A New Approach to Grant Making

A new grant-making approach is paving the way for philanthropies to better support people and causes that are too often ignored — and offering an opportunity to cultivate new nonprofit leaders and donors.

Community-based “focus funds” are small, vibrant grant-making organizations created by people who are connected not just by location, as with community foundations, but also by shared experience and culture, such as race, ethnicity, gender, or sexual orientation. Because the approach is similar to a community foundation, many focus funds are housed at those institutions.

Focus funds sprang up in part because mainstream foundations are not meeting the needs of a diverse array of Americans. Nonprofit groups that serve and are led by blacks, Hispanics, Asian- Americans, and other minorities — who together make up nearly a third of the national population — receive only about 8 percent of private foundation dollars annually, according to the Foundation Center. Similarly, organizations that serve women and girls receive less than 8 percent of foundation giving, despite representing more than half of the nation’s population; and groups that serve gay and lesbian groups, about 10 percent of the population, receive less than 1 percent.

Focus funds offer opportunities for groups that serve those people to strengthen their ties to organized philanthropy. In recent years, such funds have grown rapidly throughout the country, drawing crucial support from the Ford, W.K. Kellogg, and Charles Stewart Mott Foundations, among others. At the California Endowment, we have awarded more than $10-million to such funds since 2000.

Focus funds can help large private and community foundations do a better job of distributing money to local groups since they have strong ties to the very people they serve. But focus funds are far more than just effective partners for large foundations. They are also attracting minority donors and leaders to philanthropy in ways that mainstream foundations have been unable to do.

For example, the Asian Pacific Fund, in San Francisco, which encourages donors of Asian descent to contribute money to groups that serve Asian-Americans, has secured its first $1-million gift from an anonymous Asian-American entrepreneur. In Los Angeles, the Liberty Hill Foundation’s Lesbian and Gay Community Fund has nearly tripled its donations over the past two years, from about $100,000 to about $300,000. And the Destino Hispanic Legacy Fund, based at the Ventura County Community Foundation, has built its fund to nearly $800,000, mostly by attracting gifts from local Hispanic business leaders. Many donors to those funds had never participated in organized philanthropic giving.

The need to promote new multicultural involvement in organized philanthropy is great, especially as the United States becomes increasingly diverse. Members of minority groups tend to be poorer, less educated, and more likely to lack health coverage than white Americans. They are also too frequently denied meaningful participation in our nation’s civic culture.

On the other hand, the fast-paced growth in the number of entrepreneurial and professional leaders of diverse backgrounds offers an unprecedented opportunity to tap into a new generation of philanthropists who will be interested in investing in causes that relate to their own experiences.

Still, some detractors of focus funds have suggested that these groups have served to balkanize different types of people and thus impeded the development of a more integrated public culture. Other critics say that focus funds spend too much on administration in relation to their grant-making budgets and are therefore not adequately efficient or economical to support in a significant way.

But, in fact, focus funds have been helping to build strong multicultural bonds in California precisely by expanding participatory opportunities for all of the state’s diverse groups in places where participation has been historically denied. In addition, the funds’ economies actually turn out to be quite impressive because they not only make grants, but also run advocacy efforts and coordinate meetings that pull together diverse groups of people to grapple with important issues.

Some recent success stories:

• The Bay Area Black United Fund, in Oakland, Calif., has developed a biennial series of community summits on the health and empowerment of black people in the state. Those gatherings — which now attract more than 8,000 participants and important policy leaders like the former U.S. surgeons general Jocelyn Elders and David Satcher — have resulted in the development of a regionwide coalition of black groups and leaders committed to making improvements in the health care of black people. The coalition involves leading companies, foundations, public-health organizations, and community groups in Northern California.

• The Brotherhood Crusade, in Los Angeles, supports community health fairs in partnership with businesses such as LensCrafters, which have provided no-cost medical and eye exams each year to more than 5,000 uninsured black and Hispanic residents of Los Angeles County. In several instances, participants at the fair received help in dealing with life-threatening and other severe health risks at the fairs, conditions that might otherwise have gone undetected.

• The Women’s Foundation of California has formed an influential Women’s Policy Institute that has produced a series of education and advocacy studies on women’s and girls’ well-being in California. The reports have been widely covered in the state’s leading news media, and have garnered the attention of state and national policy leaders like Kathleen Brown, the former treasurer of the State of California, and Sen. Hillary Rodham Clinton, Democrat of New York. A recent Women’s Foundation-supported bus tour designed to raise awareness about health and safety issues across California has helped to build a new statewide network of grass-roots advocates working to gain consensus on needed changes in public policies.

• The Horizons Foundation, which supports gay and lesbian causes, has effectively galvanized leading advocacy organizations in the San Francisco Bay Area to collectively work on issues such as AIDS treatment, same-sex marriage rights, and anti-gay violence in schools and other community-based settings. A leadership-development project Horizons sponsored to gather CEO’s from the Bay Area’s premier gay and lesbian groups has helped to greatly increase coordination and economies in the work of those organizations.

• The Seventh Generation Fund for Indian Development has forged an important partnership with the California State Library to increase available content on Native American history for California teachers through concerted policy education and advocacy efforts aimed at elected and appointed state officials. The fund has also brought together native groups and their allies in cultural preservation, strongly advocating for state and private recognition of the need to protect California’s native burial sites from public use and commercial development.

Few mainstream grant makers have supported this sort of activity. Focus funds, however, are demonstrating the importance of such efforts and spreading effective ideas and approaches.

Despite their rapid growth, focus funds need a boost from larger philanthropies to reach their potential. Many focus funds are poised to do just that, taking their cues from the community foundation movement of the last 50 years.

Drawing on significant financing from foundations, community foundations have effectively harnessed the power of collective initiative to attract new donors and capital pools for the greater good.

The impressive network of community foundations across the country today would never have been possible without sustained support from private foundations. This experience has served as a model for minority, female, and gay and lesbian leaders to develop their own community-driven funds focused on their particular philanthropic needs.

With increased support and the partnership of mainstream foundations and the public, focus funds can attract a greater number of new donors, develop multicultural leaders, and expand philanthropic diversity.

In the process, they can help to meet crucial needs that government bureaucracies and larger philanthropies are unable to because of their relative distance from grass-roots causes and their necessary emphasis on limited, larger investments, especially as state and federal budgets grow tighter.

Established foundations should enthusiastically support this emerging form of community engagement, problem solving, and social investment. Focus funds deserve assistance from all who care about the future of our increasingly multicultural society.

Robert K. Ross is chief executive officer of the California Endowment, in Los Angeles.