Negotiating Diversity in Foundation-land and What it Means for the Rest of Us

As we predicted in the summer issue of the Nonprofit Quarterly and in the Financial Times, the California state legislature and the state’s biggest private foundations struck a deal to scuttle the looming legislative mandate (Assembly Bill 624) that large foundations report on their grantmaking to racially diverse communities and minority-led nonprofits. The deal was struck away from the public spotlight and announced on June 24th.

The general outline of this agreement emerged at the Council of Foundations conference held in May where an occasional foundation leader would hint at the negotiations around just this sort of agreement—while denying that any negotiations were being contemplated. So much for foundation transparency, especially when foundations employ heavyweight lobbyists for behind-closed-doors deals.

The deal announced at the Senate Committee on Business, Professions and Economic Development commits 10 foundations to a so far unspecified “comprehensive set of grantmaking activities….in the multi-million dollar range…over several years, to begin in 2009” that “will lead to increased funding for capacity building and technical assistance targeted to minority-led and grassroots community-based organizations” and “support for leadership development activities that will bolster and train a diverse pipeline of executives, staff, and board members for the nonprofit and philanthropic sector.”

In addition, the funders committed to do research on the number of minority-led, community-based nonprofits in the state and their capacity needs. One draft of the funders’ statement suggested that they would commit to a “decade of strategic investment” in youth development, financial literacy, community health, and civic engagement grantmaking targeting minority communities.

The signatories are 10 big foundations, but not necessarily the 10 biggest in the state by grantmaking or assets, though they hand out millions annually, as these 2005 and 2006 numbers (from the Foundation Center) attest:

This agreement will be a topic of conversation in the weeks and months to come and will present those in the nonprofit sector with numerous questions such as:

Why these foundations and not others? To some extent, there are some “usual suspects” in this list, for example, the top five in the chart above that have histories of grantmaking to minority-led nonprofits, particularly the California Endowment. But what about the missing foundations? The Greenlining Institute studies that prompted the legislation were quite specific about the negligible minority grantmaking of the Gordon and Betty Moore Foundation (the second ranking California grantmaking foundation focused on environmental issues), which was absent from this list.

Other major California grantmakers not making the pledge include the conservative-leaning Koret Foundation (whose CEO was a vociferous opponent of the bill), the H.N. and Frances C Berger Foundation, and the W.M. Keck Foundation and more liberal-leaning grantmakers such as the Broad Foundation (a major funder of education initiatives), the Richard and Rhoda Goldman Fund (environmental), the Evelyn and Walter Haas Jr. Fund, the Walter and Elise Haas Fund, the Skoll Foundation, and many more.

Did the conservative foundations stick to their anti-regulation guns and play hardball? Why did some of the others choose to leave the heavy lifting to these ten? Will the ten signatories take to lobbying their missing foundation peers to get them to ante up? And how did the out-of-state Annenberg Foundation enter the mix except as recognition that simply focusing on California-based foundations misses the issue of foundation grantmaking reaching minority-led nonprofits in California?

Since the details of the commitments will not be announced until later in 2008, who is going to determine that the commitments are sufficient or not? In their attacks on AB624, the foundation community nationally and in California has launched dozens of diversity initiatives. Consultants across the country have read the tea leaves and are fashioning diversity-oriented lines of business in a bit too obviously sudden awareness of the issue. Will the California initiative simply take credit for these multiyear initiatives that the foundations have already launched, or will the foundation coalition’s commitments involve serious new money? And how would anyone know?

The foundations committed to regular meetings with community representatives through the undetermined multi-year course of implementing this commitment. Is that the same as rigorous monitoring to see that the foundations live up to the letter and more importantly the spirit of the agreement? Will Senator Ridley-Thomas and Assemblyman Coto, the original sponsor of the bill, call “foul” if they determine the foundations are falling short?

Will all this work in the long run address the structural issues of minimal numbers of people of color in leadership and trustee positions in grantmaking foundations? Reconstituting the composition of private foundation boards to better reflect diverse communities would appear to be a crucial element in any fundamental change in foundation attitudes and grantmaking behaviors toward people of color-led grant recipients.

Some right wing foundations that did much of the talking for the foundation community against AB624 routinely charged the Greenlining Institute with nefarious, self-interested purposes, namely a “shakedown” to get foundation grants for Greenlining as part of a settlement to withdraw the bill. At first blush, there seems to be not a penny of the foundation dollars going to Greenlining as a result of this agreement (California Endowment funding of Greenlining preexisted the introduction of AB624), and Greenlining staff have affirmed that they have no financial benefit from the bill.

Coto’s formal statement on the deal called it a “win-win” and his legislative aide, Mike Welch, suggested that through the deal, foundations “maybe surpassed the goals of the bill on their own” . The head of the Weingart Foundation indicated that this agreement “will be a cause for celebration by the nonprofit community, especially in low-income communities of color.” Adam Briones of the Greenlining institute called the agreement “a great starting place.”

The recipe here seems to mix many of the necessary players—key foundation leaders, state legislators, and the public policy watchdog organization—into what appears to be a good-looking meal for minority-led nonprofits and minority communities in California. But, as is obvious in agreements such as this, the proof is in the pudding. And, importantly, given the presence in this deal of executives like Hewlett’s Paul Brest, the California Endowment’s Bob Ross, and Irvine’s Jim Canales as among the nation’s most influential and respected foundation leaders, what will the California minority grantmaking pact mean for foundations outside of California?

Perhaps, the first hint of an answer is evident: just this week, the Florida Minority Community Reinvestment Coalition posted a statement to a listserv under this title: “Historic Agreement Reached For California Minority Organizations With Foundations: Question To Florida Legislature: What about Florida Minority Organizations?”

Ready or not, the California debate and agreement are likely to catch the attention of nonprofits and decision-makers in some of the nation’s 49 other states.