New Fund Aims to Address Inequitable Investment in Black, Brown-Led Nonprofits

Messiah Equiano started CHI-RISE as a “labor of love” in 2018. He grew tired of traveling out of Chicago and hearing people refer to the city as “Chi-raq.” With CHI-RISE, Equiano works to uplift positive stories in Chicago, through block parties, media production and mentoring programs.

Accessing funding to support and expand this work has been challenging at times, he said. In the beginning Equiano funded the organization himself, but he wasn’t always able to provide all the programming and financial support that he wanted to.

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“If in my own life things got tight or I had to have another job, I had to pay the bills and CHI-RISE came second,” Equiano said. “I think for a lot of people like myself, where it is a personal labor of love, we may not have access to funding.”

Research shows Black and brown-led nonprofits receive less funding than their white counterparts. This is for myriad reasons, including a lack of relationships and connections within philanthropic circles.

“Funders are risk averse, they tend to not want to make an investment in organizations that they don’t know,” said Sean Garrett, president and CEO of United Way Metro of Chicago. “So that means newer, smaller, often founder-led organizations are less likely to receive funding.”

An 2020 analysis of grant applicants by Echoing Green and The Bridgespan Group found that on average, Black-led organizations saw revenues 24% smaller than their white counterparts. Meanwhile, Black-led organizations’ unrestricted net assets were 76% smaller.

A new program by the United Way of Metro Chicago is working to address this disparity. This year it launched the United Neighborhood Equity Fund, selecting 10 Black and Brown-led nonprofits on Chicago’s South and West Sides to receive funding and support. The grantees will receive $50,000 in unrestricted funds over the next two years, along with support from DePaul’s nonprofit management program. The leaders will also be connected with corporate partners and foundation leaders, helping to build relationships with key funders.

“We launched this fund after looking at our own funding and we looked at the places we fund. While we fund a more diverse portfolio of organizations than many others, we were nowhere near where we wanted to be,” Garrett said.

United Way turned to organizations involved in its neighborhood network initiative to identify key local community organizations making an impact.

Centro Sanar is one of those organizations. The nonprofit started providing free mental health services to residents on Chicago’s Southwest Side in March 2020. It started with just four co-founders working for free, by November it received $500,000 in funding and expanded to a paid staff of nine.

Co-founder Edwin Martinez says even with this growth, the organization still can’t keep up with the demand. Their waitlist is about four to five months long.

The organization still faces challenges securing additional funding. One barrier is not having the resources to do administrative work that would better position them for grant opportunities, like creating a website or having an accountant.

“Building all of those things that usually you would have directors of operation, directors of communications in large nonprofits, as a small grassroots organization with a limited budget, we can’t afford that,” Martinez said.

Martinez said United Way’s equity fund will help Centro Sanar strengthen its positioning and set the nonprofit up for more grant opportunities.

“The other thing, and this is often a challenge for small Black and Brown-led organizations, is that we often can’t compete with larger not for profits with different amounts of funding,” Martinez said. “So unrestricted funding is very valuable because we’re able to afford and receive larger grants, but also state or city funded grants that are reimbursed. Some grants are upfront funding, some are reimbursed. Smaller not for profits can’t really afford reimbursement grants which tend to be a larger pot of money. “

CHI-RISE is also a part of the equity fund. Equiano learned of the fund through a fellowship with the Goldin Institute.

“There’s something that needs to be said about having access and being in the ‘in-crowd,’ or being in the know of these opportunities,” Equiano said. “If I wasn’t a Chicago Peace Fellow, I wouldn’t even have known about the opportunity.”

Garrett hopes United Way’s backing of the 10 local organizations will encourage other organizations and foundations to provide more support for the nonprofits.

“We are seeing a number of efforts like this. There are a number of organizations, foundations that have said, ‘We need to be different. We need to invest differently.’ I think what people are finding is it’s about changing the network to begin with, changing the networks and relationships that people have,” Garrett said. “You don’t want to fund a great grant-writer … they’re an important part of the ecosystem, but you want to fund the organization that’s doing great work in the community.”

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