Boston, Nov. 11, 2021 (GLOBE NEWSWIRE) -- When donors endow nonprofits with a pool of money that pays out 5 percent annually over many years, they set those organizations up for long-term success, but too few are deploying capital this way, according to a new article in Stanford Social Innovation Review (SSIR) by William Foster and Darren Isom of The Bridgespan Group. The result, they say, is that philanthropy too often forfeits the true potential of these groups.
The authors report that from 2000 to 2013, just 5 percent of philanthropic gifts of $10 million and above were deployed for endowing social change organizations and that such funding is rarer still across legacy, Black-led social change organizations. In contrast, endowments are a common form of giving to many higher education, arts, and medical research organizations.
A Bridgespan analysis of the investment income of 56 nonprofits dedicated to social change found that on average, the endowments of organizations led by people of color were almost four times smaller than those of white-led organizations, and their average percentage of revenue was less than half. The benefits of endowing Black-led nonprofits are several, the authors argue.
“An endowment is not just a gift of money; it’s also a transfer of power. That makes endowments the ultimate form of trust-based philanthropy,” said Foster, managing partner of Bridgespan. “Black-led social change organizations also typically have smaller asset bases, and their leaders often come from the communities they serve and know how best to address their needs.”
Additionally, Foster and Isom critique areas of common concern among funders: a belief that most nonprofits lack the capacity to take on a large gift; that donors themselves can manage the money better; and that nonprofits should work themselves out of business. The authors then make the case for why endowing Black-led nonprofits—and thereby increasing the odds that they will accomplish far more—should outweigh donors’ legitimate (but ultimately misplaced) apprehensions.
Said Isom, a Bridgespan partner: “If our civil society is to continue to thrive, we must ensure that organizations that are working with communities of color, and in turn are led by people of color, have the financial wherewithal to endure. An endowment could be a transformative tool to unlock and sustain the promise presented by these tumultuous times.”
To read the full article, visit https://bspan.org/3HfLZrZ.
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About The Bridgespan Group
The Bridgespan Group (www.bridgespan.org) is a global nonprofit that collaborates with social change organizations, philanthropists, and impact investors to make the world more equitable and just. Bridgespan’s services include strategy consulting and advising, sourcing and diligence, and leadership team support. We take what we learn from this work and build on it with original research, identifying best practices and innovative ideas to share with the social sector. We work from locations in Boston, Johannesburg, Mumbai, New York, and San Francisco.
