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Why Diversity, Inclusion, And Equity Are Essential In 21st Century Philanthropy

Posted by Stacey Hellas on Aug 22, 2018 3:25:12 PM
 Photo by Ross Findon

The "new face" of philanthropy is not really new at all. Diverse communities have not only been involved in philanthropic work for decades, they’re a critical element as we move forward. We'll be discussing why and how cultivating inclusion and equity in your organization will benefit your organization and the entire world.

An article from the Independent Sector suggests that “There has never been a more relevant time to help organizations succeed in their efforts to strengthen diversity, equity, and inclusion.” Diverse organizations are better equipped to serve their customers, minimize bias, and grow their bottom line by increasing market share.

Philanthropic involvement from diverse communities isn’t the challenge, the acknowledgment from society surrounding it is what needs to shift. In 2011, Dr. Jackie Copeland-Carson and the Pan-African Women's Philanthropy Network (PAWPNet) declared August as Black Philanthropy Month to celebrate the philanthropic work of people of African-descent. Yet while people of color have been giving back to communities for decades (the Eddie C. and C. Sylvia Brown Family Foundation has been funding health, the arts and education since 1994; the NcNeil Education Foundation since 1999), articles are regularly written stating people of color are “new and emerging donors.”

In actual fact, African-Americans have been giving back for literally centuries. As Tyrone McKinley Freeman, an assistant professor of philanthropic studies at Indiana University wrote in the Chronicle of Philanthropy; “African-American philanthropy spans the period from slavery to the present, but originated in precolonial West Africa. This history includes many informal ways of giving and sharing as a matter of daily living, as well as formal volunteering, donating, advocating, and other activities, especially through the black church.”

Moving from donor-centrism to the diverse workplace

“The nonprofit world’s adoption of ‘one size fits all’ approaches to philanthropy and fundraising has tended to overlook the specific motivations, interests, and needs of donors of color."

Tyrone suggests that it’s time to shift society’s view from donor-centrism, meaning we see certain groups as recipients of nonprofit giving programs rather than donors and philanthropists themselves; “The nonprofit world’s adoption of ‘one size fits all’ approaches to philanthropy and fundraising has tended to overlook the specific motivations, interests, and needs of donors of color. The unfortunate result is a misalignment in our identification, cultivation, solicitation, and stewardship strategies, which fail to effectively engage this important group.”

But there is more to this issue than granters and donors. Diversity, inclusion, and equity are hot topics when it comes to the workplace. Companies enjoy many benefits from being diverse employers. The 2017 Human Capital Trends report produced by Deloitte notes that 68% of surveyed business leaders place a high importance on the topic, and 49% are ready to act on it.

The benefits of a diverse workforce

“Diversity used to be a box that companies checked. But today, diversity is directly tied to company culture and financial performance."

The importance of diversity is echoed in a report published by LinkedIn on the Global Recruiting Trends 2018, with 78% of companies saying diversity is extremely important. The report goes on to say: “Diversity used to be a box that companies checked. But today, diversity is directly tied to company culture and financial performance. Our data shows that 78% of companies prioritize diversity to improve culture and 62% do so to boost financial performance. Key forces are at play: changing demographics are diversifying our communities, shrinking talent pools for companies that don’t adapt. Growing evidence that diverse teams are more productive, more innovative, and more engaged also make it hard to ignore.”

And while gender is the main focus for companies in their diversity efforts — 71% consider it a priority — other groups are also being actively recruited as the value of a diverse workplace becomes more and more recognized:

  • Racial and Ethnic - 49%

  • Age/generational - 48%

  • Educational - 43%

  • Disability - 32%

  • Religious - 19%

  • Other - 6% (other refers to areas such as gender identity and members of the LGBTQ+ communities)

Employers have learned that the payoffs of diverse hiring practices do more than improve company culture. Diversity improves company performance and is better for customer engagement.


 Photo by Ali Yahya Photo by Ali Yahya


1. Diverse teams are more profitable

The Delivering through Diversity report produced by McKinsey and Company, says companies in the top-quartile for ethnic/cultural diversity on executive teams are more likely to experience increased profits: “Companies in the top-quartile for gender diversity on their executive teams were 21% more likely to have above-average profitability than companies in the fourth quartile. For ethnic/cultural diversity, top-quartile companies were 33% more likely to outperform on profitability.”

The advantages of gender diversity in leadership was also covered in our recent blog, Diversity, Inclusion, and Equity - The Impact of Women in Leadership, and is clearly supported in the aforementioned McKinsey and Company report, which states; “...having more women executives in line (typically revenue-generating) roles is more closely correlated with financial outperformance,” indeed, Gender diverse executive teams are 21% more likely outperform their national industry median.

