Andrew SearsExecutive Director,

TechMissionandrew@techmission.org

617-282-9798 x101

How CNCS Can Address How CNCS Can Address Nonprofit Funding BiasNonprofit Funding Bias

Presentation Available at: www.urbanministry.org/cncsproposal

OutlineOutlineThere 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

Why TechMission Is Addressing Why TechMission Is Addressing This Issue?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

Why TechMission Can Speak to Why TechMission Can Speak to This Issue?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

Nonprofit Statistics and RaceNonprofit Statistics and Race1.4 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

Funding Bias: Non-Whites Make Up 52.4% Of Funding Bias: Non-Whites Make Up 52.4% Of Poverty But Non-White Led Nonprofits Only Poverty But Non-White Led Nonprofits Only Receive 3% of FundingReceive 3% of Funding

http://www.slideshare.net/rosettathurman/race-matters-in-nonprofits-promoting-diversity-in-our-profession andhttp://www.aecf.org/upload/publicationfiles/executive_transition_survey_report2004.pdf

Nonprofit Leadership Does Not Reflect Nonprofit Leadership Does Not Reflect Class Community it ServesClass 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

Most Nonprofits Have a Different Most Nonprofits Have a Different Class Culture than Clients They ServeClass Culture than Clients They Serve

White Black Latino Asian

Upper

Middle

Lower

Leadership

Clients Clients Clients Clients

Indigenously Led Nonprofits Are Indigenously Led Nonprofits Are Most Affected by Funding BiasMost Affected by Funding Bias

White Black Latino Asian

Upper

Middle

Lower Leadership and clients

Funding and GenderFunding and Gender

From: http://www.aecf.org/upload/publicationfiles/executive_transition_survey_report2004.pdf

Diversity Profile of CNCSDiversity Profile of CNCSBlack Latino/a White Asian Native

AmericanOther

USA Poverty 23.9% 24.8% 47.6% 3.7% 5.3% 1%

AmeriCorps 26% 15% 50% 2% 3% 4%

NCCC 86%

VISTA NO DATA (recommendation for study)

CNCS Staff NO DATA (likely reflects HHS staffing overall)

HHS Staff 16.8% 3.6% 55.8% 7.2% 16.6%

Leadership of Funded Orgs

NO DATA (recommendation for study)

Leadership of Service Sites

NO DATA (recommendation for study)

Sources: http://www.abtassociates.com/reports/ES-americorps-baseline.pdfhttp://www.abtassociates.com/reports/COMSRVS.pdf http://www.opm.gov/feddata/demograp/Table2mw.pdf

If CNCS Funding Profile Reflects If CNCS Funding Profile Reflects Nonprofit Leadership Profile in USA…Nonprofit Leadership Profile in USA…

Source: http://www.aecf.org/upload/publicationfiles/executive_transition_survey_report2004.pdf

SummarySummaryIt 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

How Can CNCS Be A Force How Can CNCS Be A Force to Counter Nonprofit to Counter Nonprofit

Funding Bias?Funding Bias?

Why Does Only 3% of Foundation Why Does Only 3% of Foundation Funding Go to Nonprofits Led by People Funding Go to Nonprofits Led by People of Color?of Color?

Statistics are explained in the attached spreadsheet at: www.urbanministry.org/fundingbias

Two Issues for Policy ConsiderationTwo Issues for Policy Consideration

1. 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

2. 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

TechMission Experience: HHS & CNCSTechMission 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

Policies Recommendation 1Policies Recommendation 1: Reach out to : Reach out to Indigenously-Led Faith-Based NonprofitsIndigenously-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 fundedIt is Critical to Continuing efforts of Office of Faith-

based & Neighborhood partnerships

Statistics are explained in the attached spreadsheet at: www.urbanministry.org/fundingbias

Policies Recommendation 1Policies Recommendation 1: Reach out to : Reach out to Indigenously-Led Faith-Based NonprofitsIndigenously-Led Faith-Based Nonprofits

Invest significantly in recruiting:1. Grant reviewers from under-represented

populations2. Organizations led by minority groups that are

under-representedIntentionally 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

Policies Recommendation 2Policies Recommendation 2: Use : Use Diversity Profiles for All CNCS Diversity Profiles for All CNCS ApplicantsApplicants 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

