A hand holding up a gold mirror to the sky, which is reflecting a single monolid eye. The concept of reflecting on racial equity.
Image credit: Photo by Joel Naren on Unsplash

People enjoy puzzles—be it jigsaw puzzles, Wordle, or Scrabble. Our brains like things to fit together. When it comes to the work of dismantling racially oppressive structures and creating a more just world, well-done racial equity audits—that is, comprehensive assessments of the strengths and shortfalls of diversity, equity, and inclusion practices across the organization—are an important piece of the puzzle. These audits are part of the bigger picture of organizational change management. And every piece of the puzzle is required to complete the scene and make change happen. 

Significant racial equity advancement will remain elusive until organizations are willing to examine their own purpose, leadership, strategy, and culture.

There is a growing conversation about equity audits in all sectors. Racial equity audits are a growth industry in the corporate world, too. KMP, a global network of professional firms providing tax and audit services, reports that they saw 19 shareholder proposals for racial equity audits in 2021 and double that number in 2022. Meanwhile, the country is rapidly changing demographically; the 2020 Census revealed that people of color make up 38.4 percent of the population, up from 27.6 percent a decade before. 

Increasingly, organizations collect demographic data from the people they serve. This kind of data collection can inform an organization about the fundamentals of who they are funding or serving. A 2022 racial equity audit by the Skillman Foundation uncovered some hard truths. Skillman set out to assess where every dollar went, disaggregated by race and vendor, and as they report, “We were…shocked that our numbers didn’t reflect greater investment in people of color and how far off we were.”

Meaningful racial equity audits require an “inside-out” approach. Significant racial equity advancement will remain elusive until organizations are willing to examine their own purpose, leadership, strategy, and culture before collaboratively exploring the demographics of their partnerships. The willingness to look inward allows organizations to align with their partners using a shared racial equity focus and lens; this can then lead to sustainable and transformational change for all.

We want to “power up” the impact of racial equity audits by offering the following best practices to allow organizational leaders, managers, and their staff to make use of all types of data in service to the shared goal of a more racially equitable organization and a just world. Through our work, we’ve discovered these critical puzzle pieces that can move organizations toward equity.

Below we focus primarily on foundations, but we believe that many of these findings have broader application to many types of organizations.

How Can a Racial Equity Audit Advance Systemic Change?

In our experience, five domains of critical practice need to be examined and addressed as part of a racial equity audit:

  • Purpose
  • Leadership
  • Culture
  • Grantmaking Strategy
  • Grantee Partnerships

The first four domains require organizations to look at their internal practices. This is the “inside” part of the inside-out process. 

Let’s examine each one in turn, sharing the essential questions and some tools that may be needed—with some examples from foundations that have already embarked on change.


The first domain requires developing a shared understanding of the purpose for a racial equity audit. Shared purpose means the organization has answered their collective “why,” and it’s both a powerful and an essential starting point. Thoughtful purpose statements can serve to prepare, energize, and guide teams with a values-based roadmap.

Here are three questions to start the conversation:

  • Can leadership and staff articulate a shared definition for racial equity and related concepts?
  • Why is conducting a racial equity audit important to the organization?
  • How will leadership and staff be engaged in the process?

Undertaking these processes requires a few steps. First, the organization needs to create or bring forward any documents that have guided its racial equity work to date, such as equity charters or a glossary of terms that address and define equity and related concepts. A cross-functional team should undertake a process to craft the purpose statement, which is then shared more broadly. Staff meetings are often a useful venue to share information and keep the entire organization engaged. 

This process is modeled by the MacArthur Foundation’s Just Imperative. In its first update in 2018, the foundation’s former president discussed developing a staff-led, organization-wide framework that centers diversity, equity, and inclusion. The foundation articulated its commitment to racial equity and detailed how staff and leadership can live out this mission in their daily work. 

Without leadership participation and support, a racial equity audit becomes a dusty set of demographic data, informing no real change.


Leadership is central to integrating racial equity into an organization’s mission, vision, values, decision-making, priority-setting, and program design. Without leadership participation and support, a racial equity audit becomes a dusty set of demographic data, informing no real change. 

 A few focused questions can ascertain whether support is explicit and actionable. Start with these:

  • Has leadership articulated a specific vision for the role of racial equity in the organization’s mission? 
  • Does racial equity appear in the organization’s mission, vision, and values?
  • What is the organization’s own demographic makeup, including leadership, staff, and board members? 

The team can start with a hard look at the strategic plans, theories of change, and logic models set forth by organization leaders to scan for how racial equity is integrated. Additional research can look at internal reports, scoring or evaluation criteria of current grantees (if applicable), and external publications like newsletters. Finally, after document review, conducting interviews with a cross-section of leadership, staff, and board members allows the audit team to probe more deeply. Because leadership may shift, institutionalizing systemic change that centers racial equity in process and policy throughout an organization is imperative. 

