How philanthropy is working around a DEI backlash

Some U.S.-based philanthropic funders are changing the way they frame their diversity, equity, and inclusion efforts, or DEI — including removing references to Black and other marginalized communities — in an effort to avoid potential legal troubles as conservative groups attack race-based policies in the United States. Foundations and nonprofits have been worried about the status of their DEI programs in the wake of last year’s U.S. Supreme Court ruling that colleges cannot consider applicants’ race when deciding which students to admit — a practice known as affirmative action. The decision has spurred legal challenges to race-based policies in a variety of sectors, including philanthropy. Last August, the Atlanta-based Fearless Fund venture capital firm and its foundation were sued for providing grants to Black women entrepreneurs. A lower U.S. court will soon issue a decision on the case. It could affect U.S. philanthropies that fund DEI work both in the U.S. and abroad. While they await the court ruling, many foundations have begun considering how they can continue with their DEI efforts without being subject to lawsuits. For grantmaking on domestic U.S. causes, some nonprofits are starting to use proxies for race — such as zip codes or specific neighborhoods and communities — when making grant decisions, said Scott Curran, a U.S.-based lawyer and the founder of the Beyond Advisers consultancy firm for nonprofits. Internationally, funders might soon start using country boundaries or certain cities as a substitution, he said. The goal of all of this would be to reach the same people without violating U.S. anti-discrimination laws, Curran said. Funders also have started pressuring grantees to amend language on their websites and public materials that explicitly references Black or brown communities and to seek legal counsel if their organization focuses specifically on racial or ethnic groups, according to the Philanthropic Initiative for Racial Equity, a U.S.-based nonprofit that advocates for equity. Foundations are becoming more cautious about DEI advocacy work and some also are shifting to a race-neutral approach that uses income or geography as proxies for race, PRE said in a recent op-ed for The Chronicle of Philanthropy. Is it the right move? The changes aren’t legally required, and by making them funders are signaling a willingness to bow to pressure to eliminate equity-focused programs, said Suneela Jain, chief legal and compliance officer and chief of staff at Tides, a U.S.-based nonprofit and philanthropic group focused on global equity efforts. Tides distributed $815 million in grants worldwide in 2022 and is the fiscal sponsor of PRE, which means it directs donor funding to the group. Asking for language changes or requesting that grantees “tone down” DEI goals is “short-sighted and dangerous and unnecessary,” Jain said. Funders need to understand the difference between the risk of being sued and the risk of legal liability, which refers to being legally responsible for harm or damage under the law, she added. “I think there is a real danger in conflating them,” Jain said. “I think a lot of the things that people are doing or are saying needs to be done are actions where they are just seeking to avoid getting sued whether or not that lawsuit has any merit,” she added. So long as funders aren’t requiring grant recipients to check a box to declare that they are Black or a woman or any other such criteria, then they aren’t doing anything illegal under current U.S. law, she said. Rather than fear lawsuits that might not stand up in court, it might be more useful for funders to find ways to help smaller, nonprofits endure legal challenges by providing resources such as a legal fund, she added. Curran also noted the importance of major foundations lending support to smaller grantmakers and intermediary groups to help them “withstand uncertain times.” “They can provide that confidence and comfort to the rest of the sector by saying, ‘we are going to stay the course, we are going to support you through this turbulent time and we are going to be there with you as we go through these current cases and those that are yet to come,’” he said. A waste of money? Not everyone is on board with the idea of legal funds, however. It could prove to be a “waste” of money that would otherwise be applied to the fight to protect diversity efforts, said Indira Kaur Ahluwalia, founder of the Coalition for Racial and Ethnic Equity in Development, or CREED. “If I’m so busy protecting myself from liability, I’m very busy focusing on winning this lawsuit, rather than empowering people,” she said. “I don’t want to get distracted." The genesis of CREED began in 2021 when more than 20 leaders of U.S.-based global development organizations joined together in response to the global racial reckoning that followed the murder of George Floyd the year before. The group officially launched in February 2022 and created a pledge in support of equity that has been signed by more than 110 global development organizations. To avoid legal threats, CREED’s advice has been to focus on equity rather than equality, similar to what many philanthropic organizations are currently doing. That means looking at qualitative measures such as whether boards are reflective of the racial and ethnic makeup of the country or community they represent and if there is salary parity among employees of different backgrounds. "If you remove all identity identifiers, what we are left with is two people hired to do the same job that are getting paid differently,” Kaur Ahluwalia said. “Explain how this discrepancy is going to improve morale or prevent a lawsuit. Let’s make that argument. I want to fight the equity game, because with equity, it’s clear because it’s about the numbers,” she added. The few vs. the many While the debate about how foundations should respond to DEI backlash rages on, data has shown that many are holding firm in their support for diversity efforts. Survey findings published this week by the Center for Effective Philanthropy showed that the majority of the 280 U.S.-based foundations that responded said they weren’t planning to make changes to their ongoing DEI work in response to the Supreme Court’s affirmative action decision. The William and Flora Hewlett Foundation is among the large foundations that have remained supportive of racial justice and equity work. The $13 billion foundation has a $150 million racial justice strategy that distributes grants worldwide, including in the global south. “This is long-term work,” Elizabeth Peters, Hewlett’s interim president, recently told Devex. Imaginable Futures, a grantmaker and impact investment firm that receives funding from eBay founder Pierre Omidyar and his wife Pam, also plans to continue its DEI work including grants for Black-led groups in Brazil and financial support of African-led education research. Imaginable Futures was part of the Omidyar Network before splitting off in 2020. It retained $200 million in investments and grants that it previously held as the network’s education initiative and also received an additional $150 million gift from the Omidyars for its operations and investments over the next four years. The Omidyars remain deeply committed to issues of equity, Amy Klement, Imaginable Futures’ managing partner, said. “I think they are worried about the landscape but they are not backing down, and we are not backing down on our mission,” she said.