Beating the Funding Gap for Leaders of Color

At Common Future, we first and foremost raise unrestricted funding. As our CEO Rodney Foxworth explained early on in our shift to this strategy, “Unrestricted funding is a measure of trust. It acknowledges that those closest to the problems best know the solutions, and deserve the autonomy to act directly upon their communities’ needs. Unrestricted funding also facilitates the shifting of capital, and ultimately power.” Ultimately, unrestricted funding is what allows us to fill critical gaps in the way our partner organizations are traditionally resourced.

Independent Sector recently published a report outlining the health of the nonprofit sector, in which they outlined how in 2021, 76% of the 1,812,473 nonprofits registered with the IRS had annual revenues under $100,000, and the pitfalls of funding they often face, such as government contracts which only pay out 80% of promised funding due to their nature and timeliness of payments. This report reveals what we already know: Nonprofits are responsible for the social, emotional, physical, spiritual, educational, economic, well-being of the communities we serve; and yet we are wholly under-resourced.

What’s more, per a recent study by Echoing Green and Bridgespan, there is a huge funding gap for leaders of color. This means that not only are BIPOC-led organizations under-resourced, but they also lack access to flexible, non-extractive capital on their terms. In order to achieve true economic justice, we must radically reimagine how we understand the role of capital in communities. Recognizing these endemic flaws of nonprofit fundraising, at Common Future, we aim to work differently.

The Inequity is a Feature, Not a Bug

Economic conditions directly impact all other social, environmental, and political facets of a community’s well-being. Common Future’s approach is two-fold: we redress harms while maintaining a focus on changing systems, all the while enabling the solutions to emerge from the communities most impacted. We demonstrate the extent to which philanthropy can be restorative and investment can be reparative.

In developing our strategy to be a better funding partner and meet our own organizational needs, we acknowledge that the inequities are structural and by design. For example:

1. The lending industry has a history of inequitable practices, such as relying on racist credit scores, which codify discrimination into data and produce more discrimination as a result. The Character-based Lending pilot—along with our other capital strategies products—asks what would happen if the field of investment actually empowered those closest to directly impacted communities to make capital deployment decisions.
2. Black-led organizations face insurmountable scrutiny and high levels of mistrust, sometimes couched as risks; this is blatantly apparent when supporting and funding these organizations. As a think and do tank, we at Common Future approach our work with a commitment to experimentation— that is, to push boundaries, try what hasn’t been tried before, and try what has been tried before in new ways or in communities that have historically been excluded.
3. The prioritizing of funders’ whims reflects the values of the oppressive system that created the funder class in the first place. As a result, we are building a new operating system — one in which communities have the economic independence and power to steward their own restoration and repair.
4. Funders—eager to fund ready-to-go programs—refuse to acknowledge that money is needed for innovation and to lay the groundwork to get these programs there. We’ve spoken at length about how when organizations have the stability to explore new ways of approaching issues, the campaigns they create are more effective and transformative, rather than the “run-of-the-mill” solutions the current system produces.
5. Leaders in government continue to look to the same actors to define economic policy. Specific degrees and sets of experiences are prized over others—and the most brilliant community-informed leaders often don’t have access to the necessary platforms to get heard. We’ve launched the Common Future Policy Incubator to incubate field-defining policy interventions alongside the leaders who are best positioned to lead in both the design and execution of the work.
6. Burnout is common in nonprofits due to the expectations to do much with little resources and support. People of color or those who identify with marginalized communities often take on even more, being so used to working twice as hard to get half as much. Knowing this, we have internally prioritized wellbeing through access to mental health services, compensation, and a four-day work week.

Building the Solutions: Funding Good Ideas

Philanthropy has the unique opportunity to provide the capital needed to build the infrastructure for a new economy. What’s more, philanthropy can also catalyze the creation, viability, replicability, and scalability of community-driven solutions counter to dominant mainstream products and practices.

In response to the inequities we outlined above, our aim is to organize and deploy funding to support projects and innovations that shift power and resources to the hands of communities themselves. Our ability to invest in our programs and innovate in real-time is dependent on unrestricted flexible capital.

As capital has been a tool of extraction and exploitation, its return to and self-determination by communities is an opportunity for healing. We evince this not only in who we channel capital to, but in the terms and design of our financial products.

Common Future is keen to examine what is the potential for investment, even if other financial and philanthropic institutions have deemed it too risky. Our strategic funding across the capital stack seeks to continuously disprove the notion of traditional investability —through philanthropic support, impact investing support or other forms of support.