A comprehensive examination and authentic “buy-in” from people at all levels of an organization are essential to systemic change.

Taking MacArthur again as an example, the organization’s president, John Palfrey, articulates its approach to reparation and healing work. Although remaining staff-led, the president, leadership team, and board were active in an organization-wide process of assessing and addressing past harms by being honest and vocal about its history. 

This power-sharing process led to a commitment from the board to integrate regular DEI trainings into governance. The board also committed to undertaking periodic reviews of equity and transparency in practice and policy. Additionally, the foundation hired a Chief Equity Officer to advance the work. 

A comprehensive examination and authentic “buy-in” from people at all levels of an organization, especially from those with positional power, are essential to systemic change.  


Culture involves both an internal and external evaluation of the foundation’s racial equity stance and practices. Culture is often understood and not written down, making it often difficult to navigate.

Here are a few questions to start a meaningful conversation:

  • How do staff understand and experience internal policies and practices that center equity and inclusivity?
  • How does the organization seek to understand the racial equity stance and culture in its current and prospective partners?
  • What tangible changes in operations and strategy must be incorporated for the organization to achieve its racial equity goals?

Tools that can help to uncover culture include surveys, assessments, and focus groups. The organization can use a tool like creating a racial equity charter to make explicit its own commitment.

At this point, a much clearer picture will emerge about where the organization is on its racial equity journey. It may be time for a pause in the audit conversation to allow leaders to reflect on the findings with staff and board members. 

Only after these steps are taken is the organization prepared to begin adjusting strategy and approach to partnerships. 

For foundations, in particular, the next step revolves around redesigning their own grantmaking practices. 

Grantmaking Strategy

For foundations, racial equity and related concepts should be embedded in grantmaking strategy. Questions to ask include:

  • How do foundation strategies embed racial equity?
  • How does the foundation center racial equity in the selection of grantees?
  • How does racial equity apply to grant size and current measurements of risk and partnership?
  • Is the organization holding itself accountable to its own principles?

The best place to start this round of exploration includes a deep dive into the foundation’s strategic plan. A thorough review of program strategies and supporting documents will uncover where explicit racial equity commitments have been made. Meanwhile, structured interviews with program staff can reveal the organization’s racial equity stance in practice (and help identify gaps between the two).

One foundation that took this approach is the Tara Health Foundation, which embarked on a journey to embed racial equity, diversity, and inclusion throughout its work. This process ultimately led to revising its mission statement, which now reads: “We advance health and economic justice by transferring all of our resources and assets to invest in and elevate solutions at the intersection of race and gender.” The foundation is now implementing these principles in its grantmaking practices, as well as broader integration into its interactions with grantees and their communities.

Grantee Partnerships

For a grantmaking strategy to be effective, it is important to focus both internally and externally—that is, how the strategic shift is landing in the field. (Alas, too often philanthropy remains overly focused on itself.) 

For this reason, foundations should dedicate time and effort to understand the racial equity patterns of current and prospective grantees, measure resource allocation to BIPOC-led organizations—and be able to articulate how it supports grantees in their work to achieve a more racially just world. This process must be a mutual learning journey and partnership rather than a top-down process led by the foundation’s program staff.

Again, it is useful to start with a conversation with the organization seeking funding. Some of the guiding questions will seem very familiar because the foundation has already interrogated itself:

  • How is racial equity incorporated in grantee strategies?
  • What are grantees’ approaches to identifying and addressing systemic racial inequities?
  • What is the demographic makeup of their boards and staff? 
  • What is the demographic makeup of the communities they serve?

These conversations will demonstrate whether the foundation and the organization are aligned and where the gaps might be on either side. As more foundations move to offer general operating support grants and move away from onerous reporting requirements, alignment is critical to building trust between funder and grantee.

Putting the Puzzle Pieces Together

While some may prefer a silver bullet or a “one and done” solution to racial equity audits, that is impossible. Indeed, one thing that is clear is an audit alone will not yield any systematic change. 

Combatting systemic racism requires an independent, objective, and holistic analysis of an organization’s policies, practices, and culture. Systemic racism is deeply ingrained in US society, as we well know. Those seeking to dismantle harmful systems must engage all levels—including those who may be complicit in upholding and benefiting from those systems.

Acting within these five domains provides a set of guidelines to undertake a more comprehensive assessment of structural racism and how it shows up at the organizational level. 

To eradicate structural racism, it is vital to see the whole picture, not simply the pieces. Only then will philanthropy be adequately positioned to advance the vital work of building a more just and equitable world.