Diversity and Foundations

When the big bull market began in the early 1980s, the overwhelming majority of people employed by foundations were white. Although women were fairly well represented (especially in smaller foundations), the officers and trustees of foundations, especially those foundations with over $10 million in assets, tended to be white males. The demographics of foundation employment and board membership began to change slowly during the 1980s, and the rate of that change accelerated slightly in the 1990s. Women and African Americans made the greatest gains, both on the staff rolls and in the boardroom. Latino participation grew more slowly; Asian Americans and Native Americans experienced the smallest increases. The hard truth, unfortunately, is that foundations have not been the leaders in diversifying their staffs and boards. In fact, many foundations have been badly retrograde on this issue. The progress of the 1990s has been a positive sign, but it is proceeding very slowly. Still, all trend lines were moving up by the decade's end.

During the 1990s, however, a new and more profound approach to diversifying philanthropy gained favor: funds endowed by and managed by women and people of color. These funds take many forms, from private foundations to donor-advised funds in community foundations. One popular approach for organizing such entities is that of the public charity, which is a grantmaking corporation possessing a 501 (c) (3) designation from the Internal Revenue Service. As such, it must meet the public support test. (In highly simplified terms, it must prove that, over a period of four years, at least a third of its income is derived from public sources.) Perhaps the lion's share of grantmaking entities by and for people of color are component funds of community foundations, but others are freestanding nonprofits. These funds are changing the philanthropic dynamic. Being in charge of funding decisions that most affect them has given these formerly excluded populations real philanthropic influence. It has also proved a boon to philanthropy, for these populations have brought new ideas and new donors to the table.

In the 1990s, women and people of color began to change the face of philanthropy. That change is likely to accelerate in the years to come, as access to greater economic opportunity allows these populations to amass more capital. This trend will go far toward correcting the long-standing racial and gender imbalance between the people governing and managing foundations and the people whom foundations seek to serve.