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How CNCS Can Address Nonprofit Funding Bias

How CNCS Can Address Nonprofit Funding Bias. Andrew Sears Executive Director, TechMission andrew@techmission.org 617-282-9798 x101. Presentation Available at: www.urbanministry.org/cncsproposal. Outline.

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How CNCS Can Address Nonprofit Funding Bias

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  1. How CNCS Can Address Nonprofit Funding Bias Andrew SearsExecutive Director, TechMission andrew@techmission.org 617-282-9798 x101 Presentation Available at: www.urbanministry.org/cncsproposal

  2. Outline • There is a strong bias across race, class and gender from foundation funding of nonprofits • While CNCS did not cause this bias, CNCS has the potential to counter this bias • Specific policy recommendations on how CNCS can counter the funding bias

  3. Why TechMission Is Addressing This Issue? • TechMission is an AmeriCorps national direct grantee that supports an at-risk corps • TechMission primarily supports Black and Latino-led nonprofits that are close to the community • We have seen how these nonprofits are experiencing systemic issues with bias in funding of nonprofits • In a down economy, we are observing an increasing bias towards large (i.e. White) organizations • Many of our partner sites are struggling to stay functional

  4. Why TechMission Can Speak to This Issue? • TechMission’s organizational culture reflects lower class culture • Nearly all of board and senior staff are Black, Latino and/or come from low-income background • ED is White from lower class background • TechMission Corps AmeriCorps members are 63% Black and Latino with 50% from low-income backgrounds • TechMission has one of the widest spans of connection with grassroots organizations (over 4,000 registered nonprofits) • UrbanMinistry.org being the Black/Latino counterpart to Idealist.org and VolunteerMatch.org • Leadership has extensive experience on writing about and living out reconciliation across race, class and gender

  5. Nonprofit Statistics and Race • 1.4 million registered nonprofits in USA • 1,169,000 White-led nonprofits • 138,600 Black-led nonprofits • 50,400 Latino-led nonprofits • 12,600 nonprofits led by other races Source: Number of nonprofits from Independent Sector, Racial breakdown extrapolated based on survey results at: http://www.aecf.org/upload/publicationfiles/executive_transition_survey_report2004.pdf

  6. Funding Bias: Non-Whites Make Up 52.4% Of Poverty But Non-White Led Nonprofits Only Receive 3% of Funding http://www.slideshare.net/rosettathurman/race-matters-in-nonprofits-promoting-diversity-in-our-profession and http://www.aecf.org/upload/publicationfiles/executive_transition_survey_report2004.pdf

  7. Nonprofit Leadership Does Not Reflect Class Community it Serves Data show subjective estimates from the author based on educational levels and class assimilation rates of nonprofit leadership. 94% of leadership have at least bachelor’s degree with an estimated class assimilation rate of 90-95% based on living location & culture

  8. Most Nonprofits Have a Different Class Culture than Clients They Serve Leadership Clients Clients Clients Clients

  9. Indigenously Led Nonprofits Are Most Affected by Funding Bias Leadership and clients

  10. Funding and Gender From: http://www.aecf.org/upload/publicationfiles/executive_transition_survey_report2004.pdf

  11. Diversity Profile of CNCS Sources: http://www.abtassociates.com/reports/ES-americorps-baseline.pdf http://www.abtassociates.com/reports/COMSRVS.pdf http://www.opm.gov/feddata/demograp/Table2mw.pdf

  12. If CNCS Funding Profile Reflects Nonprofit Leadership Profile in USA… Source: http://www.aecf.org/upload/publicationfiles/executive_transition_survey_report2004.pdf

  13. Summary • It is not CNCS’s fault that there is a funding bias in the nonprofit community, but… • CNCS has the ability to dramatically counter nonprofit bias • Diversity profile of AmeriCorps members is strong: creates diversity in leadership pipeline of nonprofits • Diversity profile of leadership of CNCS funded organizations is unknown • This is what is most important to counter funding bias • Diverse leadership creates diversity throughout organizations

  14. How Can CNCS Be A Force to Counter Nonprofit Funding Bias?

  15. Why Does Only 3% of Foundation Funding Go to Nonprofits Led by People of Color? Statistics are explained in the attached spreadsheet at: www.urbanministry.org/fundingbias

