Few Racial Equity Grantors Have Diverse Boards

Foundations with few or no staff say racial equity is very relevant to their mission and are making grants that reflect close connections to communities and causes but the same can’t be said of board composition and staff.

According to Exponent Philanthropy’s 2019 Foundation Operations and Management Report, 72 percent report racial equity as somewhat or very relevant to their mission, with almost two in five (37 percent) reporting that racial equity was “very relevant” to their mission. Yet, 75 percent of boards have no people of color and only 15 percent have one person of color.

Almost 90 percent of foundations had full-time CEOs who identify as white. One in five (19 percent) had or were creating mission statements that included an expressed commitment to racial equity.

“We are at the beginning of a journey and there is certainly much more work to do. What is exciting and promising is that a growing number of our members are focusing on diversity, equity and inclusion, acknowledging its importance to their overall philanthropic impact,” Henry Berman, CEO of the Washington, D.C.-based association of almost 2,000 funders with few or no staff, said in a press release announcing the results.

Independent foundations had a higher proportion of boards with members of color. More than 20 percent of respondents had or were in the process of completing a training and employee self-assessment on racial equity.

Some 78 percent of those surveyed have no paid staff of color and while 65 percent of CEOs tend to be female, females earned on average 85 percent of what a male CEO received. Seven of 10 foundations reported having paid staff, with a median of 2 staff.

Fewer than one in five foundations (19 percent) had a written CEO succession plan while 7 percent were unsure. Some 73 percent did not have a written succession plan.

The report also found that half of all family foundations surveyed are engaging the next generation of philanthropists in their work through activities such as board service, site visits and discretionary grant making. Funders said involving the next generation of philanthropists led to increased use of technology (28 percent), a greater focus on impact and evaluation (16 percent), and updated foundation policies and procedures (14 percent), according to the survey.

Of the 17 percent of foundations that said they engage in mission investing, 41 percent of them had started within the last three years. The vast majority (85 percent) use consultants for help with investment matters.

About 35 percent of foundations compensate board members for routine board service, with more than half of those (54 percent) at independent foundations and a quarter (26 percent) at family foundations. As average asset size of a foundation increases, so does the likelihood that it compensates board members.

“Foundations with few or no staff are driven by a strong desire to improve people’s lives and are making an outsized impact, not just in their communities, but around the world,” Berman said. “This survey shows that funders are evolving to reflect the needs and realities of the communities and causes that are most important to them.”

The 2019 Foundation Operations and Management Report provides a snapshot of the practices of participating organizations at the time they were surveyed, across topics including boards and governance, grant making, mission investing, and compensation and benefits. The 45-page report is based on responses to the 2018 Exponent Philanthropy’s Foundation Operations and Management Survey. Of the 1,794 foundation members across the United States surveyed, 468 members responded (26 percent).