Racial Equity in Grantmaking: What Foundation Data Show

The murder of George Floyd in May 2020 prompted an extraordinary response from American philanthropy. Foundations of all types issued equity statements, pledged billions of dollars to racial justice organizations, committed to reckoning with their own racial dynamics, and announced intentions to change how they fund work in communities of color. Three years later, researchers, practitioners, and community organizations have begun assessing whether the rhetoric of transformation has been matched by durable changes in grantmaking patterns. The pre-2020 baseline of philanthropic giving to communities of color and to organizations led by people of color was well-documented and deeply unequal. Research by Echoing Green and Bridgespan Group found that organizations led by Black leaders held average revenues 24 percent smaller than those led by white leaders, with even larger disparities in unrestricted net assets. Research on foundation grantmaking found that only about 8 percent of philanthropic dollars went to organizations explicitly serving communities of color, despite these communities comprising a substantial share of the populations most affected by the social problems philanthropy aims to address. Post-2020 data suggest an initial surge in racial equity funding, particularly in the months immediately following the summer of 2020. Major foundations announced significant new commitments, and some foundations made shifts in grantmaking toward organizations that had been historically underfunded. The Council on Foundations, Candid, and other sector research organizations have tracked these changes with varying levels of rigor and consistency across definitions. Whether the surge represents durable change or a time-limited spike is a more contested question. Some foundations have maintained or increased their equity-focused grantmaking. Others have seen their giving in this area decline toward pre-2020 baselines as the immediate crisis receded and other priorities competed for attention. The pattern of surge-and-return has been observed in previous periods of racial reckoning in philanthropy, and some researchers and practitioners have expressed concern about whether 2020 would prove different. Trust-based philanthropy, a movement that advocates for providing unrestricted multi-year funding with reduced reporting requirements, has grown in visibility and adoption as an approach intended to address the power imbalances in traditional grantmaking. Research on unrestricted versus restricted funding finds that unrestricted funding enables organizations to respond flexibly to community needs, invest in organizational capacity, and operate more sustainably than restricted project funding. Several foundations have publicly committed to trust-based practices, and networks of funders have formed around the model. The power dynamics in grantmaking relationships have been examined critically by researchers and practitioners. Traditional grantmaking concentrates decision-making authority with foundation staff and boards that are often predominantly white and wealthy, while grant decisions are made about communities that are less well-represented in these spaces. Participatory grantmaking, which involves community members in grant decisions, has grown as an approach intended to redistribute decision-making authority. Evidence on the effects of participatory grantmaking on both grant decisions and community outcomes is still developing. Funder collaboratives and pooled funds have been proposed as mechanisms for directing more capital toward underfunded communities and organizations. Collaboratives can aggregate resources from multiple funders, reducing transaction costs for recipient organizations and enabling more flexible and responsive grantmaking. Research on specific funder collaboratives documents their effectiveness in reaching organizations that individual funders might not have identified or funded. The sustainability question is central to evaluating whether 2020-era equity commitments have produced durable change. Organizations that received one-time grants or short-term project funding in 2020 and 2021 face the same sustainability challenges after that funding ends as they faced before. Multi-year unrestricted commitments that enable organizational development, reserve building, and program stability are more likely to produce durable organizational strengthening than one-time or project-restricted grants. The accountability mechanisms available to hold foundations to their equity commitments are limited. Foundations are not subject to the same transparency and accountability requirements as publicly traded companies or government agencies. They report to the IRS on Form 990 and are subject to state attorney general oversight, but neither of these mechanisms provides the granularity or timeliness needed to assess equity commitments in real time. Sector researchers, community organizations, and advocacy groups serve as the primary accountability mechanisms for foundation equity commitments.