  16. Two Issues for Policy Consideration • Lack of representation of FBOs can lead to Disproportionate Effects on Black and Latino-led organizations • Less than 10% of AmeriCorps national direct organizations are faith-based • Faith-based organizations represent about 1/3 of the social services sector • Cultural Bias • Standardized outcome measures and funding criteria can unintentionally introduce a cultural bias into funding process just like standardized testing introduces bias in educational tests Statistics are explained in the attached spreadsheet at: www.urbanministry.org/fundingbias

  17. TechMission Experience: HHS & CNCS • TechMission was a grantee (with CTCNet) with HHS Compassion Capital Fund (02-06) • CCF grantee meetings were over about 75% people of color and about 50% FBOs • TechMission is a National Direct grantee • Grantee meetings seem to be about 10% people of color and less than 10% are FBOs • Differences between HHS CCF & CNCS • Different levels of outreach to FBOs and communities of color • Different levels of outreach to ensure that FBOs and communities of color are adequately represented among grant reviewers • HHS follows Charitable Choice legislation respecting religious hiring rights • AmeriCorps does not seem to follow Charitable Choice and requires non-discrimination on sexual orientation • Our estimate is that differences in hiring rights results in a loss of more than 50% of FBOs which eliminates 1/3 of Black-led nonprofits • We recognize that this is just our non-statistical estimates based on limited meetings and discussions with partners

  18. Policies Recommendation 1: Reach out to Indigenously-Led Faith-Based Nonprofits • Policies that restrict funding faith-based organizations create an unintentional bias toward White-led organization • How it works • About 2/3 of Black-led nonprofits are in churches or other faith-based organizations • About 2/3 of White-led nonprofits are secular • Limited funding of faith-based organizations makes White-led nonprofits twice as likely to get funded • It is Critical to Continuing efforts of Office of Faith-based & Neighborhood partnerships Statistics are explained in the attached spreadsheet at: www.urbanministry.org/fundingbias

  19. Policies Recommendation 1: Reach out to Indigenously-Led Faith-Based Nonprofits • Invest significantly in recruiting: • Grant reviewers from under-represented populations • Organizations led by minority groups that are under-represented • Intentionally prioritize intermediaries that show history of success in placing members in minority-led nonprofits • Consider expanding Native American focused initiative to include minority-led grantees with greater than 50% minority placements

  20. Policies Recommendation 2: Use Diversity Profiles for All CNCS Applicants • Recommend CNCS require all funding recipients to complete diversity reporting form as part of applications • Recommend CNCS publicly list their own diversity reporting form with the cumulative results of who they funded and who the members are • Recommend Diversity reports carry similar weight as financial and other outcome reports and should be listed in CNCS’s annual report • Diversity profiles & reports become an approximate measure for many of the subjective elements that are hard to measure in other outcomes • Diversity reports could be used to provide suggested corrective actions to grantees that significantly under-represent the populations they are serving • Diversity provides could help CNCS adapt its funding portfolio to better include under-represented groups

  21. Comparing Bias in Standardized Testing to Bias from Standardized Outcomes • Racial Bias • White or Asian: 150-200 point increase • Income Bias • 30 points per $10,000 of family income • The cultural bias of the SAT test is well documented and understood • The bias from standardized outcomes is similar but less well understood Source: http://www.maec.org/natstats.html & http://www.educationanddemocracy.org/testing_facts.pdf

  22. Understanding Nonprofit Funding Bias • Racial Bias • 97% of foundation funding goes toward White-led nonprofits • Income Bias • Estimated 95% of leadership of nonprofits is culturally middle class • Gender Bias • While 58% of nonprofit executives are women, the median income of a nonprofit led by a man has twice the median income of a nonprofit led by a woman • The Cultural bias of foundation funding is well documented, but not well understood Sources: http://www.aecf.org/upload/publicationfiles/executive_transition_survey_report2004.pdf & http://greenlining.org/publications/pdf/339 The class statistic is explained on a previous slide

