: 7 ways to support racial equity with year-end charitable donations. ‘If there was ever a time to give generously, it’s now’

But individuals can make a big difference too. MarketWatch talked to several experts about the best ways to make charitable donations that address issues such as the racial wealth gap; disparities in health, education and homeownership; and the uneven burden Black Americans have borne during the still-unfolding coronavirus pandemic.

“If there was ever a time to give generously, it’s now,” said Valaida Fullwood, co-founder of New Generation of African American Philanthropists, a giving circle in Charlotte, N.C. “There’s a lot of pain and a lot of work that needs to take place.”

As of July 2020, Candid, an organization that provides information about nonprofits and foundations, had tallied $4.2 billion in donations from large donors to address racial equity.

That appears to be a big jump from previous years, though it’s difficult to measure the share of philanthropy aimed directly at racial equity. One analysis by the Philanthropic Initiative for Racial Equity found that roughly 10% of grants over $10,000 from the 1,000 largest U.S. private foundations specifically targeted people of color in 2016 (the most recent year for which data was available), for a total of about $2.4 billion.

“Many of the headlines have the tendency to over-inflate racial equity giving, as some are about pledged dollars and most are not very specific about what they mean by ‘racial equity’ or ‘racial justice’ grantmaking,” said Lori Villarosa, the executive director of the Philanthropic Initiative for Racial Equity.

“We know there is still far too little that actually goes to Black-led (or other community of color-led work, even in the name of ‘equity’ — but we are clearly seeing more individual donors and funders of all sizes seeking ways to do more.”

Here’s how individual donors can do their part:

Give to organizations founded or led by Black leaders

Every expert MarketWatch talked to suggested donating specifically to nonprofits that are either founded or led by Black leaders. It’s easier than ever to do this: A new online database, Give Blck, compiles Black-founded nonprofits and lists them in categories such as arts and culture, education, technology and more.

Give Blck’s partner, the nonprofit-rating site Charity Navigator, vets the nonprofits in the database. Charity Navigator recently created its own list of highly-rated Black-founded nonprofits.

“As these organizations are of the community, they know how to best serve the communities and create systemic change,” said Charity Navigator spokesman Kevin Scally.

One lesser-known way to give to a Black-led organization: Donate to a Black-led giving circle. Giving circles are groups of people who pool their resources and donate collectively to causes they select together. “Often our organizations are second guessed by white-led organizations and white peers,” Fullwood said. “It’s important to trust us and invest in us and believe in our know-how and our experiences.”

Donate to nonprofits that support Black entrepreneurs and small businesses

“If you look at the hierarchy of charitable giving, these types of institutions are at the bottom of the ladder,” said Rodney D. Foxworth, the chief executive officer of Common Future, a national network of organizations that support small businesses and entrepreneurs, especially people of color and in rural communities.

The bulk of Americans’ charitable donations typically support religion, education and health-related causes. But there’s a case for supporting groups working with small businesses, especially now, because Black and Latino-owned businesses have been particularly hard hit by the pandemic, Foxworth said.

Donating to business-supporting groups can also help make a dent in the racial wealth gap. There’s evidence that Black business ownership is a stronger indicator of Black financial wellbeing than homeownership, Foxworth said. He noted that the median net worth of a Black business owner is 12 times higher than that of a Black non-business owner, and it’s not because they started out wealthier, according to research by the Association for Enterprise Opportunity.

Two examples of business-supporting organizations in Common Future’s network are MORTAR, a Cincinnati nonprofit that trains entrepreneurs (mostly women), and Commonwealth Kitchen, a shared commercial kitchen for food businesses in Boston. 

These types of organizations typically get much of their funding from government grants that can only be spent on certain activities, Foxworth said, so “even $50” from an individual donor can make a big difference, because the organization will be able to spend that money where it’s most needed at the moment.

“Individual givers can provide some flexibility so these institutions can do the work they might not otherwise be able to do,” Foxworth said.

Give to Historically Black Colleges and Universities 

“If you’re really looking for an amazing return on your investment, they have proven time and again to produce leaders,” said Tonia Wellons, CEO of the Greater Washington Community Foundation, referring to HBCUs. “They’re good investments for individual donors who are looking to make an important bet in racial equity.”

Wellons admits to being a bit biased: She graduated from North Carolina A&T State University, a 129-year-old HBCU in Greensboro, N.C.