As far as ethnic and cultural diversity, the McKinsey report says; “...companies with the most ethnically/culturally diverse executive teams – not only in terms of absolute representation but also of the variety or mix of ethnicities – are 33% more likely to outperform their peers on profitability.”


 Photo by Stock Snap Photo by Stock Snap


2. Diverse teams are smarter

An article in the Harvard Business Review states; “Striving to increase workplace diversity is not an empty slogan — it is a good business decision.” Doctors David Rock and Heidi Grant of the NeuroLeadership Institute, go beyond the financials and dive into an issue that supports why diverse companies are doing so well financially; diverse teams are smarter. They cite 3 main factors:

  • They focus more on facts: “...diverse teams are more likely to constantly reexamine facts and remain objective.” Diverse teams also raise more facts during panel discussions. They tend to probe deeper into the actions of other members of their team, promoting vigilance and keeping team members engaged and avoid stagnation.

  • They process facts more carefully: Based on a study published in the Personality and Social Psychology Bulletin, scientists now believe that diverse teams may be better performers. When it comes to making decisions, they process the information they’re given more carefully than homogenous teams.

  • They’re more innovative: A study published in Economic Geography found that increased cultural diversity is a serious advantage for companies looking to develop new products. Businesses managed by diverse leadership teams are also more likely to try new ideas, in particular, those that had more women in leadership positions.

3. Diversity and inclusion improves customer relationships

This is actually a more challenging goal. As written in the January 2018 Deloitte Review; “...customer diversity and inclusion have often been largely overlooked, with the lion’s share of attention devoted to employee diversity. And when customer segmentation is considered, it is more in terms of a customer’s financial profile than who customers are as people.”

In an earlier blog, Why employers should start preparing now for Generation Z, the vast majority of both Generation Z and millennials are making decisions about spending based on the values of the company that produces products they’re shopping for. The 2017 Global Human Capital Trends report produced by Deloitte supports this, citing that diversity and inclusion strongly impact how your brands are perceived.

4. Diversity and inclusion matter to your employees

A report produced by Randstad, Managing Gen Y and Z in the Workplace, workplace diversity is key for where both generations want to work. Both generations strongly value:


“A diverse and inclusive workplace is central to a company's ability to attract, develop, and retain the talent it needs to compete,” is also mentioned in the McKinsey & Company report Delivering through Diversity. The report’s findings include that more and more corporate leaders recognize and accept the need for diversity and inclusion if they hope to attract the kind of talent that will support growth.

The role of corporate leaders is changing

While focusing on diversity and inclusion continues to increase in importance, some companies are still not quite there. The 2018 Global Human Capital Trends shows that while 78% of those surveyed believe it is a competitive advantage, only 6% tie compensation to diversity outcomes. The reason? Diversity doesn’t happen overnight. But new tools are coming to help improve diverse hiring practices, including the creation of diverse leadership teams; “Today, 71 percent of survey respondents believe their organizations are adequate or excellent at identifying and promoting diverse leaders throughout the organization.”

The role of leaders needs to include an ongoing focus on creating the kind of environment they need to do business in the 21st Century; “For diversity and inclusion to become embedded in the organization, leaders should pursue changes in processes and systems. Organizations should transparently measure diversity, and managers should be held accountable for outcomes as well as their own behavior. Organizations would also benefit from expanding the definition of diversity beyond demographic and social identities.”

An excellent way to achieve the full benefits of a truly engaged workforce is with philanthropic activities. In particular, millennials and Generation Z want to feel; “...emotionally invested to causes and favors a more participatory approach to philanthropy, extending beyond a transactional donation. Employees also want to be associated with a company that places a high value on philanthropic actions.”


 Photo by Omar Lopez Photo by Omar Lopez


Keep your diverse workforce involved through giving and engagement programs

You can deepen employee engagement with vibrant giving programs that speak to the issues that are priorities for your team. A comprehensive employee giving program that includes donations, matching gifts, dollars for doers and volunteer opportunities will help staff feel not only connected to issues close to their hearts, but supported by their employer.


 Photo by Alex Radelich Photo by Alex Radelich


Corporate giving solutions made simple

Building an all-in-one enterprise solution is easier than you think. SmartSimple offers both employee giving and corporate giving systems that tailor your giving program from a single, centralized platform.

Increase employee satisfaction, improve your corporate brand and build the kinds of communities your team wants to be a part of. Contact SmartSimple today to request a demo of our platform and find out how we can take your support for employee diversity to the next level.


Topics: Corporate Social Responsibility, Diversity & Inclusion, Responsible Companies