The Re-Emerging Art of Funding Innovation

Addressing the Bias in Big Philanthropic Bets

Giving Compass' Take: • Cheryl Dorsey unpacks some of the barriers to equitable distribution of money in big philanthropic bets.  • Are you and/or your organizations working with big bets? How can you decrease the bias of your philanthropic efforts?  • Learn about embracing a racial equity lens in your philanthropy.  The nonprofit playing field is far from level when it comes to funding opportunities for organizations led by people of color. In fact, only 11 percent of social change big bets made between 2010 and 2014 went to such organizations. The rise of large, syndicated funds only increases the chance that this dynamic will persist (or even worsen) unless we proactively address biases in the system. Our aim at Echoing Green is to expand access to funding for all social entrepreneurs regardless of who they are or where they are from. Achieving our objective calls for hacking the bias that exists in the nonprofit sector. Several interrelated challenges make this goal difficult to achieve. The first stumbling block is a denominator problem. A 2017 study from Building Movement Project found that the percentage of people of color in nonprofit CEO roles has remained under 20 percent for the last 15 years. The study also suggests that this is not because of lack of aspiration or readiness by diverse candidates, but rather that the playing field is uneven. A second issue is what I refer to as “com-pound bias”: multiple, overlapping, systemic barriers that stand in the way of unleashing more big bets for organizations led by people of color. One such barrier is that people of color are less likely to have relationships with big-bet donors. Organizations run by people of color are also more likely to be under-resourced, so they are often not even on big-bet donors’ radars. Research also confirms that funders are vastly more likely to invest in people who share the same ethnic, educational, and career backgrounds. This homophily, in this case, “like funds like,” is a significant barrier for organizations run by people of color. Donors’ risk aversion is also at play. Donors sometimes view the types of organizations that are more commonly led by people of color, such as smaller human service organizations that are deeply embedded in their communities, and which can seem less proven or have harder-to-measure results, as riskier bets. To truly address the structural inequities in the nonprofit sector, many more funders and leaders in the field will need to pursue approaches to leadership and organizational development that hack bias and structural barriers, which in turn will enable people of color to establish relationships with donors and build the trust in their organizations that precedes a big bet. Let me suggest a few ways we all can start: Use brand equity to open doors. Build big-bet readiness. Change how we measure. Read the full article about the bias in big philanthropic bets by Cheryl Dorsey at Stanford Social Innovation Review.