Building capacity for diversity, equity and inclusion: Lessons from two years of organizational effectiveness grants

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How can nonprofits build stronger muscles around diversity, equity and inclusion? This is a challenging question that many peer funders and the nonprofits that we support are currently grappling with. While there are no easy answers, a new assessment following two years of capacity-building grants offers some lessons.

First, a bit of background: Since 2004, the Hewlett Foundation has supported existing grantees with organizational effectiveness  grants to help strengthen the internal capacity of nonprofit organizations to become high-performing organizations that are healthy, sustainable, and successful. The grants have typically supported organizational priorities like leadership transitions, financial planning and board development. In 2018, the foundation set aside $2 million for the launch of a grantmaking fund specifically focused on organizational effectiveness related to diversity, equity and inclusion (DEI).

The decision to focus on this type of capacity-building for grantee organizations came amid several years of staff-intensive work inside the foundation, which included articulating a commitment to DEI across our operations, culture and grantmaking as one of the foundation’s guiding principles. We knew that we had – and still have – much to learn. We wanted to support our grantees who were motivated to undertake this work, and learn alongside them.

Two years in and 186 grants later, we commissioned an assessment of early lessons from these efforts. We hired an external evaluator, Community Wealth Partners (CWP), to help us understand how grantee organizations used the organizational effectiveness DEI funds, what they are learning, and how our program officers and staff are supporting our grantees. We hoped to use these findings to inform our Organizational Effectiveness work and strengthen our support for grantees.

From the outset, we were excited to see the creativity and rigor with which many grantees were attempting to take on equity concerns in their organizations. We developed a taxonomy of over 40 distinct project types, ranging from staff training to compensation benchmarking. We saw organizations reckon with the challenges of building an internal culture to match their outward-facing equity lens. We saw organizations eager to reflect the regions and populations that they serve. We saw organizations make themselves vulnerable, leadership and staff alike, in order to better serve their staff and the needs of their communities.

This vulnerability was a major lesson for us. Diversity, equity and inclusion require a level of trust between funders and the organizations that they support: This is hard work, it tends to air out deep organizational culture issues, and it always feels “high stakes.”  As funders, we need to be aware of how power dynamics implicit in our relationships affect these conversations with grantees, and we need to meet grantees where they are to show our support and trust.

Advancing equity also requires work at multiple layers – personal, interpersonal, organizational and structural; in practice, that means starting with the individual and building outwards. Many grantees start by trying to build diversity, equity and inclusion into their internal culture, and then extend those practices outwards to programs and services. Sometimes this resulted in delayed outcomes and feelings of frustration, as organizational cultures were disassembled and questioned. We learned that, in these moments, it is our role as funders to offer flexibility to grantees as a key first step toward organizational change.

Organizational effectiveness grants are, after all, a first step: We think of them as “booster shots” for organizational health, and this assessment asked us to consider what else we might be prescribing in inviting organizations to take on complex change, and talk with us about it. How are we signaling DEI’s importance, and our commitment to it, as a large funder? Overall, the feedback that we received was positive – grantees expressed appreciation for the funding because it helped to validate their work and created space for organizations to focus on DEI concerns.

Grantees also highlighted the signal this funding represented, and used it to leverage support from board members and staff who might be otherwise less inclined. This encourages us to keep thinking about how organizational effectiveness grants can act as leverage in signaling the importance of diversity, equity and inclusion to the sector.

In the spirit of learning together, we offer one last, unexpected lesson learned: Complex questions require complex answers, and it will take more time and money than we anticipate to make progress. We knew to expect this in our grantmaking, but discovered through the assessment that we could do more to apply this method to our own assessment process.

For example, in our qualitative analysis, we asked our consultants to conduct a 360-degree analysis, interviewing staff from grantee organizations, program staff from the foundation, and DEI consultants who worked with the grantees. We thought, initially, that by bringing everyone to the table, we would have a more equitable assessment process and get a full picture of the scope and reach of this funding.  We soon learned, however, that we had underestimated the significance of asking grantees to tell their DEI stories.

Multiple staff wanted to participate in the interviews. They wanted to paint a true and complex narrative of organizational change. We learned, through our grantees’ and consultants’ candor, that opening a conversation about capacity building for diversity, equity and inclusion is often an invitation for something much larger. It can and will consider structural inequity right alongside interpersonal challenges and organizational woes.  As funders, we must be equipped to have that conversation.

As such, we are committed to continuing to learn in this realm. This assessment left us with as many questions as we have answers and, as such, we offer a few open questions to consider:

  1. Capacity building for equity requires a measure of power-shifting and sharing; what are creative ways that institutional philanthropy is thinking about power-shifting and sharing, in support of its larger effort to foster diversity, equity and inclusion?
  2. Many grantees requested sustained funding for this work and highlighted it in their feedback to us; why aren’t more funders supporting capacity building for equity?
  3. In support of our foundation-wide effort to support the true cost of nonprofit work: What does the true cost of capacity building for equity look like? How can we better support program teams to consider complex issues of equity in funding the true, operating costs of grantee organizations?

We are grateful to our grantee partners, California Shakespeare Theater, University of Chicago Consortium on School Research, and The Wilderness Society, for their participation in this effort. Our internal efforts will revolve around our ongoing learning community, and we invite grantees to keep in touch with us about their equity journey and expectations of us as funders.

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