Association for Public Policy Analysis & Management

This paper investigates whether the share of giving from local foundations to African American non-profit organizations declined over the past 25 years during an era of declining impacts of the US Civil Rights Movement and greater racial and ethnic diversity in local communities. We test two hypotheses of philanthropic disinvestment are made based on observations from practice in the Twin Cities of Minnesota. The first hypothesis is that philanthropic giving to African American-focused nonprofits has declined in the past few decades because of increased support for nonprofits focusing on other minority groups such as Asians, Latino, and Native Americans. A second hypothesis is that there is a negative trend in philanthropic giving to African American-focused nonprofits independently of changes in demographic composition of the local area.

This paper contributes to the literature on the financing of minority organizations in several important respects. First, the racial identity of nonprofit organizations is an understudied area in the current literature because of the difficulty of identification of the demographics of the leadership and served populations using conventional data sets. Second, research on funding disparities among different types of nonprofits mainly focus on the perspectives of donors and study the giving patterns of foundations, corporations, and individuals rather than the effects of these disparities on the recipients of funds. Third, few researchers study the perceptions and lived experiences of minority-focused nonprofits with funding dynamics. Finally, research on funding disparities between nonprofits focusing on different racial communities is largely confined to the white v.s non-white framework, treating racial minorities as a homogeneous group, ignoring the nuances of funding dynamics among different racial minority nonprofits.

This paper uses financial data from 990 tax forms and from a survey and interviews with racial minority-focused nonprofit organizations in the Twin Cities of Minnesota to test the two hypotheses of philanthropic disinvestment. This study contributes to the current literature with an operational definition of racial minority nonprofit, perceptions of minority nonprofit on funding dynamics, and nuances between different racial minority nonprofits regarding philanthropic funding.