The Importance of Diversity, Equity, and Inclusion in Grantmaking

Grantmakers distribute billions of dollars annually to nonprofits and community organizations supporting the most underrepresented demographics, making them crucial players in promoting equity, diversity, and inclusion (DEI). These decisions can significantly impact an organization’s ability to serve its beneficiaries.

Funders must support impactful organizations, no matter their size, mission, or service population. With DEI, grantmakers can help achieve social justice and create a world where changemakers have the resources to further their mission. 

This article will explore why DEI is vital to grantmaking and how you can equitably support diverse and inclusive organizations, their causes, and communities.

Understanding the Importance of DEI

There has been a growing awareness of the role of DEI in grantmaking in recent years. But with a surplus of information, it can be challenging to define DEI. In simple terms, equity refers to creating fair access to opportunities and resources, considering race, gender, socioeconomic status, or other factors. Diversity involves different perspectives and backgrounds, including race, ethnicity, gender, sexual orientation, and ability. Meanwhile, inclusion is about cultivating an environment where everyone feels welcome and valued, ensuring all contributions are recognized and appreciated.

An effective DEI strategy can help grantmakers make better funding decisions, reduce bias, and improve the overall reach of their work to address historical disparities and reinforce equitable resource distribution.

Equity, Diversity, and Inclusion in Grantmaking

DEI is an ongoing process that requires a commitment to go beyond symbolic gestures and implement tangible change. One of the primary ways grantmakers can achieve equity is by creating a level playing field. Often, larger and more established organizations receive more funding than smaller nonprofits, even though they may not be more effective at addressing the needs of their communities. This harsh reality limits the ability of small-scale or emerging nonprofits to create change.

By embracing DEI, grantmakers can ensure that all organizations have an equal opportunity to receive funding. This approach may look like providing requirements in multiple languages or hosting informational sessions virtually or at an accessible location.  

The Value of Diversity

An equitable distribution of resources across different groups results in a more innovative, sustainable, and productive nonprofit sector better equipped to address complex social issues.

In engaging with diverse organizations and communities, grantmakers can better understand different groups’ challenges and create a more effective giving strategy. For instance, organizations led by people from historically marginalized communities may have a deeper understanding of the needs and perspectives of those groups, making them the ideal changemakers to address the root causes of social problems and implement impactful solutions. 

A more diverse grantmaking process benefits the grantmaker and the organizations they support. For funders, it builds trust and legitimacy with a range of stakeholders. When organizations see that grantmakers are committed to DEI, it can help to build stronger partnerships and improve the overall impact of your grantmaking strategy.

Equity vs. Equality: What’s the Difference?

Equity and equality are sometimes used interchangeably, but they have different meanings. Equality is treating everyone the same, while equity involves fair treatment based on the unique circumstances of each organization and community. Equity recognizes different needs and experiences and addresses these disparities.

In grantmaking, equity means recognizing that some organizations and communities face more barriers than others and may need additional support to achieve their goals. For example, an organization serving a low-income neighborhood may need more help than one supporting a more affluent community. An equitable grantmaking process would consider this and provide more support to the low-income organization, even if it means providing more grant money. Treating both organizations as equals is unfair because they do not have the same starting point.

How can funders be more equitable and inclusive?

You can be more equitable and inclusive in your grantmaking in several ways. But first, you must commit to change. Here are some steps that you can take to integrate DEI.

Adjusting the Grantmaking Process to Address Equity and Inclusion

Change your application and review process or provide additional support to organizations working in underrepresented communities. You can simplify your application, provide grant writing training assistance, expand funding criteria, offer technical capacity-building guidance, or ensure the grant review process is transparent and fair.

Understanding Impacted Communities and Root Causes

Assess the root causes—history and context—to understand the issues of the communities that organizations serve. This strategy will guarantee that your funding decisions are relevant to the target community’s service gaps.

Expanding Programs to Meet Community Needs

Grantmakers can embrace DEI by expanding their funding scope to support organizations that target marginalized communities and promote public equity.

In doing so, it’s important to allocate grant money to address unique needs, provide funding for new programs and services, or expand existing initiatives. For example, suppose an organization is working to address food insecurity in a particular community. In that case, it may be helpful to provide funding for programs that address other related issues, such as job training or access to affordable housing.

Supporting Front-line Organizations

Front-line organizations are the most connected to their communities. By investing in these organizations, funders can ensure that resources are responsive to the needs of the most underserved communities. Support may include funding as well as technical assistance.

Appreciating Smaller, Grassroots Organizations

Smaller or grassroots organizations often have an in-depth understanding of their communities, allowing them to be more agile and innovative in addressing social problems. But they often have limited resources and experience or capacity. Grantmakers should broaden criteria, such as team and financial requirements, to be inclusive to smaller organizations and empower them to serve more people.

Simplifying Grant Applications

Grant applications can be complex and time-consuming, which can be a barrier for smaller teams or those that may not have as much experience with the process. By simplifying grant applications, funders can make the process easier and more accessible for organizations that don’t have the resources to hire grant writers or consultants.

Offer Grant Writing Training

Grant writing is a skill that not all organizations may have internally. Hosting training sessions for organizations new to the process will equip them to make a stronger case for why they should receive support and become better prepared to navigate applications/proposal requests and present their competitive edge.

Diversity, Equity, and Inclusions Tools for Grantmakers

Various tools can help your process become diverse, inclusive, and equitable, including resources for understanding the needs of different communities, equity impact assessments, and training programs for team members. Some of these include:

• The Ford Foundation’s Diversity, Inclusion, and Equity Tools - A toolkit to help grantmakers “instill best practices for DEI-related issues” using real-life case studies and guides. 
• The National Committee for Responsive Philanthropy Power Moves Assessment - An analysis tool that provides insight into how you use your power to impact equity and justice in your community.
• Future Good DEI Resources - A curation of articles, webinars, podcasts, and more for funders to lead DEI change efforts at every level.  

Final Word: A more inclusive approach to grantmaking

DEI is critical to a successful and impactful grantmaking process, leading to better outcomes for everyone involved, from supporting front-line and grassroots organizations to offering grant writing training and more. With readily available tools and resources, you can improve your fund investment goals to contribute to a more inclusive and equitable world.

It is time to embrace DEI and make tangible changes to your funding process. Fluxx’s intuitive grantee portal gives you access to DEI tools for transparency and strengthening partner relationships. 

Discover more resources and an all-in-one technology to advance your DEI best practices and make a difference.