PEAK Grantmaking’s recent survey of the field reveals that too few of the funders who collect demographic data on their grantees can articulate how they plan to use the information. This is confirmed in CEP’s new report, Nonprofit Diversity Efforts, which shows that only 21 percent of nonprofit CEOs report that their foundations explain how they use the demographic information that they collect. To further confuse the issue, most funders (85 percent) collect demographic data at the time of application, sending a signal to grantseekers that this information is considered in the funding decision, when often it isn’t a critical factor.
After absorbing CEP’s report on the nonprofit perspective on diversity in the context of our research into funder practices at PEAK, my biggest takeaway is that both funders and nonprofits want to use demographic data to answer the same two questions:
1. Are we serving who we intend to serve?
Right now, funders are articulating the importance of demographic data in its use in “understanding” — understanding who grants are supporting and whether or not they are inclusive of a diverse array of recipients and constituents. But once funders collect the data and can see who they are funding, the next conversation has to ask, “Is this who we want to fund?”
No funder has enough money to meet all of a community’s or population’s needs. Choices have to be made. Every funder should be able to articulate, both internally and externally, the population they want to impact. And great examples of funders who have done this abound.
Funders are also using nonprofits’ ability to provide data as confirmation that nonprofits understand the composition of, and variation within, their constituents so that they can develop appropriate and effective interventions. This aligns perfectly with nonprofits’ primary use of demographic data, which is to make decisions on their programs, as the CEP report shows.
Fundamentally, both funders and nonprofits are answering the same question about how best to use scarce resources to make the world a better place — whether it’s grant dollars given or grant dollars received.
2. How does lived experience drive our work?
The nonprofit CEOs in CEP’s report overwhelmingly believe that in order for their organizations to achieve their goals, it is very or extremely important that the board, CEO, and staff reflect the population(s) the organization seeks to serve. Funders agree.
Both funders and nonprofits, however, are staffed and governed predominantly by white people, as reported in every study ever done on the issue. Even organizations that may have a more diverse staff find that senior leadership positions are occupied by white people while front-line, direct service, and administrative functions are staffed by people of color. Funders may want to see diverse board and staff demographics from the nonprofits they fund, but this is not the reality for most nonprofits. In fact, funders wouldn’t be able to measure up to that same yardstick in their own staffing and governance right now.
Funders should use demographic data to see if the population served is included on the board, in senior leadership, on staff, and/or in feedback loops and other methods of input that drive strategy decisions.
I use the word “included” very deliberately here. The D5 Initiative defines inclusion as “the degree to which diverse individuals are able to participate fully in the decision-making processes within an organization or group.” That is why collecting numbers to determine representation won’t be enough to understand how a nonprofit incorporates lived experience into their work. Funders also need to engage nonprofits in a conversation about how they are embedding DEI work in their programs, organizations, hiring, and boards. This will require staff development (and the necessary funds for it) to engage in conversations on these issues. Thankfully, there are plenty of resources available through ABFE, Equity in the Center, BoardSource, NCRP, and others to help both funders and nonprofits frame these conversations.
A Call to Action
Given all this, what are the action steps funders and nonprofits can take to ensure that they are collecting and learning from demographic data in ways that will help increase the effectiveness of their work?
Here are a few recommendations.
- Collect demographic data on the communities you are working in, the populations being served by the nonprofit organizations applying for funding, and the individuals (staff, board, and vendors) that make up those organizations. You need to understand demographics at all three levels to put this data in context.
- Tell your grantseekers what you are doing with the data being collected. For example, the California Endowment sent a letter to its grantees in 2015 grounding its request for demographic data in the values of the Endowment and the demographics of the state. As the letter stated, “The data collected will serve multiple purposes: to help us understand how we reflect the communities we serve, to equip our staff with critical data to better serve the needs of our communities, and to track our progress with our Board and our grantees and communities.”
- Collect data during the application process but be clear to what extent (if any) the data will factor into a funding decision. Having this data for all applicants can help you make critical assessments about your grantmaking practices (e.g., are there disparities in who is being funded vs. who isn’t?) to bring more equity to your decision-making process.
- Walk the talk by sharing your own demographic data on your website and through GuideStar.
- Continue the hard work of changing the world, while adding to or building on your efforts to approach your work from an equity framework. This conversation won’t (and can’t) go away.
- Assess your own demographics and organizational culture. If you haven’t already, begin the conversation internally around diversity, equity, and inclusion at all levels of your organization.
- Focus on culture. After all, hiring diverse staff is only the first step. If your new hire feels unwelcome or out of place in your culture, they won’t be sticking around for long.
- Enter into conversations with your funders now about supporting your efforts to bring more diversity into your staff and boards and build your existing organization capacity in these areas. I think you’ll find more and more funders open to helping you to make the world a more equitable place.
Download Nonprofit Diversity Efforts: Current Practices and the Role of Foundations here.