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Developing an Equitable Nonprofit Ecosystem: A New Funding Framework for Emerging, BIPOC-Led Grantees

Views from the Field
Posted September 16, 2024
vff_sep24_ parham
Morgan-Hynd

Jelissa Parham, Executive Director, John Muir Community Health Fund

In philanthropy, it is standard due diligence practice to vet potential grantees on their list of current, past, and future funders as a way to mitigate our perceived risk. However, this approach can put many emerging, grassroots, and BIPOC-led organizations out of contention for initial funding. The John Muir Community Health Fund (CHF) has shifted the way we fundamentally see risk, and instead, have embraced the opportunity to fund emerging organizations that address social determinants of health by providing monetary support, capacity building, and ultimately a proof of concept that propels grantees to long-term sustainability.

For the CHF, this was an intentional modification to a funding approach that began in the summer of 2020. Funders (including the CHF) and corporations acknowledged the systemic issues of racial and economic inequality in America and drafted racial equity commitments that were intended to be responsive to the moment. There was a focus to fund BIPOC-led organizations that were community-centered. The goal was to shift not only who was funded, but how funding was distributed. Applications were easier, unrestricted funding was more prevalent, reporting was streamlined, and racial equity was at the center of funding decisions. However, according to Candid, “one area in which early progress in 2020 is potentially waning is the focus on racial equity” (Arrillaga 2024). But not for the CHF.

By 2023, the CHF began to broaden our understanding of risk and devise new ways to mitigate risk in order to create opportunities for smaller and emerging organizations to thrive. A 2020 report from Bridgespan and Echoing Green stated that “The unrestricted net assets of the Black-led organizations are 76 percent smaller than their white-led counterparts. The stark disparity in unrestricted assets is particularly startling as such funding often represents a proxy for trust. Disparities by leader race repeatedly persist even when taking into account factors like issue area and education levels” (Dorsey et al. 2020).

We began to fund more early-stage, primarily BIPOC-led organizations, looking especially for leaders with lived experience. While we agree that traditional funding frameworks add value as a way to conventionally mitigate risks, they also create a concurrent, deeper risk: overlooking those newer, smaller, more nimble organizations that are rooted deeply in the communities they serve. Consequently, traditional frameworks leave the civil society ecosystem less equitable and representative of affected communities. To address this, we have been piloting the following funding framework:

  1. Start with a Relationship; Align Funding with Your Organizations’ Values
    Relationship building is key to this framework. Begin by building trust with the potential grantee’s leadership. Ask questions in order to gain greater understanding of what their challenges, needs, and opportunities are, instead of asking questions to disqualify them from potential funding. The CHF values lived experience and understands the importance of leadership reflecting the community the organization is serving. Those with lived community experience are the experts and we fund with this top of mind; our aim during conversations is to presume expertise and focus on understanding their issues and exploring opportunities.
  2. Fund Beyond a Program; Build Organizational Resilience
    Fund not only a program but invest in the entire success of an organization by providing resources that aim to support capacity building for the grantees. This is especially important for early-stage and emerging organizations because, more often than not, many of these organizations have not previously had access to such organization-focused, non-programmatic resources, which can be a catalyst for their sustainability and success. These resources can take the form of services like coaching, strategic and sustainability planning, fund development, well-being practices, and trainings and convenings. Resources permitting, funders can also provide financial support like unrestricted funding and funding earmarked for organization development, etc. This support should be designed with grantee input to be responsive to their needs. When possible, hire consultants that also reflect the community served.
  3. Build Connections and Collaborations
    Create spaces where grantees can interact and grow together. Organize convenings or trainings of your grantee cohort. Intentionally introduce grantees that have synergies within their work to one another to increase potential collaboration. This past year, the CHF hosted a narrative strategy training with follow-up peer coaching sessions and a convening. There is no reason a nonprofit should be doing it alone—they are stronger together.

    Uplift their work in order to bring additional attention and resources to an organization that may otherwise go unnoticed. Each time the CHF funds a new grantee, we pay a communications specialist to highlight their work, and we host the story on our website.
  4. Reframe Success and Your View of Return on Investment
    Change and success takes time, especially for emerging organizations. Reframe what success can look like for an organization and be willing to offer additional support as needs arise. As funders, we need to recognize that programmatic milestones, while important, might not always be the most impactful data point. Sometimes merely the fact that an organization managed to exist in an otherwise extremely challenging context is the biggest success story. New, innovative partnerships between two previously unconnected nonprofits can have huge systemic changes. Such organizational milestones need to become an integral part of our definition of success.
  5. Intentionally Build an Ecosystem of Emerging Nonprofits
    A healthy ecosystem needs a constant infusion of new ideas and leaders for it to thrive. For this, funders need to be intentional about constantly exploring and supporting such new partnerships. Start and continue to seed emerging organizations with diverse leadership and approaches. This could be making sure a percentage of your funding pipeline is reserved for emerging nonprofits. This intentionality will ensure an efficiently functioning nonprofit ecosystem that is designed to last and is constantly responsive to community needs. 

Impact

Our grantee, Village Keepers, is a perfect example of how reevaluating risk and funding emerging organizations can be successful. When the CHF first funded this grantee, Village Keepers had been providing services to the community for a number of years but did not yet have a sustainable funding model or strategic plan. Funding and capacity building support from the CHF enabled them to develop and implement a sustainability plan, secure new grants and expand their services, partner with new organizations, hire paid employees for the first time, grow their board, and develop a succession plan.

The CHF’s new funding framework is helping to build a larger nonprofit ecosystem of grantees who are advancing racial and health equity in their community. The time is now for us to really examine how we define “risky” grants. If we don’t fund emerging, diverse-led organizations, they might not survive—and that’s the bigger risk.


References

Arrillaga, Elisha Smith, “Where are we seeing sustained changes in grantmaking practices to reduce grantee burden?” Candid (blog), July 15, 2024.

Dorsey, Cheryl, Jeff Bradach, and Peter Kim. Racial Equity and Philanthropy: Disparities in Funding for Leaders of Color Leave Impact on the Table. The Bridgespan Group and Echoing Green, May 4, 2020.

Focus Area(s): Philanthropic Growth and Impact, Population Health

Related Topic(s): Children and Families, Health Equity
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