  23. Non-Dominant Culture (lower class value) Dominant Culture Outcomes vs. Non-dominant Outcomes Dominant Culture (middle & upper class value) Value Big Organizations Almost no weight given to leadership being close to the community Community support = funding Analytical & Quantitative Nonprofit “SAT Scores” Purely Objective Criteria Secular Focused • Cost effectiveness • Is leadership close to the community? • Race of leadership (staff/board) • Class background of leadership • Neighborhood they live in • Holistic • Has a Life been Changed • Subjective • Faith-Based & Secular

  24. Ways to Counter Bias of Standardized Outcomes • Rigorous standardized outcomes without rigorous demographic tracking will result in the same type of bias for funding as exists for standardized tests • Follow No Child Left Behind as an example • Requires rigorous outcomes • Track demographics equally rigorously • Result is that people are held accountable and social injustice is exposed • “If you can't measure it, you can't manage it.” - Peter Drucker

  25. Sample Diversity Profile Form From Associated Grantmakers of Massachusetts: http://www.agmconnect.org/cpf/CPF_Diversity_Form.xls

  26. Example Diversity Profile: TechMission

  27. Policies Recommendation 3: Revise Funding Criteria to Better Reflect Community Values • Diversity profiles become an objective measure to approximate subjective elements that are hard to quantify • Example from TechMission’s Grant Applications • 20% of Grant Application Weight: Is leadership close to the community as reflected in their diversity profile and strategy? • Use diversity profile form and grant questions • 20% of Grant Application Weight: Is organization serving the highest risk community? • Require detailed criteria to distinguish at-risk vs. high risk, etc.

  28. Policies Recommendation 3a: Revise Funding Criteria • Consider “Minority Owned Business” Preference for Nonprofits • If the Government gives preference to minority owned businesses in contracts, shouldn’t that be a consideration with nonprofits? • Nonprofits that closely reflect the demographics of the communities they are serving should be given preference (affirmative action in nonprofit funding) • CNCS as Nonprofit Equivalent of Small Business Admin • Demographics of CNCS’s funding portfolio will be under increased scrutiny in the same way the SBA • The rapid increase in number of nonprofits is comparable to the increase in small businesses. • Is CNCS adopting strategies similar to the SBA fostering the growth of these small nonprofits?

  29. Policy Recommendation 3b: Revise Funding Criteria Related to Cost Per Member Incentives • CNCS funding process currently encourages a high cost per member • Higher match means more likely to get more funding from CNCS • Most 1,000+ member grantees have a cost per member around $30k-40k per member • Under the Serve America Act, growth from 75,000 members to 250,000 @ $40k/member would require $7 billion in growth annually in the nonprofit sector • $7 Billion of nonprofit sector growth among CNCS grantees is not realistic in the current economy • Requiring high match creates a bias toward more elite organizations which may not reflect community demographics • FBO’s do not include much of their potential match because doing so creates hiring and faith restrictions on those funds

  30. Policy Recommendation 3b: Revise Funding Criteria Related to Cost Per Member Incentives • Emphasis on high cost per member creates a systemic bias • Since 97% of foundation funding goes to White-led upper-middle class nonprofits, other nonprofits have difficulty finding match • High cost per member programs have much more funding to track and record rigorous quantitative outcomes further increasing their chances of funding • Encourages high overhead and upper-middle class, elite organizations • Solution • Need stronger weight on measures of efficiency and diversity profile in funding and less weight on total cost per member (high match) • Move toward quantitative measures of social value beyond just funding match to show social return on investment (RoI)

  31. Summary • There is a strong bias in the nonprofit funding community toward White, elite nonprofits • That is not CNCS’s fault • CNCS needs to implement policies to counter this bias • Intentionally pursuing indigenously-led FBOs • Use diversity profiles in applications & outcomes • Need to revise funding criteria to offset systemic bias

  32. Summary: Revisions to Funding Criteria • Give diversity profiles significant weight in funding decisions. • Give preference for nonprofits that are the equivalent of a “minority owned” business • Develop funding strategies to foster growth of new nonprofits similar to the government’s small business strategies • Reverse incentives for programs to have a high cost-per-member with incentives focused on efficiency with high social RoI Presentation Available at: www.urbanministry.org/cncsproposal

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