2022 Giving Guide: Funding Racial Justice

Minnesota-based foundations increase funding to BIPOC nonprofits and involve community members in grantmaking decisions.

George Floyd’s murder in May 2020 attracted national scrutiny about major institutions in Minneapolis, and the spotlight exposed historic and current racial rifts and stark inequities in the metro area and state. Subsequent civil unrest led to burned and destroyed neighborhoods, adding urgency to squarely address racial equity and build vitality in communities of color in the Twin Cities.

Regional and national foundations and corporate giving programs responded to these events by adopting strong solidarity statements, pledging new commitments to racial and social justice organizations, vowing to rebuild neighborhoods, and admitting to their own roles in failing to effectively address inequities that were clearly built over time.

Retrospectively, it seems inevitable that any pretense of surface calm would erupt in anger and frustration. In the years leading up to 2020, report after report detailed yawning income, home ownership, and educational opportunity gaps between people of color and white Minnesotans. Meanwhile, overall income disparities were the frequent subject of reports nationally, with data showing concentrations of wealth in an increasingly narrow group of people we grew to call “the 1%.”

Shifting from talk to action

Over the past two years, has there been major change within philanthropic giving? Have pledges and equity statements resulted in concrete actions and shifts? What can we learn from philanthropy’s attempt to meet the historic moment?

Many others are asking this question and looking carefully at results. It’s tricky. Setting aside anecdotal evidence, it can take years to determine whether the giving sector has indeed placed a greater funding priority on the needs of BIPOC populations.

If a foundation board changes its giving guidelines to adopt an equity framework, it will require some months to seek out, evaluate, and respond to applications. Grant award lists may be included in press releases, but an official reporting of grants made is often part of an annual tax return. There is additional lag time before information about grants detailed in returns surfaces on a public database. Foundations are known to be deliberative, so self-reporting on their activities tends to be slow.

Calls for action that resounded in 2020 urged foundations to allocate more resources to organizations led by and serving communities of color. But they also implored foundations to remove barriers to seeking and using grant funding. Those barriers include lengthy application requirements and unduly burdensome reports on how grant funding was spent.

With the Covid-19 pandemic unfolding simultaneously with the drive for racial justice, nonprofits were called on to deliver more services while being strapped by compounding and complex circumstances. Nonprofits asked funders to address racial equity, to offer more flexibility through multiyear and general operating grants, and to build deeper relationships with nonprofit leaders rather than relying heavily on written grant requests and supporting documentation.

Defining Minnesota’s progress

The Minnesota Council on Foundations (MCF), an organization for foundations and corporate giving programs, recently polled its 150 members to see what’s changed in their giving since 2020. This poll supports the Giving in Minnesota report, whose 2022 edition will be released by the end of the year.

MCF has shared top-line information from this study with Twin Cities Business. MCF wanted to learn whether the foundations’ views of best practices were changing. They asked members about the percentage of funds granted for general operating support, whether they’d instituted new giving programs specifically for BIPOC nonprofits, the percentage of grants to organizations led by a person of color, whether their members had modified their reporting requirements, and whether they had expanded their decision-making processes to include diverse community members.

MCF chose these data points because they know they are categories that foundations already are tracking, which allows the data to be assessed over time.

The results show that in 2022:

  • 23% of respondents’ grants are multiyear;
  • 27% have specific giving programs for BIPOC-led organizations;
  • 30% of grants overall go to BIPOC-led organizations;
  • It takes an estimated one to two hours to complete a final report about the uses of grant funds;
  • 11% of respondents reported that communities served are always involved in the design of grant programs and selection of grantees; 14% said often; 29% said sometimes; 22% said rarely; and 25% said never.

These numbers generally reflect trends in a good direction, although the specific questions asked in 2020 and 2021 were somewhat different. In those years, about 50% of respondents said they were increasing general operating grants (without giving a percentage of total grants) and more than half said they were increasing flexibility in grant requirements. In 2021, about 43% said they were significantly reducing reporting requirements.

Assessing the national landscape

Nationally, researchers and journalists also are trying to get a handle on what’s changed. Inside Philanthropy, an industry publication, reported on 11 equity pledges from some of the largest foundations in the U.S., looking at shifts in grantmaking practice and funding awards. These funders had collectively made multiyear pledges of $1.8 billion in 2020 toward racial justice causes and have subsequently paid out $540 million in grants. Nearly all of the grants were paid to organizations led by and serving people of color, although prominent legacy organizations such as the ACLU were also frequent beneficiaries. Far less frequently noted were grantmakers who had opened their decision-making processes to include roles for community members.

“Relationships matter, they’re essential. We are not able to make strong grants without well-developed relationships with the organizations and leaders that we support.”

—Bill Graves, President, John and Denise graves foundation

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The Nonprofit Finance Fund, a national organization, publishes an annual State of the Nonprofit Sector report that also looks at grantmaking for racial justice causes. It surveys the nonprofit grant recipients, not the grantmakers. It found that 51% of BIPOC-led organizations reported an increase in foundation giving in the past year.

