NonProfit Quarterly: Report Maps the Philanthropy of Millionaire Donors of Color
Check out the Donors of Color Network in the article below!
NonProfit Quarterly – April 12, 2022
By Steve Dubb
“The story of philanthropy in the United States has not been fully told, for it has been told historically as a largely white story, a largely inherited wealth story” — So begins a new report by Hali Lee, Urvashi Vaid, and Ashindi Maxton, titled Philanthropy Always Sounds Like Someone Else: A Portrait of High Net Worth Donors of Color.
At NPQ, we have written often about the racial wealth gap. The latest Federal Reserve data, based on the 2019 Survey of Consumer Finance, which john powell cited in NPQ earlier this year, indicates that US median white household wealth was $181,440 compared to $20,730 for Black Americans, with the median Latinx family at $36,180. Because the wealthy boost the average, the mean is higher: $951,348 for a white household, compared to $139,797 for a Black household, with the mean Latinx household wealth at $192,200. Slice the data as you will, one message is clear—white wealth exceeds Black wealth by an extraordinary degree.
Perhaps in part because wealth is so racially skewed, philanthropy—particularly big-dollar “high net worth individual” giving—is often treated as an all-white realm. But the data show otherwise. Lee, Vaid, and Maxton note that, despite the racial wealth gap, there are “at least 1.3 million households led by a person of color in the United States with net liquid assets of one million dollars or more” (2). This makes sense. If you look at Figure 2 in powell’s article, you’ll notice that the wealthiest 10 percent of Black and Latinx households in the US as of 2019 had a mean net worth of over $1 million.
So, how do these households give? This is a key framing question for the study. Between 2016 and 2018 the study’s authors conducted 113 long-form (average of 90 minute) interviews of BIPOC millionaire donors, making their report “the largest qualitative research study conducted thus far of high net worth and ultra-high net worth people of color in the United States.”
Understanding the Data: Which Donors Were Interviewed?
It may seem odd to write this, but one of the more interesting report sections is the authors’ discussion of methodology, particularly because this report establishes a baseline. As the authors point out, “There were no data sets of wealthy BIPOC givers to which the research team had ready access.” In fact, they add, “the project has itself created that data set.”
For this reason, finding a pool of interview subjects relied on an organizing, rather than a statistical sampling, approach. To identify donors to interview, the researchers relied on personal networks, along with 30 public presentations they made to over 1,500 people (about 50 people per forum). Interviews were done in person, which meant limiting interviews to a set number of urban metropolitan areas, including New York City, the San Francisco Bay Area, Dallas/North Texas, Phoenix, Denver, Boston, Washington, DC, Seattle, and Miami.
Finding interview subjects who had the ability to give $50,000 a year or more was not easy. Of the 113 interviewed, 34 reportedly gave $50,000 or less a year, 55 between $50,000 and $300,000 a year, and two dozen over $300,000 (13 of whom gave over $1 million a year). Combined, the interviewees reported giving an annual total of $56 million, an average of nearly $500,000 per person. All told, 27 of the 113 interviewees reported having over $30 million in assets, making them qualify as “ultra-high net worth” donors.
The personal networks heavily influenced who was interviewed. On a four-person research team, two were South Asian (both from India), one was East Asian (South Korea), and one was African American. The researchers’ demographics were mirrored, albeit imperfectly, in the racial makeup of who got interviewed:
- African American 41
- South Asian 23
- Asian Pacific Islander (other than South Asian) 22
- Mixed race 13
- Latinx 13
- Native American 1
- Total 113
One other notable result of this sampling technique was that immigrants were heavily over-represented, with 45 of the 113 interviewees—more than a third of the total—being born outside the United States.
What Do the Data Tell Us? Five Themes
In their report, the authors organize the interview data in five themes, identified below:
Self-Made Wealth: Most of the people interviewed (74 of 113) were born in modest circumstances and only became wealthy during their lifetimes. Only 11 of the 113 listed inheritance as the main source of their wealth. The remaining 26 credit marriage at least in part for their wealth—eight interviewees identified marriage as the primary source of their wealth, and 18 said their wealth came both from their earnings and marriage. By contrast, the authors estimate that only 35 percent of the Forbes 400 families come from low-income or middle-class families (14).
