The murder of George Floyd in 2020 and resulting worldwide protests over racial injustice ushered in a new era of commitments from big business and nonprofits to diversity, equity and inclusion.
Nationally, some studies have found that billions worth of promised investment for inclusion have stalled, prompting an audit from a six-decade old philanthropic group in Detroit to ensure it’s making good on its own promises.
Angelique Power, president and CEO of the Skillman Foundation, said the organization recently conducted its first “racial equity audit” on the heels of what she calls “toothless” pledges across the country – and the results, she said, were shocking.
A review of data from 2019 to 2021 found Skillman – a group known for granting out more than $730 million to K-12 education, youth programming and racial justice –directed 61% of its grant dollars to organizations led by people of color, but 75% of those groups had majority-white board members. Additionally, only 19% of the nonprofit’s vendors were people of color. Overall, Skillman directed just 2% of its endowment investments toward assets owned by people of color.
“Philanthropy is this major system that moves so much capital and validates or invalidates people working on the most complicated social justice issues of our time,” Power said. “So, often philanthropy is a really big part of the problem and nobody can tell philanthropy that because we hold the purse strings.”
Skillman’s findings are aligned with some others – a 2020 study from the National Committee for Responsible Philanthropy examined 25 community foundations in 25 cities and found just 1% of funding was given specifically to Black communities, compared to a Black population of 15% in those 25 cities. Additional 2020 research from Bridgespan Group, a consultant for nonprofits and foundations, and Echoing Green, a social entrepreneurship nonprofit, found that nonprofits led by people of color receive less grant money.
“Frankly, there is no accountability within philanthropy,” Power added. “We could really do whatever we want. There’s very few ways to see what’s happening behind the scenes.”
Many foundations, she said, don’t collect the racial demographics of grantees and Skillman wanted to model how to be transparent. The foundation has been led by Black women for 20 years. The majority of its staff are people of color and half of Skillman’s board of trustees are people of color.
Power, who joined Skillman in 2021, said it was important to her to ensure the company’s values lined up with the organization’s actions after 2020, when racial equity had its fleeting moment in the spotlight. That year, fifty of the country’s biggest corporations and their foundations, including Apple and Pfizer, made public commitments to racial equality totalling $49.5 billion. Job postings for positions to lead diversity, equity, and inclusion work increased and companies like Sephora and Petco publicly condemned racism.
But new data suggests that much of the momentum has halted. Corporate DEI programs sharply rose from 2020 to 2021, but have slowed in 2022, according to the online job recruitment site, Glassdoor. At the same time, Wells Fargo and the National Football League were accused of conducting interviews with diverse candidates for positions that were already filled. A Washington Post analysis found that for the aforementioned 50 corporations, much of the money came in the form of loans, mortgages, and investments the companies could profit off of, with grants making up less than 1% of the nearly $527 billion dollars collectively earned by the companies in one year.
Skillman, Power said, used the audit to track where its funding and operational investments were going.
“It (the racial equity audit) is very easy to use. You don’t need money, you don’t need a consultant. Any entity can do this,” Power said. “It feels like a first step in actually just untying some of the processes and practices inside of our institutions that we’re actually working against our mission.”
One example, she said, was a rule that grantees seeking funding from the foundation had to have a minimum operating budget of $100,000.
“We found that we had, at some point somewhere along the line, instituted a budget threshold of $100,000,” she said. “When we looked at that, we said, ‘oh, goodness, look at that, we’ve put in a false threshold that is actually working against us because what are the organizations that are allowed to amass a budget of 100,000?’ What are the organizations that have access to high net worth individuals that can serve on their boards, and give a tremendous amount of capital that is unrestricted?”
Although Skillman looked at racial demographics in its audit, Power said much of the racial equity work isn’t about deciding to fund an organization based on whether it’s led by people of color. It’s about digging deeper to find harmful policies, beliefs, and patterns, like an arbitrary budget rule, she said.
“The real work is actually much more in depth and important,” said Power, “which is to say, ‘how did we get to this outcome? What are the things that we’re unintentionally doing?’”
Skillman now plans to do a racial equity audit every year and to make the results publicly available in its annual report. Other organizations have contacted the foundation about wanting to do audits as well.
The Max & Marjorie Fisher Foundation started a similar process this year, said Meredith Freeman, director of alignment and impact investing.
Freeman’s advice to other entities interested in doing racial equity audits is to “just get started with what you have.” She recommends looking at the basics: the demographics of the people being served and – for foundations – the percentage of grant funding to individuals, businesses and vendors of color.
“Being in a majority Black city like Detroit, it’s important that we support our local economy. Who are the vendors, who are you paying to cater your lunches, to provide delivery services?” Freeman said.
Beyond philanthropic organizations like her own and Skillman, Freeman said several loan funds in Detroit have been aligning equity values with resources. Detroit-based ProsperUs, for example, has a mission to create economic equity in underserved communities through educational opportunities, coaching, and capital for entrepreneurs. In 10 years, the organization has granted out $3.5 million in microloans to Detroit entrepreneurs. Joanna Dueweke-Pérez, senior operations director for ProsperUs, said 98% of the entrepreneurs they’ve served are people of color.
At Skillman, Power said, “our integrity is really our calling card,” and “it became really important that we model core tenets of racial equity that are not about talking, but are about transparency, action, dollars, power, and accountability.”
Editor’s note: This story was updated to include the percentage of grant dollars Skillman allocated to organizations led by people of color between 2019 and 2021.