Meanwhile, the Washington Post reported on corporate America’s $50 billion promise by examining the results of significant corporate pledges to fund racial justice organizations. The reporters’ research showed that $45.2 billion of the total was allocated as loans, with more than half in the form of mortgages. The remaining $4.2 billion was paid directly in grants.

Public companies are focusing their giving on “promoting upward mobility for Black people,” according to the report, through programs supporting home ownership, entrepreneurship, and education. The Post’s analysis covers the 50 most highly valued public companies and includes details about funding for home ownership, criminal justice, and education. It also looks at banks owned by and serving Black communities.

In Minnesota, some foundations were ahead of the curve, already dedicated to connecting with and supporting racial and social justice efforts and organizations, while others are now engaged in major changes in strategy and direction.

Bill Graves (left) is president of the foundation created by his parents John and Denise Graves.
Bill Graves (left) is president of the foundation created by his parents John and Denise Graves.

Graves, Pohlad making a difference

The John and Denise Graves Foundation is an example of a local philanthropy that was already forging relationships in communities that go beyond arm’s-length approaches. A relatively new philanthropy, the foundation opened offices in the former Sears Building at Chicago and Lake streets in Minneapolis in 2017. Staff has sought direct relationships with potential grantees who do work in the neighborhood as well as the people served by these nonprofits. The location put the foundation directly in the midst of community upheaval after the Floyd killing in 2020.

President Bill Graves describes the foundation as “place based” and interested exclusively in Minneapolis, Hennepin County, and first-ring suburbs. “Our orientation toward community and being proximate comes from the basis of the business that generated the wealth to create the Graves Foundation,” Graves says. “To build the business, my father identified leaders from communities that weren’t typically associated with the tech industry. The company’s offices looked very different because the talent was coming from all corners of Minneapolis. It was diverse. When we started the foundation, we started with the idea that you’re not going to know what’s happening unless you are open to a different understanding of what the opportunities and barriers look like firsthand.”

Starting from the belief that “natural leaders live on every block and in every neighborhood,” Graves’ giving is focused on housing, education, youth development, and community-building. The newly formed Graves Ventures will incorporate funding and other forms of support, including networking, incubation, and a willingness to take a “first funder” leap into promising opportunities and collaborate as needed and helpful.

“Our top line is this: Relationships matter, they’re essential,” Graves says. “We are not able to make strong grants without well-developed relationships with the organizations and leaders that we support.” Asked what he’s learned from his experience helming the foundation, Graves says, “The more I feel confused and uncomfortable, the more that our foundation’s grantmaking can be successful. If it’s fun, then you’re the product. If it’s hard, then you’re part of the solution.”

The Pohlad Foundation made a new $25 million commitment to racial justice work in June 2020. A recent report to the community shared the foundation’s progress on spending these dollars, describing both process changes and early grant recipients. For the first time in its history, the foundation invited community members to join its grants committee, naming three prominent Black leaders to the group. The report also shares lessons learned since 2020, prominently featuring the learning that “the community knows what they need and holds solutions.”

Graves and Pohlad are only two of the Minnesota-based philanthropies that are making visible investments in racial justice work, including changing the way they do business, employing people of color as leaders and program staff, and establishing programs specifically targeting the nonprofits that are embedded in communities of color and have the lived experience that has earned them the trust of their constituents.

Are these kinds of changes happening fast enough in Minnesota? Is the work making a difference during a time of critical need and seeming momentum? Many would say it’s too slow, it’s not enough money, and grant processes are still too cumbersome for community-based organizations to compete successfully against larger legacy nonprofits.

Nonprofits’ wish lists for change still read much like they have for decades:

  • Trust us with multiyear, general operating support grants;
  • Stop invitation-only grant opportunities that rely on outdated networks already shown to have limited reach into communities of color;
  • Increase transparency about your decision-making process and open processes to community members;
  • Streamline the application process and get to know us through our work;
  • Invite people who do the work to help design grant programs;
  • Listen, listen, and listen. Get out of your office and out into the community to witness firsthand the work we do.

This list is gleaned from the Nonprofit Finance Fund’s 2022 State of the Nonprofit Sector survey of 1,100 nonprofits nationally. But looking historically, it could have been written decades ago.

Waiting for change becomes increasingly difficult when calls for change are loud and clear. As one nonprofit leader recently said, “Minnesota grantmakers, we see your progress, and yet we ask for more.”

Click here to view the full list of Minnesota nonprofits on our 2022 Giving Guide.

The Graves Foundation located its office in the old Sears Building, so staff could build relationships with people and nonprofits in the surrounding Minneapolis neighborhoods. At left is a hip-hop pop-up event called Summer Cypher that the foundation financially supported in August 2021. PHOTOGRAPHS BY DREW ARRIETA