Donors can click on the Accredited HBCU Listing link here to  find an HBCU near them, or they can give to an umbrella group serving HBCUs, such as the United Negro College Fund, the Thurgood Marshall College Fund, or the National Association for Equal Opportunity in Higher Education. 

HBCUs have received attention from some big-name donors this year: several HBCUs  received some of the nearly $6 billion that MacKenzie Scott, the ex-wife of Amazon AMZN, -0.12% founder and CEO Jeff Bezos, has given out since July 2019. Netflix NFLX, -1.56% CEO Reed Hastings and his wife Patty Quillin said in June they would donate $120 million to UNCF and Spelman and Morehouse Colleges, two private HBCUs in Atlanta, Ga.

Give to ‘scrappier’ grassroots organizations 

Stalwarts such as the NAACP, UNCF and Color of Change may be among the first groups that people think of for their work addressing racial equity, but it’s important to remember newer, less well-known organizations too. 

“Research about how change happens shows that you need the large organizations, but you need the scrappier organizations too,” said Aaron Dorfman, the executive director of the National Committee for Responsive Philanthropy.

“Smaller organizations are often underfunded, and yet they really know how to stretch a dollar and make an impact. Donors who are willing to take a little more time and find those small organizations can make a real difference.”

To find smaller groups, look to see who the local partners of big organizations are, or even do a simple Google search like “racial justice” and “Topeka,” Dorfman suggested.  

One way to make a big difference this year, if you can afford it: Donate enough to cover a year’s salary for the executive director of a small grassroots organization, Wellons suggested. “If you were to fund the executive director’s salary for a year, imagine the pressure you could take off an individual who’s really out there doing the tough work of community organizing.”

Make donations ‘unrestricted’ or for ‘general operating support’ 

Private foundations and major donors sometimes attach strings to donations and specify that a nonprofit use the money only for specific projects. That helps donors maintain control of their money and can help give them a sense of the impact their money is having. But critics say putting restrictions on donations can also reinforce an unhelpful power dynamic where donors are “distrustful” and “disrespectful” of the groups they’re funding.

Sometimes there’s a mismatch between what donors think a nonprofit needs and what is really happening on the ground, said Jackie Bouvier Copeland, a co-creator of Black Philanthropy Month, a campaign held every August to promote charitable giving by people of African descent. 

“Philanthropy has a tendency to assume that it knows what’s best,” Copeland said. “Respect, listen to and trust the community leaders doing the work on the ground and try to make the grants as unrestricted as possible, especially during times of complex and rapid change.” 

To do this, donors can either write “unrestricted” or “for general operating support” in the notes field for an online donation, or check the box that says the money should go where it’s needed most.

Give next year too, and the year after that

An ongoing, multi-year commitment to a nonprofit can make a significant difference, Copeland said. “That’s what investors do in the private sector, but philanthropy has a tendency to make short-term one-year grants then go away,” Copeland told MarketWatch. “That doesn’t build capability or promote sustainability, particularly in communities that are survivors of gross oppression and economic injustice.”

Multi-year donations give an organization’s leadership team “breathing room” to think about and plan for the future, Wellons said. 

In addition to donating money, you can also “use your social capital to help elevate the work of our organizations,” Fullwood suggested. Establish an ongoing relationship as a donor, volunteer and advocate. Tell your friends about the organization and why you give to it, and encourage them to give too.

Support Black strength, innovation and creativity

Giving to Black-focused organizations is often done “through a deficit lens” that looks at what’s missing, absent or broken, Fullwood said. But it’s also important to recognize the strength and power of Black communities by donating to groups that promote Black creativity and innovation, she said. This tip is included on a list of Global Black Funding Principles that the organizers of Black Philanthropy Month recently created.  

One recent example of that creativity that stands out in Fullwood’s mind: the Black Lives Matter street murals that popped up in cities across the U.S. in the wake of Floyd’s death, from Washington, D.C. to New York City to Chattanooga, Tenn.  and Charlotte, N.C. The murals provided a sense of hope and “shed light on how we can move forward,” Fullwood said.

She noted that jazz and the Harlem Renaissance blossomed following the 1918 influenza pandemic.

“After a really hard pandemic, I don’t think it’s coincidental that this period of celebration of Black life through the arts took hold,” she said. “I’m hopeful that the 2020s may offer an opportunity for a similar blossoming and cultural transformation and social transformation to occur for Black people and for America.”