It’s been two years since George Floyd’s murder sparked a global movement for racial equality and justice. Since then, we’ve seen pledges for change and commitments to equity take hold across sectors. This movement, coupled with the global pandemic, has pushed organizations to think differently about their giving practices — bringing new urgency and intention to philanthropy.
It’s been well established that advancing access to capital for people of color and underrepresented groups is critical to closing the wealth gap. From venture capital to grants, we know Black founders are less likely to receive funding. Over the past 20 years, only 10% of all philanthropic dollars in the U.S. have gone to nonprofits led by people of color. And Black and Latinx nonprofit leaders receive only 4% of philanthropic funding.
This gap is even more pronounced when it comes to unrestricted funding. Echoing Green found that based on their applicant pool, the unrestricted net assets of Black-led organizations are 76% smaller than their white-led counterparts. Leading philanthropic organizations like the MacArthur Foundation and Ford Foundation are increasingly using unrestricted funding to help organizations cover operating costs, advance their long-term strategic plans and catalyze innovation. But without more equitable distribution, we risk exacerbating the systemic underinvestment in these leaders and organizations.
As society looks to deliver on its racial equity commitments, we must examine philanthropy as a core part of this strategy. Historically, foundation processes and funding have often favored larger, well-established organizations with white leadership, while organizations led by people of color have not received the same level of funding and support. As a result, the philanthropic sector has failed to direct enough funding to organizations closest to the issues we’re trying to solve.
One critical step we can take to help close this gap is to focus unrestricted funding on smaller, younger nonprofits led by people of color. This type of catalytic funding empowers diverse organizations with the flexibility to plan, innovate and scale – driving impact and addressing the issue of systemic underfunding head-on. These organizations can fund projects and initiatives that address the needs they see and experience in their communities. This not only redistributes money, it redistributes power.
Just this week, Salesforce launched a Catalyst Fund specifically focused on providing unrestricted funding to global nonprofits led by underrepresented leaders. Our first round of funding will focus on grantees that are less than 10 years old with an operating budget of $2 million or less. Our hope is that funds like this can open the door to diverse leaders, organizations and solutions, and help move our field closer to a trust-based model of philanthropy.
One of these organizations is the Marcy Lab School, an incredible New York City-based nonprofit led by Reuben Ogbonna and Maya Bhattacharjee. The school creates alternative pathways to high-growth technology careers for young adults from underrepresented backgrounds. As two educators of color who grew up in the communities they serve, Reuben and Maya have built a Software Engineering Fellowship as an alternative to college for young people from low-income backgrounds. It’s organizations like these, and their leaders, that will be key to closing the racial equity gap and infusing our industry with innovative new approaches.
Reimagining funding processes and requirements can take time, but doing so is key to putting us on a path toward racial equity in philanthropy. Small steps like simplifying grant applications, broadening networks and reducing the amount of paperwork for grantees are great places to start. At Salesforce, we’re working to support organizations that share this mission, including the Robin Hood Power Fund, which specifically invests in nonprofit leaders of color, and Echoing Green’s Racial Equity Philanthropic Fund, which invests in the social innovation field to advance the racial justice movement.
In many ways, the scope of opportunity is even greater for companies. In addition to corporate philanthropy strategies, companies have an opportunity to harness their purchasing power across the business — from procurement to venture capital. In 2020, we established a Racial Equality and Justice Task Force to unite and accelerate our equality efforts, with philanthropy serving as one pillar of our strategy. We call this approach Philanthropy+, acknowledging that today’s companies must leverage philanthropy plus partners in product, sustainability, purchasing and policy to unlock access to capital and drive the greatest impact.
It’s these types of funds and inclusive processes that will help us address these longstanding gaps in giving. And by focusing funds in new places, together we will unlock new ideas and scale transformative solutions. Empowering those closest to the issues and communities we’re trying to serve is critical to advancing racial justice and equality, and will create space for leaders to take risks and experiment.
Inclusive philanthropy is ultimately about process and outcomes. By leveraging our purchasing power more intentionally and creating more equitable access to capital, we can welcome diverse leaders and perspectives into the philanthropy sector and help close the age-old racial equity gap in our industry.
Rebecca Ferguson is Senior Vice President of Philanthropy at Salesforce and COO of Salesforce Foundation. She has more than 15 years of experience scaling social good initiatives globally, including nine years at the Bill & Melinda Gates Foundation.