Rethinking grantmaking to dismantle structural racism
By: Donna Daniels
Tags: Giving Circles, Grantmaking, Philanthropy, Racial Equity, Structural Racism

Dismantling structural racism requires rethinking grantmaking practices

I co-authored this article with my colleague, Kelley Buhles. Kelley is senior director of philanthropic services at RSF Social Finance.

Edgar Villanueva brought conversations about power dynamics in philanthropy into the open with his 2018 book “Decolonizing Wealth.” Now, the Black Lives Matter movement has accelerated calls to action and philanthropists are responding with commitments to give more money to organizations led by people of color and to racial justice initiatives. That’s a necessary step, but if we really want to dismantle structural racism, we also must radically rethink grantmaking processes.

This rethinking starts with donors ceding power to nonprofit and movement leaders and trusting them to make decisions based on their expertise. It also requires confronting philanthropy’s tendency to move at the pace of privilege: Donors determine where the money goes and for how long, and set the time frames needed to achieve results. They may engage in an extended decision-making process to award short-term grants — often one year, rarely as many as three — but expect recipients to deliver outcomes right away.

This asymmetry contradicts the goal of addressing — and redressing — an embedded power structure. How are communities that have been systematically disempowered supposed to figure out repair in three years, or even five? It won’t happen that fast, and it won’t happen at all under the dominant philanthropic structures. We have to build new ones to get us to a different place.

Grantmaking approaches that provide transparency about decision-making and solicit advice and concerns from the community move us in the right direction, but they won’t get us where we need to go. To reach the regenerative, non-extractive economy that many philanthropists say is their goal, and to avoid perpetuating inequitable systems, we need to put communities in the decision-maker role.

Strategies that meet the moment: flow funding, shared gifting, and community-led funds

In collaboration with donors, we are actively using three community governance approaches that are iterative, responsive, and co-creative: flow funding, shared gifting and community-led funds.

Flow funding: We often suggest flow funding as a simple way for donors to push the boundaries of participatory grantmaking while quickly moving funding out the door. Flow funding involves handing over grantmaking power to nonprofit leaders, social entrepreneurs or community leaders with lived experience in a particular field. The donor typically chooses the issue area and, directly or through a strategic partner, invites community leaders to distribute funding. Through this process, more people share the power of giving and donors gain exposure to many more organizations or projects than they could identify alone.

RSF’s Women’s Capital Collaborative, for example, practices flow funding through the Integrated Capital Institute, a fellowship program for financial activists. The process is straightforward: ICI leaders tap a group of fellows, largely women of color, to distribute grants to organizations in their networks.

Participants in a Women’s Capital Collaborative Shared Gifting Circle

Shared gifting: Using our shared gifting approach, we invite six to 10 local nonprofit leaders (selected through a community nomination process) to spend a day together and decide how to distribute financial resources among themselves based on their own criteria. They review each other’s proposals and ask questions about each other’s work. We encourage participants to be open and honest with the group about how they made their funding decisions. The group also decides how participants will report back on their use of the gift.

We’ve been facilitating shared gifting circles for more than 10 years through our integrated capital funds and for donors and private foundations. In tallying the cumulative feedback, we found that 84% of participants said the experience was worth a full day of their time, despite the relatively small amounts given away. The process encourages discussion of needs and offers, and often the nonfinancial resources that emerge — potential partners, network connections, introductions to new resources — are considered as valuable as the funding.

And while 70% said connecting with leaders in the field, learning about each other’s work, and reading each other’s proposals were the most valuable part of the process, many also cited “shifting power dynamics and turning competition into collaboration” (27%) and “being given the experience of giving and receiving” (18%) as significant benefits.

“It really hit home that this was the only time that I had ever been able to truly influence the funding of other artists and organizations that are run by and serve people of color,” said one participant in a circle of community organizing and arts organizations.

Community-led funds: These funds put community leaders fully in charge. Donors connect directly or through a strategic advisor with community leaders working in their interest area. Those leaders identify community advisors who collaborate on funding decisions, develop a funding process, and work with a fund administrator on carrying out the work. Donors provide ongoing financial support, and community leaders have sustained autonomy over how the funds are distributed.

The Arctic Indigenous Fund, for example, is supported by multiple funders with a focus on Indigenous communities. It’s structured as an international collaborative: Two representatives each from Alaska, Canada, Greenland and Northern Europe’s Sápmi region act as advisors in themed grantmaking cycles. Similarly, the Pawanka Fund has a governance committee composed of regional Indigenous leaders who play a pivotal role in selecting local partners along with project implementation and evaluation.

What it means to embrace these strategies

Implementing these approaches requires thoughtful planning at every step: bringing together a committed and collaborative set of advisors, making sure you have all the right voices in the room, and getting and acting on feedback about how the process is working. (The Kindle Project has a whole program dedicated to supporting community members stepping into the funder role for the first time.) The goal is to support community representatives in their role as decision makers without recreating the power dynamics that community governance structures are trying to overturn.

Control is probably the most difficult aspect for donors and funders to get comfortable with. People who want to pioneer this kind of power-sharing partnership with communities have strong personal motivations — they are uncomfortable with philanthropy’s traditional practices; they question their right to be the ultimate decision maker; they want to have a deeper impact on a close-to-the-heart issue. Yet they need to work through what it means to give up a decision-making role.

Donors who want to change philanthropy’s power dynamics usually have many layers of personal work to do, and they may struggle to help without exerting control. Potential failure is a common area of tension. Communities want a free hand to implement their ideas, learn from what doesn’t work and iterate; funders may be unwilling to let them fail, feeling that their money is not being used wisely.

This kind of conflict exposes philanthropy’s deep-seated paternalism. There’s an unspoken assumption that funders are better suited to control the money — an expression of the elitist thinking that must be confronted if we truly want to decolonize philanthropy. It also exposes the ingrained habit of deploying money through a capitalist framework, which assumes that all money must have a return on investment in order to be productive. Decoupling the distribution of money with production, and instead seeing its flow as a tool for healing and regeneration, is a step toward decolonizing gifts.

The path from patronage to partnership

These are real challenges, yet donors who push through them will tell you they learn and grow as much as the community leaders do. But too many people are sitting on the sidelines. Many donors say they’re interested but want proof that community governance approaches work. Nonprofit and movement leaders are increasingly turning that question around and asking for proof that traditional philanthropic practices work. Looking at the world around us, that’s a hard case to make.

Community governance grantmaking, based on the Just Transition framework, seeks to empower those leaders, shine a light on their expertise and balance the scales to achieve partnership rather than patronage.

In our years of exploring and prototyping these approaches, we’ve found that they can serve as a path toward untethering from dominant practices that perpetuate inequity, restoring trust and building thriving communities. It’s not an easy path — the experience of giving up and even of exercising power can produce complicated feelings and dilemmas — but it is essential to unpacking systemic problems and beginning to address them.