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California Foundation Diversity Bill: Best Way to Boost Results for Low Income Communities of Color?

posted on: Thursday, April 17, 2008

A California Assembly bill is causing quite a stir in the philanthropic and nonprofit worlds. Spurred by a series of studies by the Greenlining Institute, the bill, AB 624, sponsored by 23rd District Assembly Member Joseph Coto (D-San Jose), would require California foundations with assets over $250,000,000 to collect and make public information about:

  • the ethnicity, gender and sexual orientation of foundation board and staff members;
  • the number of grants and grant dollars awarded to organizations reporting that 50% or more of their board or staff members are ethnic minorities;
  • “the number of grants and grant dollars awarded to “organizations specifically serving African-American, Asian-American, Pacific Islander, Caucasian, Latino, Native American, and Alaskan Native communities, lesbian, gay, bisexual, and transgender communities and other underrepresented communities
  • “the number of grants and grant dollars awarded to predominantly low-income communities"; and
  • "the number and percentage of business contracts awarded to African-Americans, Asian-Americans, Pacific Islanders, Caucasians, Latinos, Native Americans, and Alaskan Natives."

The current draft of the bill is available here.

The problem is, if the ultimate result sponsors hope to achieve is increased benefits from philanthropy flowing to either communities of color, or low income communities[1], compliance with the bill, as written, looks very unlikely to accomplish that.

First of all, complying with the bill would not be easy, both because of the fairly vague or uncertain definitions of the information to be collected, and also because of the amount of energy that would go into collecting that information, both at the foundations and on the part of their grantees. The bill is imperfectly drafted, so much so that the Nonprofit and Unincorporated Organizations Committee of the California Bar Association’s Business Law Section, a group of attorneys expert on exempt organization law, have issued a statement of opposition raising numerous objections, and concluding that the bill is “fatally flawed.”

The problem I see in the bill is that it does not require information be collected that would establish who is served by grant dollars (more on the feasibility, and wisdom, of trying to establish that below). Rather, it simply requires foundations to tally up the numbers, grant dollars and percentages and publish those. In its current form, a foundation could simply publish the aggregate figures (e.g., “300 grants, in the amount of $400 million, to organizations specifically serving communities of color”, or “250 grants, in the amount of $300 million, predominantly low income communities.” While it would be interesting to track whether those numbers go up or down, they are practically useless, otherwise, for advocates. The data likely wouldn’t provide any evidence that philanthropic support to low income people of color living in particular regions or geographic communities is rising or falling, or how the distribution of grant funds within those communities is shifting over time. (Also, the data likely would not be aggregated somewhere, so to get the bigger picture, advocates would have to cull information from dozens of foundation sites.)

As Aaron Dorfman, NCRP’s Executive Director, has pointed out in this space, if diversity in grantmaking is important, it should be measured. Opponents of the bill actually agree on this point, but object that the challenge will be how to measure it completely, and how to measure it in ways that are most useful to advocates for more responsive grantmaking. The leaders of The California Endowment, The William & Flora Hewlett Foundation and The James Irvine Foundation all have published op-eds or letters to the editor opposing the bill. Ironically, these three foundations are among the handful of large foundations with statewide reach most prominent in pushing policy advocacy and systems change to benefit low income communities of color. The controversy over AB 624 seems to be an example of what a friend of mine calls “heated agreement,” where people who basically agree and should be pulling in the same direction instead divide and argue over minor points.

As Dr. Ross of the Endowment observes, for all the debate about transparency, “the real issues are: poverty, equity and opportunity in communities of color and other underserved communities.” If the purpose is to improve the use of philanthropy to tackle those challenges, we’ll need better information than AB 624 mandates, and advocates for more responsive grantmaking and leaders of foundations like the Endowment, Hewlett and Irvine should be able to come up with much better solutions by working together.

A better place to start would be making visible the flow of grant dollars to specific places, the demographic and other attributes of those places, and even the specific subsets of people served in those places. (Another irony: the specific reach of grants for policy advocacy or systems change will be harder to define, but this challenge can be solved, as I will explore in a future post). To do so, we’ll need to make the grants data already disclosed by foundations more accessible to advocates, and supplement that with data about the geographic and demographic reach of those grant funds. This would mean bringing the grants databases out from behind the firewalls of services like the Foundation Center or Foundation Search, or paying the costs of providing free public access to that data. It also would entail beginning to map the reach of grants. With a modest investment of time and resources, we can determine which census tracts are served by which organizations, and show the amount of grant dollars relative to the numbers of people living in an area or, more specifically, the particular characteristics of people actually served. This is not a technological pipedream, it can definitely be done[2], and likely for far less cost and effort than compliance with AB 624 would entail. The design and development of such a system, however, is something that can’t very well be done in advance through legislation.

In the end, AB 624 is unlikely to become law anytime soon (It has a rough road ahead in the California Senate, and if it passes both houses, Governor Schwarzenegger is likely to veto it.) That should give all supporters of responsive philanthropy, within foundations and the broader community, plenty of time to develop approaches more targeted to improving results for low income communities of color.

Peter Manzo is an NCRP board member and the Director of Strategic Initiatives for the Advancement Project, a civil rights advocacy organization based in Los Angeles and Washington, D.C. His opinions are his own and do not necessarily reflect those of NCRP or the Advancement Project.

[1] 1) Oddly, there is no such straightforward statement on Greenlining Institute’s Web site that this is the purpose, as opposed to more generically making foundations more “effective and efficient.”
[2] 2) HealthyCity.org, a partnership of nonprofits in Los Angeles sponsored by the Advancement Project, already has built tools and methods for making the flow of grant dollars visible, for public agencies and private funders, to help them assess their grants in Los Angeles County and throughout California. (Full disclosure: I am a proud co-founder of HealthyCity.org.).

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