Comparing Bias in Standardized Testing Comparing Bias in Standardized Testing to Bias from Standardized Outcomesto 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

Understanding Nonprofit Funding BiasUnderstanding Nonprofit Funding Bias

Racial Bias◦ 97% of foundation funding goes toward White-led

nonprofitsIncome 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

Dominant Culture Outcomes vs. Dominant Culture Outcomes vs. Non-dominant OutcomesNon-dominant OutcomesDominant 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

Non-Dominant Culture (lower class value)

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

Ways to Counter Bias of Ways to Counter Bias of Standardized OutcomesStandardized OutcomesRigorous 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

Sample Diversity Profile FormSample Diversity Profile Form

Board & Staff Asian Black Latino(a) White Other TotalF M Tot % F M Tot % F M Tot % F M Tot % F M Tot % F M Total %

BoardChair/President of Board 0 0% 0 0% 0 0% 1 1 17% 0 0% 0 1 1 17%Other Board Officers 0 0% 1 1 17% 1 1 17% 0 0% 0 0% 0 2 2 33%Other Board Members 0 0% 2 1 3 50% 0 0% 0 0% 0 0% 2 1 3 50%Subtotals 0 0 0 0% 2 2 4 67% 0 1 1 17% 0 1 1 17% 0 0 0 0% 2 4 6 100%

Management StaffExecutive Director 0 0% 0 0% 0 0% 1 1 33% 0 0% 0 1 1 33%Other Management or Supervisory Staff 0 0% 1 1 2 67% 0 0% 0 0% 0 0% 1 1 2 67%Subtotals 0 0 0 0% 1 1 2 67% 0 0 0 0% 0 1 1 33% 0 0 0 0% 1 2 3 100%

Other StaffProgram Staff 0 0% 0 0% 0 0% 3 1 4 27% 0 0% 3 1 4 27%Support Staff 1 1 7% 2 1 3 20% 1 1 7% 3 2 5 33% 1 1 7% 7 4 11 73%Subtotals 1 0 1 7% 2 1 3 20% 0 1 1 7% 6 3 9 60% 1 0 1 7% 10 5 15 100%

Volunteer/AmeriCorps Members at Sites 1 1 2 7% 7 4 11 38% 1 2 3 10% 9 4 13 45% 0 0% 18 11 29 100%Subtotals 1 1 2 7% 7 4 11 38% 1 2 3 10% 9 4 13 45% 0 0 0 0% 18 11 29 100%

Grand Total 2 1 3 6% 12 8 20 38% 1 4 5 9% 15 9 24 45% 1 0 1 2% 31 22 53 100%

Organization Population Served 47 39 86 6% 304 256 560 42% 291 248 539 40% 37 41 78 6% 37 33 70 5% 716 617 1333 100%Program Population Served (if applicable) 2 4 6 1% 125 103 228 53% 107 59 166 39% 2 2 4 1% 15 12 27 6% 251 180 431 100%

From Associated Grantmakers of Massachusetts: http://www.agmconnect.org/cpf/CPF_Diversity_Form.xls

Example Diversity Profile: Example Diversity Profile: TechMissionTechMission

Policies Recommendation 3Policies Recommendation 3: Revise Funding : Revise Funding Criteria to Better Reflect Community ValuesCriteria 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.

Policies Recommendation 3aPolicies Recommendation 3a: Revise : Revise Funding CriteriaFunding 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?

Policy Recommendation 3b: Revise Funding Policy Recommendation 3b: Revise Funding Criteria Related to Cost Per Member Criteria Related to Cost Per Member IncentivesIncentives

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

Policy Recommendation 3b: Revise Funding Policy Recommendation 3b: Revise Funding Criteria Related to Cost Per Member Criteria Related to Cost Per Member IncentivesIncentives 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)

SummarySummaryThere 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 bias1.Intentionally pursuing indigenously-led FBOs2.Use diversity profiles in applications &

outcomes3.Need to revise funding criteria to offset

systemic bias

Summary: Revisions to Funding Summary: Revisions to Funding CriteriaCriteria

1. Give diversity profiles significant weight in funding decisions.

2. Give preference for nonprofits that are the equivalent of a “minority owned” business

3. Develop funding strategies to foster growth of new nonprofits similar to the government’s small business strategies

4. 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