Achieving Racial Equity Through Cross-Sector Partnerships

Mitch Landrieu, the former Mayor of New Orleans and recipient of the 2018 JFK Profiles in Courage Award for his decision to remove four Confederate monuments from that city, noted on accepting the award that "[c]enturies-old wounds are still raw because they were not healed right in the first place. Here is the essential truth. We are better together than we are apart."

Historically, the failure to increase fairness and equity in America through cross- sector collaboration and public-private partnerships represents a complete failure at the "systems level." Fifty years of effort by government, educational and advocacy groups, corporate diversity programs, and consultants, not to mention intense media focus on the issue, have failed to make a substantial impact.

The fact is, tackling racial equity is hard, the structural and policy issues complex. As an African American, the issues of income inequality and progress on the corporate diversity front are of keen interest to me. Seeking to answer the question "What does good enough look like?", I recently spoke with more than two dozen leaders from the nonprofit, government, and business sectors and discovered that there is broad consensus that much more needs to be done to address racial inequity in America.

Public-private partnerships that pool resources and expertise and facilitate broad community support are one way to do that. The decision by Congress to include, as part of the Tax Cuts and Jobs Act of 2017, $1.6 billion in tax incentives over the next ten years to create Opportunity Zones for private investment in distressed communities is the latest attempt. While the social sector is slowly coming around to the idea that the private sector can be a force good, however, new "playbooks" are required if we hope to see meaningful change.

Unfortunately, the racial inequality debate too often resembles the debate over climate change. Most people concede that the long-term consequences of leaving the problem unaddressed would be devastating, but getting people to agree on the root causes of the problem is impossible. Despite overwhelming evidence of continued discriminatory practices in education, health care, housing, hiring, and the criminal justice system, not to mention the emergence of a field of study focused on the psychology of racial bias, many Americans remain in denial. In fact, in some areas, the data suggest that the problems of discrimination and racial bias are getting worse.

Economic Impacts

In a joint study entitled "The Competitive Advantages of Racial Equity" (32 pages, PDF), FSG and PolicyLink estimated that the elimination of racial wage gaps in the U.S. economy would boost Gross Domestic Product (GDP) by $2 trillion, or 14 percent. In other words, sticking with the status quo represents a huge cost to society.

Similarly, the 2018 edition of the National Urban League’s "State of Black America" report includes an "Equality Index" that measures the status of blacks compared to whites. On a scale of 1 to 100, the 2018 index finds that blacks on average capture 72.5 percent of the American economic pie (compared to 100 percent for whites), earn 58 percent of what whites earn, and have 4 percent of the wealth that whites have.

Other sources corroborate NUL's findings. One of them, a multi-decade analysis of black-white wage inequality and labor participation rates by the Federal Reserve Bank of San Francisco, found that a large percentage of the black-white earnings gap is not due to education or geographic location but, instead, is "unexplained."

Fig. 1.1: Components of Black-White Earnings Gap

Without strong networks in place, many community-based programs have consistently failed to close these gaps, even as local grassroots efforts struggle with funding options that, all too often, are focused on the short term, unconnected to larger national efforts, and burdened with significant reporting requirements. Not a formula for success.

Yes, various movements have raised awareness of these issues, but they have been less successful, at least so far, in effectuating real change. Movements such as #MeToo, #BlackLivesMatter, #SayHerName, and #NeverAgain have enlisted participants from multiple socioeconomic groups and economic sectors, but, as Donald Tomaskovic-Dewey, professor of sociology at the University of Massachusetts Amherst's Center for Employment Equity, has observed, they are "not so good at practice shifts at an institutional level." Intentionality, collaboration, mission alignment, and joint planning are the best way to achieve our goals in this area.

Case Studies

Through its Truth, Racial Healing & Transformation (TRHT) initiative, the W. K. Kellogg Foundation seeks to encourage conversation among different racial groups with the goal of bringing about transformational and sustainable change. Currently supporting programs in fourteen cites, the initiative teaches participants how to have productive discussions about race that foster mutual understanding. With the goal of strengthening its local economy, one of Kellogg's partners in the initiative, the Community Foundation for Greater Buffalo, has enlisted more than two hundred community-based partners to promote the importance of racial equity in four key areas:

1. Education and Job Readiness
2. Criminal Justice & Safety
3. Quality of Life & Neighborhoods
4. Income & Wealth

According to CFGB, the regional economy stands to gain more than $1 billion in annual GDP as a result of these initiatives. And by engaging multiple community groups, real progress is being made in high school graduation and employment rates.

Racial equity is an issue for every region of the country, not just western New York. Take the San Francisco Bay area. In his highly acclaimed book, The Color of Law, Richard Rothstein describes how housing segregation patterns driven by government policy since the 1940 still impact communities in the Bay Area. It's not just the South, with its history of slavery and Jim Crow, that enacted laws and policies aimed at preserving discriminatory practices and de jure segregation of the races.

