Why It’s Time to Stop Asking Black Nonprofits to Do More With Less
The funding gap for Black nonprofits has remained largely unchanged for decades. In the early 2000s, Black-led organizations received only 1.4% of total foundation grants. By 2017, this number had barely increased, with Black founders still receiving less than 2% of funds from the nation’s largest foundations. Despite a surge in pledges following George Floyd’s murder in 2020, funding gaps for Black nonprofits persist, even with $340 billion in commitments since then.
The Impact of Funding Disparities
While Black people make up 13% of the U.S. population, they disproportionately face health, economic, and education disparities. These long-standing misalignments between resources and need are staggering. There’s a $20 million funding gap between Black and White social entrepreneurs. Most Black-led nonprofits operate with budgets under $500,000 a year, and Black-led organizations experience 24% less revenue and 76% less unrestricted funding compared to their white-led counterparts.
Facing an Uncomfortable Truth
Philanthropy’s current structure reflects America’s history of systemic racism. Much of the country’s wealth stems from the exploitation and enslavement of Black and Indigenous people. As a result, Black-led nonprofits continue to face significant funding challenges, shaped by this legacy of structural inequality.
Today, over 80% of foundation board members are white, despite white people comprising only 58% of the U.S. population. Acknowledging this root cause is crucial for achieving racial justice in philanthropy.
Solutions for Closing Funding Gaps for Black-Led Nonprofits
To stop asking Black nonprofits to do more with less, consider these solutions to close funding gaps for Black-led organizations:
- Invest Like Those Closest to the Problem Are Closest to the Solution
We often say, “the people closest to the problem are closest to the solution.” However, nonprofit funding distribution does not reflect this. Trust-based philanthropy can help by putting resources in the hands of nonprofits and empowering them to steward funding, implement interventions, and adapt strategies based on their lived experience.
- Embrace Equity-Based Grantmaking
As race-conscious grantmaking faces increased scrutiny, Black-led nonprofits may see a widening funding gap. Now is the time for funders to get creative. They should consider eligibility criteria that prioritize things like opportunity funds and loosen reporting and administrative requirements to ensure resources reach the communities in need.
- Experiment with More Flexible Grantee Requirements
A lack of funding resources for Black-led nonprofits limits their ability to build operational infrastructure. Yet funders often expect this infrastructure to be in place before they invest. This creates a cycle of exclusion. To break this cycle, funders must experiment with flexible grant requirements—such as offering more unrestricted funding or redefining success in non-traditional ways.
Closing the Gap and Advancing Equity
Disparities are the result of intentional decision-making, and the same level of intentionality is required to close the funding gap. Black-led nonprofits continue to create significant impact despite limited resources. However, shifting traditional philanthropic practices is necessary to build sustainable strategies that close the funding gap for Black nonprofits and create a more equitable future for philanthropy.
If your nonprofit is struggling to close the funding gap, connect with us to find out how we can help.
