Foundations Should Embrace Diversity and Effectiveness
posted on: Monday, March 17, 2008
By Aaron Dorfman
Last week, six hundred foundation leaders from across the nation were in San Francisco, Calif. for a conference on grantmaker practices that improve nonprofit results while a major controversy involving foundations continues to brew in the California Legislature.
The conference marked the tenth anniversary of Grantmakers for Effective Organizations (GEO), a coalition of funders focused on maximizing the impact of their grants. GEO is the place where foundation leaders come together to share resources and ideas that help them most effectively contribute to the success of their grantee organizations. When the grantees achieve their missions, the foundations also achieve theirs.
The legislative controversy is about AB 624, a bill that would require the largest California foundations to disclose diversity data about their boards, staffs, grantees and vendors. The bill passed the California Assembly and is making its way through the Senate. Assembly Member Joe Coto introduced the bill because he feels that foundations aren’t meeting the needs of his constituents and other communities of color in California.
With any rigorous review of the available data, it is clear that communities of color benefit from institutional philanthropy at rates far lower than one would expect. Nationally, less than nine percent of grant dollars are classified as intending to benefit racial or ethnic minorities. As a percentage of total grants, that figure has been declining over time. And while the available evidence suggests that foundations have been making real progress diversifying their staffs at the middle levels of seniority, chief executives and trustees of foundations remain overwhelmingly white.
But foundations exist for the purpose of having impact on the issues and causes they were founded to address, not to provide grants or hire staff based on race or ethnicity. Opponents of AB 624 argue that they make their funding decisions based solely on which grantees are most likely to achieve maximum impact and that race shouldn’t enter into the equation.
So are we at an impasse? Must grantmakers choose between being effective or embracing racial equity and diversity? Not at all.
Improving the societal impact of foundations and improving their support for diverse communities need not be mutually exclusive propositions. In fact, there is growing evidence that diversity and effectiveness go hand in hand.
A recent book, The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools and Societies, by University of Michigan professor Scott E. Page shows convincingly that diverse organizations actually outperform more homogenous ones. “Diverse boards of directors make better decisions, the most innovative companies are diverse,” he states in an interview with the New York Times.
Foundation leaders who want results should consider seriously Page’s research. Grantmakers should embrace both diversity and effectiveness, and they should persistently seek to improve on both fronts. They need to go beyond race/gender/sexual orientation and should also include class to ensure that elites of different races aren’t the only voices listened to in philanthropy.
For the past decade, foundations have been advancing their ability to measure the impact of their work and that of their grantees. They’re getting better at knowing whether or not they’re making a difference. They should continue their efforts on this front.
But we also need better data on diversity in philanthropy. Improving diversity will help foundations increase their impact, but we won’t be able to tell if they’re making progress if they don’t measure and report on key diversity metrics. When the only diversity data that is available clearly shows that communities of color are getting shortchanged, elected officials can and should start raising questions. After all, foundations’ tax exempt status means these grantmakers are spending quasi-public dollars.
There are flaws with AB 624, but there is no question that foundations should embrace both diversity and effectiveness to ensure maximum public benefit from the valuable and limited resources that are entrusted to them.
Aaron Dorfman is the executive director of the National Committee for Responsive Philanthropy.
Labels: Best Practices, diversity, Legislation, self-regulation, transparency
By Aaron Dorfman
Last week, six hundred foundation leaders from across the nation were in San Francisco, Calif. for a conference on grantmaker practices that improve nonprofit results while a major controversy involving foundations continues to brew in the California Legislature.
The conference marked the tenth anniversary of Grantmakers for Effective Organizations (GEO), a coalition of funders focused on maximizing the impact of their grants. GEO is the place where foundation leaders come together to share resources and ideas that help them most effectively contribute to the success of their grantee organizations. When the grantees achieve their missions, the foundations also achieve theirs.
The legislative controversy is about AB 624, a bill that would require the largest California foundations to disclose diversity data about their boards, staffs, grantees and vendors. The bill passed the California Assembly and is making its way through the Senate. Assembly Member Joe Coto introduced the bill because he feels that foundations aren’t meeting the needs of his constituents and other communities of color in California.
With any rigorous review of the available data, it is clear that communities of color benefit from institutional philanthropy at rates far lower than one would expect. Nationally, less than nine percent of grant dollars are classified as intending to benefit racial or ethnic minorities. As a percentage of total grants, that figure has been declining over time. And while the available evidence suggests that foundations have been making real progress diversifying their staffs at the middle levels of seniority, chief executives and trustees of foundations remain overwhelmingly white.
But foundations exist for the purpose of having impact on the issues and causes they were founded to address, not to provide grants or hire staff based on race or ethnicity. Opponents of AB 624 argue that they make their funding decisions based solely on which grantees are most likely to achieve maximum impact and that race shouldn’t enter into the equation.
So are we at an impasse? Must grantmakers choose between being effective or embracing racial equity and diversity? Not at all.
Improving the societal impact of foundations and improving their support for diverse communities need not be mutually exclusive propositions. In fact, there is growing evidence that diversity and effectiveness go hand in hand.