On Capitol Hill recently, I had the opportunity to speak with Congressional Black Caucus staff about their Tech 2020 initiative, which is designed to put a spotlight on much-needed efforts to increase diversity in Silicon Valley's tech industry. Reminiscent of the 1977 Sullivan Principles that addressed apartheid in South Africa, the initiative's S.M.A.R.T. Principles outline the following priorities:

1. STEAM education and job training
2. Make tech available and affordable
3. Address the economic stability of communities
4. Recruit and retain black talent
5. Target investment capital in diverse companies and communities

All are admirable, but they will require the active support and participation of a variety of governmental, corporate, and nonprofit entities if they are to be fully realized. Acronyms not backed by effective, coordinated action do not work. To be clear, when it comes to diversity, equity and inclusion, there are lots of nonprofits in America that model best practices. Understanding their role within the larger ecosystem is important. At the same time, funders must provide sustainable funding in support of broad, coalition-building activities.

Funding for Racial Equity

In 2018 report on The Financial Health of the United States Nonprofit Sector (28 pages, PDF), Guidestar, a leading information provider on the sector, notes that most nonprofits are small. Of the more than 1.5 million nonprofits in the U.S., two-thirds have a budget of less than $1 million, accounting for only 2 percent of sector total spending. In contrast, only 2 percent of nonprofits have a budget of $50 million or more, representing 80 percent of total spending. Alarmingly, the report also found that more than half of the nonprofits in the U.S. have less than a month of operating reserves.

BoardSource, the leading provider of nonprofit board support and training in the U.S., reports that lack of diversity in hiring and board representation are key reasons why more funding does not go to programs targeting minority groups. Make no mistake: funders have a critical role to play in encouraging and supporting diversity and inclusion. Underfunding overhead costs, viewing diversity initiatives as too "niche" or risky, overly burdensome grant application processes, and a tendency to favor siloed projects have been counter-productive to the cause in the past and continue to be.

In its Quantifying Hope report (36 pages, PDF), Foundation Center estimates total giving targeting black men and boys for the period 2005-2014 at $334 million. In an interview, Chris Cardona, program officer in philanthropy at the Ford Foundation, told me that Ford had committed $1 billion over five years through its BUILD initiative worldwide to organizations and networks seeking to disrupt the drivers of inequality, including discrimination based on identity and cultural narratives that undermine fairness and inclusion. To leverage that commitment, Ford recently partnered with the Kellogg Foundation and Borealis Philanthropy to create a collaborative fund focused on advancing racial equity in the sector.

An area that requires additional research, however, is overall spending targeting DE&I and racial equity initiatives. Rough estimates range from $2 billion to $4 billion, or 1 percent of overall foundation spending. Clearly, that's not enough investment to address widespread racial inequality in America. (To put it into context, Politifact and Brown University estimate the cost of the wars in Iraq and Afghanistan for the period 2001 -2017 at $6 trillion to $7.9 trillion, including interest.)

Can Technology Help?

Transformative, disruptive innovations in technology are changing the way every sector of the economy works. Rob Acker, CEO of Salesforce.org, describes what we are experiencing as the "4th Industrial Revolution." The Internet of Things (IoT), artificial intelligence (AI), predictive analytics, and robotics are just a few of the emerging technologies that are going to fundamentally reshape society and our world. New cloud-based tools enable nonprofits to manage relationships with clients, donors, and volunteers and keep track of their progress in real-time. Indeed, in a Harvard Business Review article, United Way CEO Brian Gallagher offers a compelling case for shifting his organization's century-old business model and, in partnership with Salesforce, focusing on direct relationships with individual donors and volunteers.

Elsewhere, FiscalNote is an early innovator in the area of issues management, making it easy for nonprofits to automate the gathering of information related to legislative activities at the local, state, and national levels. With that information, advocacy groups can develop new strategies based on the success of local initiatives and share that information nationally, while predictive analytics provide insights on the likely success of proposed legislation. The importance of government policy reform, at all levels, cannot be overstated, and issue management tools created by the likes of FiscalNote are likely to play an increasingly important role in the racial equity conversation.

Conclusion

Racial equity discussions generate a good deal of passion and can be uncomfortable. At the same time, unconscious bias in the workplace often influences key decisions. Well aware of those facts, many organizations are investing in racial/gender bias training. I'm fortunate to live in the Washington, DC, area, where regular visits to the National Museum of African American History and Culture and the National Museum of the American Indian are powerful reminders of this country's long history of racism.

We should not assume that all Americans know that history, and it is critical that we establish a common fact base and language around it. Local grassroots organizations often understand the needs of their communities better than funders and corporations. Senior leaders have a critical role to play in driving cultural change; their input is vital. Equity in the Center's Awake to Woke to Work: Building a Race Equity Culture (38 pages, PDF) is an excellent place to start.

The expectation that one will be treated fairly is a fundamental tenet of the American creed. As Mitch Landrieu so eloquently pointed out, the root causes of structural racial inequality go back centuries, and institutional and systemic change are tough. With only three African Americans and twenty-five women counted among the CEOs of the Fortune 500, progress on the diversity in corporate America has been a slow train coming.

The S.M.A.R.T. principles outlined by the Congressional Black Caucus provide a good starting point. But such principles are useful only if buttressed by aspirational social movements that help push us to think and behave differently. There is no need to repeat past mistakes: racial reconciliation is a key enabler of economic opportunity and growth.

The urgency to act before structural racism further destabilizes society and the economy has never been greater. It's time we get this right.

Michael Gee is a graduate of Boston College and the Columbia Business School and the proud father of two sons, both college grads. Previous articles on corporate diversity by Michael have appeared in the Harvard Business Review.