For their latest report, the Center for Effective Philanthropy (CEP), asked nonprofit CEOs what aspects of diversity are relevant to their organization’s goals. Of those who responded (hover for stats)

Issues of diversity, inclusion, and equity span throughout all sectors of the nonprofit world

While  60% of nonprofit employees are female and 36% are male. Compensation still remains as a key issue along with the percentage of women who make it into leadership positions. According to an article in Medium, “In the nonprofit sector, 75 percent of all workers and volunteers are women. Yet, only 45 percent of women will go on to secure a top position at any of these organizations.”

As discussed in our recent blog, Diversity, Inclusion and Equity — The Impact of Women in Leadership, not only are women considered better at working out compromises and mentoring, organizations that have women in the C-Suite are more profitable.

Photo by Christina Morillo

It isn’t just women in leadership roles at issue for the nonprofit sector. Racial inequality is also an issue in the philanthropic world. A study conducted by Race to Lead, a series of reports and articles conducted by the Building Movement Project, an initiative that develops research and tools for nonprofits, notes disparity for people of color as well. Race to Lead dispels several myths around issues such as education and motivation. For example, 41% of people of color have a masters degree as do 44% of white people. And, in fact, 50% of people of color aspire to top leadership positions compared to only 40% of whites.

There are defined parallels between the for-profit and nonprofit sectors in terms of the issue of diversity. Our recent blog, Why Diversity, Inclusion, and Equity are Essential in the 21st Century, notes that 78% of companies say diversity is extremely important, and the number for nonprofit respondents who feel the lack of racial diversity in leadership roles at nonprofits is a big problem stands at 80%. Another report from Equity in the Center, an organization with the goal of shifting the mindset of the social sector to increase racial equity, reports that, “Achieving race equity — the condition where one’s racial identity has no influence on how one fares in society — is a fundamental element of social change across every issue area in the social sector.”

The benefits of diversity within nonprofit organizations

Delivering through Diversity; Diversity and Financial Performance in 2017, a report produced by McKinsey, notes that “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 report also found that companies with ethnically/culturally diverse boards are 43% more likely to experience higher profits worldwide.

Photo by Raw Pixel

In addition to financial benefits, there are other key advantages to a diverse organization. The McKinsey report goes on to list several:

• Diversity is key to an organization’s ability to attract, develop, and maintain quality talent

• Diverse teams make better decisions more quickly and incorporate more thorough fact-checking

• Diversity improves collaboration and company loyalty, both of which are important to high performers

• Inclusion and diversity is also vital for a positive global image and reputation

Even simply having a diverse range of employees within an organization offers benefits to your existing team. A study conducted by Northwestern and Brigham Young Universities found that “...the mere presence of socially distinct newcomers and the social concerns their presence stimulates among oldtimers motivates behavior that can convert affective pains into cognitive gains.”

Diversity includes LGBTQ and disabled people

Inclusion isn’t limited to gender and ethnicity, though when searching for information about diversity and equity, these appear to be the most common topics written about. Members of the LGBTQ community and those living with disabilities experience bias, discrimination, and underemployment. But if having ethnic and gender diversity within an organization have clear benefits to the bottom line, would logic not dictate that welcoming other minorities into your nonprofit would also be advantageous?

Photo by Marta Branco

An article published in the Spanish daily newspaper, El Pais, suggests that there are also advantages to having an inclusive space for LGBTQ employees. The author writes, “When an organization ensures that all of its professionals feel important and included – independently of their differences – there are three benefits to be had: more innovation (how can creativity be generated if we all think the same way?); customers feel better represented (would you buy from a company that discriminated against someone who is like you?); and finally, workers are prepared to put all of their talents into practice without fear of being criticized.”

People with disabilities have been facing sigmas for years; in Canada alone, 49% of the disabled population is unemployed, 67% as a direct result of their disability. A document by Disability Campaign.org, an organization founded in 1988 to raise awareness and promote advocacy for people with disabilities, outlines the 7 Benefits of Hiring People with Disabilities, including improving corporate culture, increasing productivity, and reduce employee turnover.

