2020 has marked an important turning point for conversations on race.

The police killing of George Floyd in the US in May, following too many other similar deaths and injustices, sparked protests and renewed a discussion around civil rights and police reform. The devastating effects of the COVID-19 pandemic on lives and livelihoods have disproportionately affected people of color around the world, shining a spotlight on structural economic and social inequalities.

Civil society leaders have stepped up to address these gaps. Yet they continue to face hurdles from philanthropic donors and a funding system that too often creates a power imbalance rather than resolving one. Few frontline workers dare to speak openly about the funding challenges they experience so as not to offend donors, further exacerbating these issues.

As a result, important conversations around equity and inclusion are forced into oblivion, leaving charitable donors to unwittingly perpetuate inequity in the social sector, even as they seek to end it in the wider world.

Image: World Economic Forum

Fighting for people of color

For Carolyn Pitt, CEO of Film Connx, the pandemic focused her attention on the outsized impact on people of color. Drawing on her activist experience, Pitt addressed a bipartisan U.S. Congressional committee to advocate for stimulus dollars to support the battered film industry, which serves as an employment base for a number of African Americans in Georgia.

Cheryl Gordon is a 43-year-old African-American activist who leads a movement to help inspire criminal justice reform. “I’m clocking 60 hour weeks. If I’m lucky, I can spend every second weekend with my kids.”

The cost of her activism is all too familiar for the millions of black women at the frontlines of social justice. In the aftermath of the killing of George Floyd, her work received increased attention but nowhere near as much funding.

“My team could not compete with the big nonprofits," she said. "They don’t live or work here but still get the funds. I received about one-tenth relative to them, and [the donors] dictated how we spent every dollar. I found it insulting but we needed the money.”

This example raises important questions for the future of charitable donations: By overriding the judgement of those with lived experience, do donors risk perpetuating the very structures they are compelled to address? More specifically, does the power imbalance between Cheryl and the given funder mirror the racial power imbalance experienced by Black people around the world every day?

Obstacles to impact

Lack of funding is one of the largest sources of stress for social entrepreneurs. According to a recent study from the Schwab Foundation for Social Entrepreneurship, 47% of social entrepreneurs said that the lack of consistent access to capital is the top barrier to scaling their organization.

Organizations led by people of color or serving the interests of people of color often face additional hurdles.

For example, donors tend to opt to support large and mostly white-led organizations over those led by practitioners with lived experience. This pattern becomes even more concerning when large organizations then subcontract black and brown organizations to do the work for a fraction of their funding.

Another obstacle is called movement capture, where white donors' compromise social movements by pressuring them to readjust their work to reflect the donors' own preferences. As a result, communities bear the cost of lacklustre programs while practitioners suffer credibility strains.

Social entrepreneurs also face pressure to cut costs while increasing outputs. Donors treat them like startups and pressure them to be lean, agile and ruthlessly efficient. This can lead to excessive workloads, high staff turnover and low earnings.

“Our donors pressured us to cut back on staff and budget even less pay for the remaining team," said one nonprofit leader (who asked to be anonymous so as not to impede funding opportunities). "You would be surprised how little we earn and how much we do. It’s a recipe for a toxic work culture."

By focusing the conversation around organizational efficiency, donors are less likely to think through how decades-long austerity measures that have effectively wiped out the government programmes for the working class in many developing countries, leaving them to rely on an increasingly stretched nonprofit sector. Emphasizing mindfulness is important, but it's not enough.

The normalizing of low earnings in the social sector poses the question of whether donors can create truly equitable societies when those tasked with such work are ultimately forced to join the working poor as well. This phenomenon cuts across the developed world, too, with practitioners often finding themselves with little savings and pension upon retirement.

Serving vulnerable communities

COVID-19 is prompting the long-overdue reckoning for a social sector marked by burnout, inequity and seemingly endless pressure to be lean.

To reverse this culture, a decent allocation of grant funding should cover salary and overheads, with the understanding that this can lead to better outcomes and less burnout among staff. Donors should also take stock of just how stretched the social sector is and whether their demands for organizational change might hinder the ability of nonprofits to reach the most vulnerable.

These important reflections might cause discomfort to donors and may even surface deep wounds that are at the core of why they choose to fund social change. Nevertheless, such a process can only lead to a healthier relationship between donors and nonprofit leaders and to the benefit of the communities they intend to serve.

By tackling such critical and pointed questions, donors are less likely to centre their funding around an existential desire to find meaning and praise. Moreover, such a shift would instead build on the rich knowledge of practitioners with lived experiences and provide better support to oppressed communities.