Being a generation away from poverty has many effects. One impact the authors emphasize is the widespread practice of giving money back to friends and family. Of the 113 people interviewed, 88 reported making major gifts—ranging from $2,400 to $1.2 million—to friends and family for a range of expenses including “crisis responses, living expenses, educational expenses, cultural experiences, and major life events such as weddings or funerals.” Most respondents did not perceive this as “philanthropy” but rather as familial obligation. One Black man in his fifties said these pressures could be challenging: “When you are in an environment in which there is no money, when you get money, it drains away because everyone around you needs it.”
Structural Racism: In the interviews, experience with racism was universal. This made some donors more willing to disrupt the status quo. “Many of the people interviewed spoke about how to deploy their resources—investments, charitable, and political—to tackle the social issues they care about in ways that can bring about systemic change,” the authors write (22). One respondent, an Asian American woman in her forties, told the authors that, “Our current system of capitalism is going to run us into the ground in so many different ways. We have to change modes of our economy, otherwise we’re always going to be fighting the same fights” (22).
Cultural Translation: The authors also sought to identify if the group had a unique culture of giving. Instead, they found wide variation. For example, some donors gave for religious reasons, with tithing being popular, while others eschewed faith-based groups altogether. One common theme that emerged, however, was that donors often found themselves, by choice or necessity, playing the roles of translator or cultural broker. As one Black man in his sixties told the authors, “Culturally, Black people are accustomed to living in two worlds. In order for us to survive and succeed, we have to learn how to live with white people in power. White people don’t have to do that” (31).
Social Justice Orientation: A fourth section focused on donor practices. Nearly two in three respondents listed education as one of their top five giving categories. This is also the leading category for white donors. But otherwise, a strong social justice bent was evident: not only did 44.4 percent name social justice as a factor in their charitable giving (second most popular choice), but women/gender rights ranked third (39.7 percent), racial justice fourth (36.5 percent), and, after health, income inequality ranked sixth at 31.7 percent (32).
The Value of Networks: Of the 113 high net worth donors of color interviewed by the authors, 95 reported belonging to networks, and 39 reported that their networks had influenced their giving. By contrast, only two respondents reported using paid philanthropic advisers. Among Black donors, “fraternal organizations were often cited as important networks. These include the Links, the Boulé, Jack and Jill, Girlfriends, and the ‘Divine Nine’ fraternities and sororities” (41), as well as historically Black college and university alumni networks. In certain cities, key historically important Black nonprofit institutions have become hubs, such as the YMCA in Dallas and the Blair-Caldwell African American Research Library in Denver. Giving circles were also cited as important networks and advising mechanisms in all BIPOC communities.
A New Network Emerges
Lee, Vaid, and Maxton did not just use an organizing approach to build their interview pool. They are organizers themselves and cofounders of the Donor of Color Network, which developed directly from their research. The network, they inform us, was founded in 2019, after “an inaugural retreat of 48 donors of color (joined by leading social and racial justice organizers) was held” (6). To paraphrase from the report, the network aims to: 1) center racial, gender, and economic justice and the interplay between them to foster systemic change; 2) increase resources available to racial justice groups; and 3) build joyful, cross-racial communities and leverage network members’ power and experience (46).
As if often the case, the report raises as many as questions as it answers. Four key implications that the authors emphasize are the following (53):
- Donors of color have a growing number of opportunities to leverage their giving and build their knowledge of how to achieve greater impact.
- Nonprofits that adapt and develop specific fundraising strategies to engage HNW [high net worth] donors of color can diversify donor bases and secure new resources.
- Financial and donor advisory service providers as a field could diversify and/or build new knowledge to better serve HNW donors of color.
- More research is needed to understand the values, priorities, and giving potential of HNW donors of color.
Forty years ago, Lee, Vaid, and Maxton wrote, “philanthropy as a field grew in its knowledge, reach, and donor base through the development of women’s funds.” Later, they point out, a powerful LBGTQ donors’ network also was built. Today, they contend, “The increased organizing and networking underway among donors of color represents a similar field-building moment for philanthropy” (53). Fundamentally, they add, “power in the world of philanthropy will shift as more BIPOC emerge as donors and as leaders” (56).