The statistics for disabled in the US aren’t much better. Information released by the US Department of Labor last year cited that a mere 18.7% of disabled Americans are working. That’s pretty discouraging when, according to the last report produced by the D5 Coalition, more than 37 million Americans are classed as disabled, with over half being of working age (18 to 64). D5 was created in 2010 to bring the issues of diversity, equity, and inclusion to the forefront of philanthropic thinking.

Photo by Vadim Guzhva

Community connections and grantee perception

100% of the nonprofit CEOs and more than 90% of NGO respondents that were interviewed for the Nonprofit Diversity Efforts: Current Practices and the Role of Foundations, report believe “diversity will lead to organizations appearing more connected to communities.” Grantee and applicant perception is incredibly valuable to maintain their reputation as funders. CEP, in order to assist organizations by producing customized Grantee Perception Reports that provide exactly this kind of insight for those nonprofits interested in hearing directly from those they interact with and provide funding for.

CEP’s Nonprofit Diversity Efforts report, 42% of nonprofit CEOs say that their foundations’ funders haven’t discussed diversity issues with them. However,

• 34% have had diversity discussions around both the organization’s internal operations and programmatic work

• 19% have only discussed diversity in relation to programmatic work

• 5% have only discussed diversity in relation to internal operations

This is a conversation that many feel is an important one to have. As one CEO who responded to the survey for this report said, “If we are going to eliminate disparities that negatively impact people of color disproportionately, funders, nonprofit leaders, policy makers, all of us need to have the courage to talk about race, racism, and how it contributes to, if not causes, the disparities we seek to eliminate.” That said, only 17% of the CEOs responding said they’d like to have their foundation funders very or extremely involved in their diversity efforts. Where they do feel they could use funders’ help in regards to diversity:

• 32% said they could provide more nonmonetary support such as training

• 27% said they would appreciate monetary support

• 17% said they could emphasize the importance of diversity efforts in general

A shift in nonprofit employee representation to match our changing demographics

Based on the D5 data in their last State of the Work report, in 2022, the workforce will include 10% more African Americans, 24% more Asians, and 38% more Hispanics. Plus, a recent New York Times article reports that there are now fewer deaths than births among white people in the majority of US States With this shift in population, the issues of diversity, equity, and inclusion would suggest that a corresponding shift in organizational staff would be warranted to match the changes occurring in the population at large.

Equity in the Center, an organization committed to promoting diversity within the nonprofit and philanthropic sector created a report, Awake to Woke to Work, that supports this idea; “While issue-specific dynamics play an important role in driving social impact (e.g., public policy around affordable housing or the elimination of food deserts to create access to nutritious foods), the thread of structural racism runs through almost every issue faced by the U.S. social sector. Race equity must be centered as a core goal of social impact across the sector in order to achieve our true potential and fulfill our organizational missions.”

Photo by Raw Pixel

There are challenges to advancing diversity within philanthropic organizations

One program that has been created to support this mission in the UK called 2027. Their goal is to change the structure of nonprofits by 2027 with an additional focus on getting more working class people into senior roles in nonprofits. “We think that greater diversity at the top of foundations and trusts can help these organisations make better decisions, while better representing the communities they serve. We also believe that by bringing foundations and working-class communities closer together, we can begin building a new funding model for a fairer society.”

This is an issue that’s bigger than simply your organization’s headcount. It’s one thing to employ inclusive hiring practices, but it’s entirely another to ensure that every individual within your organization feels their work is not only valued, but that themselves as individuals are also valued, and are provided with career options equally. In the D5 report, Philanthropic Paths, it says that an, “...essential corollary to advancing diversity in foundations is ensuring inclusion such that racial and ethnic diversity is not merely present, but valued with equal power given to diverse voices. Shifting numerical composition alone does not guarantee inclusion.”