How to close the racial gap in philanthropic funding

Echoing Green President Cheryl Dorsey joins Yahoo Finance’s On The Move panel to weigh in on supporting minority lead non-profits during the coronavirus pandemic.

Video Transcript

- Well, as we continue to look at the effects of racial disparities and systemic racism in all kinds of segments of American life, one of the areas that's affected is philanthropy. There's a new white paper from the Bridgespan Group and Echoing Green that found less than 10% of the grants made by foundations which have majority white leadership are invested in communities of color. To give us more perspective on this is the president of Echoing Green. Cheryl Dorsey's organization provides seed funding for early-stage nonprofits.

Cheryl, thank you for joining us. Talk to us about the findings of this study, because it actually is one of the areas where it is perhaps a little counterintuitive. We talk about a lot of different nonprofits helping areas that are in need. And in some cases, those areas are communities of color. So this is, to me, a bit of a surprising finding.

CHERYL DORSEY: Well, thank you for having me. I really appreciate this opportunity to speak with you all. And as you mentioned, we were fortunate to partner with Bridgespan to really dig into the depths of racial inequities in philanthropy. And in some ways, it is not surprising, because in many ways, philanthropy follows our networks and our affinity groups. You would not be surprised that a substantial amount of philanthropy actually goes to our colleges and universities, our alma maters, our places of worship, arts and cultural institutions, health care institutions. So in fact, when you look across the landscape of philanthropy and you look at more progressive approaches around social justice, racial justice, it's actually a fairly small amount of total philanthropic dollars.

ADAM SHAPIRO: Hi. It's Adam Shapiro. Which would have a greater impact in getting more dollars to flow to these charities? Would it be having people of color in leadership pushing these charities forward, or would it be-- you've mentioned less of a burdensome regulatory application process.

CHERYL DORSEY: Well, a complicated question. I would say when we looked at-- got underneath the numbers and the structural inequities in funding, we looked at three drivers, what was causing this. And for us, we identified concepts around risk, sort of weaponizing the concept of risk. Who is risky? What is risky? Bias, both implicit and explicit forms of bias, and power-- who has it? Who does not? Who shares it? Who seeds it? And all of those come together to determine who gets money, who does not.

So I think you've got to look at dismantling these very complex structures in a variety of ways. And as you said, Adam, part of it is who sits atop these organizations. Who's running these philanthropic outlets, who's staffing them, who's at the board level-- that's certainly part of it, but also, our conception of who is a leader and who do I invest my philanthropic dollars in. I think all of them are required to really shrink the gap in terms of this disparate funding between leaders of color and philanthropic resources.

INES FERRE: Cheryl, Ines Ferre here. I was looking through your findings, and funding inequities take a toll on nonprofit leaders of color. Talk to us for a second about that, about the fatigue that they are feeling and the challenge there.

CHERYL DORSEY: No, thank you. I think that's a really good question, Ines. I mean, we often spend a lot of time thinking about the outward trappings of leadership development. How do we support leaders to propel their organizations forward? But there's a lot of work around the inner work of leadership, the well-being. How do you continue on? How do you think about resiliency and well-being?

And we find, time and time again, a lot of the implicit bias, as well as explicit bias, that show up in terms of microaggressions for leaders of color can lead to what I will call systems residue, the systems way of being impacted by structural inequities. And it drives a lot of leaders out of the sector.

Very interestingly, a phenomenal social entrepreneur in which Echoing Green invested in a number of years ago, Catherine Finney-- serial entrepreneur, started and sold a for-profit business, started a wonderful social enterprise called Digital Undivided which supports black and Latinx women tech entrepreneurs, got a significant seven-figure investment from Melinda Gates and Pivotal Ventures-- she's leaving the sector, her response to I worked so hard, I'm best in class, I'm incredibly smart, but funders don't trust me. After a while, the weight of it all got too much for her, and she's leaving the sector.

So I do think, Ines, we've got to think about what these accumulated assaults, both small, slight, and large, are doing to some of this best-in-class talent that we're losing in the sector. And in moments like these, we can't afford to lose this kind of talent.

DAN HOWLEY: Cheryl, in the nonprofit sector in general, do you see any areas in particular where minority-owned companies are doing better, or is it just kind of across the board where this issue is most apparent?

CHERYL DORSEY: Daniel, thanks for that question as well. These structural inequities are brilliant at being relentless, holistic, and comprehensive, so you see it across the board. And it's actually really interesting to see how intersectional these issues are. So leaders of color have disproportionate impacts that prevent them from getting access to resources. And it is even-- it's even more complicated for women of color. So it's quite intersectional.

I would say, though, that you look at terms like proximity which are coming into fashion, which I think is a really important concept-- that if we're really trying to get to impact, if impact is at the core of how we're deploying philanthropic dollars, some of the key issues that we're looking at are going to require investing in proximate leaders who understand the context in which they work, the communities that they serve, and all of the structural inequities that are leading to these disproportionate outcomes. And time and time again, we've got to look at leaders of color who are most proximate and understand issues in their communities best.

- Cheryl, you've spoken a little bit about this, but if I get you to expand a bit, some skeptics of the idea of systemic racism-- we're still out there-- might say, well, it's hard to find people who want to start these social-- who are social entrepreneurs who want to start these organizations you're talking about. And what you're describing belies that, that it's not the case. Where are you finding people? How are they finding you? How are these connections being made?

CHERYL DORSEY: Well, thank you for that question. Echoing Green is an early-stage funder of emerging social entrepreneurs. And a big part of our work is annually launching an annual global social business plan competition. And I tell you, this talent is prodigious, and it is global. Every year, we get over 3,000 submissions from 160-plus countries around the world.

The talent is out there, and it is spectacular. So I reject without fail. The talent is absolutely out there. But I think we know from both academic studies as well as our own networks that networks are closely held. We look to the places we went to school, the places we go to worship, where we-- the cultural institutions which we attend. So I think some of the work in broadening out those networks is the work that Echoing Green does.

And after 30-plus years of doing this, Julie, I've got to tell you, the talent is out there. And I will also say there's a generational impact as well. Millennial and Gen Z have really, really listened to the clarion call around the need for this next generation of talent to really be focused on solving some of our greatest societal challenges.

And I've been so inspired by these young people who have taken up that mantle in recognition that the work of the world, the work that their generation has to do is, in part, getting underneath and solving some of these big structural issues from, racial injustice to climate change.

- I like it. Ending on a hopeful note. Cheryl Dorsey, thank you so much for digging into these issues with us. She is the president of Echoing Green. Appreciate it.