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How Donors Can Put Equity into Practice for More Effective Giving

Date: April 12, 2023

Jody Chang

Chief Operating and Portfolio Officer, SV2

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Much has been written about the impact and significance of leading edge, equity-based practices in philanthropy, such as trust-based philanthropy principles, sharing power through participatory decision-making, getting proximate to community, and centering community voice. Early adopters of these important practices tend to be philanthropic institutions rather than individual givers — and these practices can in fact feel obscure or abstract to individual donors.

But the majority of philanthropic giving in the United States — 67 percent of total giving in 2021 — is generated by individuals. While much of this giving is in small dollar donations, many individual donors operate as significant grantmakers. For example, in 2021, the number of Donor Advised Funds (DAFs) in the United States approached 1.3 million, an increase of 28 percent over the year before, and totaled an estimated $234.06 billion in assets. Individual donors are largely responsible for allocating this money philanthropically. If our sector is to change — if we want to see funds allocated in equitable and effective ways — then it is crucial that these equity-based practices in giving come alive for individual donors.

SV2 is a learning community of innovative givers committed to accelerating equity in the Bay Area through collective grantmaking and impact investing. Our donor partners learn best practices through this collective work and also in immersive learning workshops and by “getting proximate” with local community leaders and organizations. We believe that as individual donors are influenced in our community, they will give more generously, and their giving will be more effective because it is more centered in community voice and solutions. Data from our donor partner community backs up this belief: in 2022, 72 percent of donor partners reported that their SV2 engagement had increased their ability to advance equitable practices in social impact, and 94 percent said their involvement in SV2 had increased their level of knowledge about local community needs and solutions.

How does this look in practice?

Implementing Trust-Based Philanthropy

All of SV2’s grants are multi-year and unrestricted. We strive to do our own homework and limit paperwork; for example, we’ve eliminated written grant applications in our collective grantmaking, and instead host “Coffee Chats” where small groups of SV2 donor partners and staff talk through strategy, impact, leadership, and financials more relationally with each nonprofit leader who is participating in our grant rounds. We made this change in response to feedback from our nonprofit applicants: they reported how much time they spent on our process, and we realized we could cut a lot of those hours by eliminating the written proposals. This change ended up having a beneficial impact not only for the nonprofits in our process, but also for the donor partners, who much prefer a more relational approach as well.

Sharing Power

SV2’s grant round funding decisions have historically been made by donor partners only. But in the last two years, we’ve evolved to share power with community leaders in funding decisions. Former grantee partners nominate new nonprofit applicants, share their insights in grant round discussions, and vote in grant decisions. They receive honoraria for their time, in recognition that contributing to our process lies outside the main focus of their work. As an example, in December 2022, SV2 made its largest grant to date to a local organization working to bring systemic change in their community through collective action. This grant decision was made by a team that included community leaders as well as SV2 donor partners and staff. Community voice informed the learning and discussion, and the voting was equally weighted between community leaders and SV2 donor partners and staff — a significant step for SV2.

We are also sharing power at our Board level: in the past year, SV2 has brought community leaders — current or former SV2 grantee partner executives —  onto our Board for the first time in our history. These thoughtful leaders bring to the SV2 Board their lived experience as nonprofit executives and members of the communities their organizations serve. Our Board discussions have a different tenor because of their insights, and the entire Board benefits from the increased diversity of backgrounds and lived experiences.

Getting Proximate to the Local Community

SV2’s grantees each select two of our donor partners to serve as their “Partner Champions” during the three-year grant period. These liaisons receive training on how to build trust through humility and awareness of power dynamics. They serve as thought partners and friends to our grantees, connecting them to resources, opening their networks, and offering skilled advice when helpful. This “Beyond-the-Dollars” support is one way our donor partners get proximate to the community: by rolling up their sleeves in support of our grantees’ missions. We also invite our donor partner community to volunteer with our grantees and to connect with their work through learning events co-designed by our grantees and SV2 staff.

What is the ripple effect?

We’ve heard many stories of how this implementation of equity practices in philanthropy is having an effect in our network. As SV2 donor partners enter relationships with grantees with trust-building humility, grantees feel the freedom to be honest about the challenges they are encountering in their work. For example, during the pandemic, one grantee was cash-strapped while awaiting the completion of a merger; they felt able to come to their SV2 liaisons, who advocated for an early release of the next year’s grant funding, which was quickly approved. That nonprofit is now thriving, and credits their relationship with SV2 as a big part of what got them through that difficult time.

As SV2 Board members experience board service with nonprofit executives as peers, it shapes their approach to board service in other contexts. For example, one SV2 Board member is now serving as the Nominating Committee Chair on the board of a former SV2 Grantee. That organization is now bringing people with lived experience in the organization’s area of work onto their board, and the SV2 Board member is leading that process. She said that her experience at SV2 helped her see the importance and value of engaging board members who have lived experience.

And as SV2 imparts the value of unrestricted, multi-year funding for nonprofits, more of our donor partners are implementing this kind of funding in their personal giving. For my own part, as a direct result of what I’ve learned as an SV2 donor partner, my family’s foundation has shifted to multiyear, unrestricted grants and a conversational annual check-in in lieu of written grant reports.

We are excited about the multiplier effect that’s possible when individual givers live out an equity mindset in their giving and community engagement. We see this in action every day through our network. We want to see this type of impact grow so that more individual givers are transformed through giving practices that lead to flourishing — both for themselves and for those served by the organizations they fund.

Jody Chang is a donor partner at SV2 and serves as SV2’s chief operating & portfolio officer. She is also a Managing Director of The Campbell Foundation, a family foundation which makes grants focused on education equity. Find her on Linkedin.

Editor’s Note: CEP publishes a range of perspectives. The views expressed here are those of the authors, not necessarily those of CEP.

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