issues go way back, this is a newer conversation in the philanthropic sector. “I think funders are really interested in questions around equity, but sometimes there’s a real kind of fear of how to approach it,” she says. “‘How do we do it?’ ‘What does it mean?’ ‘What does it look like for us?’ And for every foundation that’s going to look very different.”

A big part of equity in the nonprofit sector is making sure everyone has full and equal access to things like funding, support, services, and employment. But it’s not about treating everyone the same – that’s equality. Equity is recognizing that everyone is coming from a different place, with different experiences and needs, and meeting people where they are.

“It’s also about ensuring there’s a possibility of equal outcomes,"  says Zaman, adding that some communities need more support than others in order to get there. “We strive to offer flexibility in reporting and project extensions, recognizing that there will be bumps along the way and that funders need to adapt to the realities of grantees' experiences.”

Funding communities most affected by inequity

Part of the push towards greater equity in philanthropy is recognizing the inherent power dynamics involved in giving people money, and taking steps to shift the power into the hands of those you’re seeking to help.

In Nonprofit AF, outspoken nonprofit executive and blogger Vu Le writes, “Equity is ensuring the communities most affected by injustice get the most money to lead in the fight to address that injustice, and if that means we break the rules to make that happen, then that’s what we do.” To get serious about equity, foundations should be allocating at least 70% of their budget to marginalized communities and the organizations they lead, he argues.

But in reality, only a small portion of funding ends up going to these groups – a trend Kris Archie, Executive Director of The Circle on Philanthropy and Aboriginal Peoples in Canada, finds particularly troubling.

“If we know that the most deeply impacted in terms of social and economic outcomes in this country are Indigenous folks, and racialized and marginalized folks, then why is it that we’re giving a pittance of our funds to their organizations and their solutions for change?” she asks.

If foundations actually want to have an impact and influence true social change, this trend will have to shift, says Archie. “Organizations need to be deeply investing in the solutions and the charitable groups who are frontline, who have lived experience, and who have been probably building – for a long time – innovative programs for change in their own communities,” she adds.

Abandoning long-standing inequitable practices

So why doesn’t more funding go to those most affected? For one, funders are often limited by their own rules, regulations, and definitions.

“We’ve been using the same inequitable processes and definitions to allocate funding,” writes Le, “where the organizations that write the best grant proposals and have the best data get awarded.”

Even the ‘letter of intent’ stage that precedes the proposal can be biased, agues Mishra. “If I’m not familiar with writing it in the exact way that the specific funder might like – because I don’t have the necessary experience or the training – then I fail, not because the project lacks value, but because I lack know-how,” she says. “So how do you get experience without having experience? It’s a conundrum.”

To improve equity, grant-makers need to reassess and abandon these long-standing inequitable practices. They should reduce barriers and ensure the process of applying for funding isn’t too onerous. For instance, at Inspirit Foundation, they encourage people to call with their ideas and have a conversation before starting work on their proposals, says Zaman. They work with a number of grantees who have never received funding and are proactive in providing extra support for them to grow their projects.

Funders need to find ways to expand their reach beyond their usual networks, adds Zaman. “A lot of the time, we tend to fund what comes to us through those we trust,” she says. “And if all of those folks we trust are demographically similar, racially similar, and from an ethnicity point of view also very similar, we’re getting kind of the same networks.”

According to Archie, most funders aren’t doing enough to recognize the way power, racism, white privilege, and implicit biases are showing up in their organizations.

“They are not investing in understanding the behaviours of anti-racism and anti-black racism,” she says, “or in recognizing how their structures or institutions may be unintentionally upholding practices that inhibit or create barriers for folks with different lived experiences to engage in their work, either as employees or as grantees or as volunteers.”

Removing barriers to diversify philanthropy

Another area where biases and barriers are prevalent in philanthropy is in the employment landscape. While most charities and nonprofits promote diversity and inclusion, the proportion of philanthropic positions held by underrepresented groups remains low.

“Traditionally, the philanthropic sector has been a community of folks who were in the space of doing for, not doing alongside,” explains Archie. “And the folks who are doing for are not necessarily of the community they’re seeking to help, and that’s in-and-of-itself problematic.”

When charities and nonprofits don’t represent the communities they serve, it means a built-in lack of voice for marginalized communities. It can result in an understanding gap around important social problems that affect those communities, and can also affect access to grants by groups that actually represent them.

Having diverse workforce and boards, on the other hand, is known to breed diversity of thought and innovation, and results in more effective organizations. But again, issues around equity continue to prevent people from diverse communities, backgrounds, and identities from getting into philanthropy and from moving up the leadership ladders.

Susan Phillips, professor and supervisor of the Master of Philanthropy and Nonprofit Leadership program at Carleton University, says lack of diversity and inclusion in decision-making will become a recruitment issue, especially since millennials place so much value on diversity, equity, and meaningful work.

“We will have a huge turnover of leadership in the sector,” she says. “The lack of talent development in the pipeline, the lack of diversity in recruitment and real inclusion in the work of charities and foundations will become a barrier to succession.”

So what can funders do to improve equity and diversity in nonprofit staff and boards? According to Mishra, “they can do plenty.”

First of all, they can ask for numbers and data in applications and in periodic reports to find out about the level of diversity and representation in the board and about their hiring practices. “They can also ask for qualitative narratives,” she says. “They can have on-site interviews with staff and the board members as well, because we know that numbers can often tell a misleading story.”

Funders can also look inward at their own diversity gaps and biases, and lead by example in addressing inequities. They can do more to make sure people from marginalized groups not only have the opportunity to be hired, but also to grow, contribute, and develop within their organizations.

“No matter where you are, or what sector you’re in, this is a messy, imperfect journey,” says Zaman. “We all need to all have patience with each other, and know that we’re not always going to get it right, but we’re committed to having the conversation, as difficult as it is.”

Rachel is a graduate of the Norman Paterson School of International Affairs and Carleton University’s journalism program. She has been a contributor to CharityVillage since 2012.

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