A recent book, The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools and Societies, by University of Michigan professor Scott E. Page shows convincingly that diverse organizations actually outperform more homogenous ones. “Diverse boards of directors make better decisions, the most innovative companies are diverse,” he states in an interview with the New York Times.
Foundation leaders who want results should consider seriously Page’s research. Grantmakers should embrace both diversity and effectiveness, and they should persistently seek to improve on both fronts. They need to go beyond race/gender/sexual orientation and should also include class to ensure that elites of different races aren’t the only voices listened to in philanthropy.
For the past decade, foundations have been advancing their ability to measure the impact of their work and that of their grantees. They’re getting better at knowing whether or not they’re making a difference. They should continue their efforts on this front.
But we also need better data on diversity in philanthropy. Improving diversity will help foundations increase their impact, but we won’t be able to tell if they’re making progress if they don’t measure and report on key diversity metrics. When the only diversity data that is available clearly shows that communities of color are getting shortchanged, elected officials can and should start raising questions. After all, foundations’ tax exempt status means these grantmakers are spending quasi-public dollars.
There are flaws with AB 624, but there is no question that foundations should embrace both diversity and effectiveness to ensure maximum public benefit from the valuable and limited resources that are entrusted to them.
Aaron Dorfman is the executive director of the National Committee for Responsive Philanthropy.
Labels: Best Practices, diversity, Legislation, self-regulation, transparency
posted by NCRP at
7:13 AM
2 Comments:
As always when it comes to the issue of diversity, I am amazed by the effort to provide a scientific foundation for it and to formally prove its efficacy.
It is a well known approach in computer science to look for an optimal solution by testing many different starting points and looking for local maxima. "Diversity" could be seen as providing more starting points and therefore improving the chance of finding a optimal solution.
Unfortunately, people are not easily modeled. Diversity can also act as a huge distraction to an otherwise effective organization. By definition, diversity strives to include minorities in the decision making process. If every organization, be it a corporation, foundation, or charity, were to embrace diversity to its fullest, a race for highly qualified minority candidates would quickly exhaust the pool of qualified applicants. Less attractive organizations would have to make do with less qualified token candidates. This comment is not based on a racial bias, in fact it transcends racial boundaries. It is simply due to the fact that, compared to a larger pool, a smaller pool, as implied by the term "minority," tends to produce numerically fewer top-percentile candidates in any particular area.
I would argue that the inclusion of token minority candidates can have as many negative effects as it has positive effects. There is really no difference between including a token minority member and including the Chairman's nephew who represents the view points of the idle wealthy (another minority).
Effective boards often share a common vision and have a degree of professional skepticism for philosophical sales pitches. Effective boards look for diverse inputs but they are not necessarily improved by adding diverse board members. A good foundation board making grants in medical research does not necessarily have to include doctors, but it should certainly listen to doctors. A good foundation board making grants to improve minorities' lives does not necessarily have to include minorities, but it should certainly listen to minorities' representatives.
Regarding Prof. Page's book, I would like to ask whether he has performed an analysis of the impact of diversity on efficiency. I can easily believe the equation "collective accuracy = average accuracy + diversity" (though the devil is bound to be in the detail). I could also see a related equation hold true: "collective efficiency = average efficiency - diversity". I admit that I have not read his book, so he might well have addressed that question already.
By
Anonymous, at 11:37 AM
Dear Anonymous,
Thanks for your comments! Let me address a few of the issues you raise.
I disagree with your assertion that we would “quickly exhaust the pool of qualified applicants” if more organizations embraced diversity. There are tens of thousands of extremely passionate, smart and accomplished people of color who would gladly serve on a foundation board if asked. Fully 87 percent of board members for foundations nationwide are non-Hispanic white persons, yet only 65 percent of the population fits that demographic, according the 2008 US Census estimates. Accepting your premise that all racial groups produce similar percentages of “top percentile” candidates leads to no other conclusion than that white people are terribly over-represented on foundation boards.
I agree with you about the negative effects of tokenism, and that boards should share a common vision. NCRP has never advocated for token diversity; such an approach is harmful for all involved. What we need is a deep commitment to true diversity and to racial equity.
Professor Page’s research shows that diverse groups of smart individuals solve problems more quickly and more accurately than homogeneous groups of super-smart individuals. Diversity trumps ability, so long as all participants are “smart.” There is no evidence in his work suggesting that diversity decreases efficiency, as you suggest. But foundation work is about effectiveness and impact, right? It’s not about making decisions quickly. It’s about making the right decisions to address pressing public problems with extremely limited philanthropic resources.
You suggest that foundation boards don’t have to include different perspectives, but that they should listen to those other perspectives. I agree that listening to other perspectives is preferable to making decisions in a vacuum. In fact, in the ethics chapter of our Criteria for Philanthropy at Its Best, we cite several examples of foundations that find ways to include the grantee perspective even though they do not go so far as to include that perspective on the board. But there is a fundamental difference between listening to another’s perspective and sharing power. Our position is that sharing power leads to better outcomes.
By
Aaron Dorfman, at 1:53 PM
Post a Comment
Links to this post:
Create a Link
<< Blog Home