Funding audit: current practice in racial justice funding

The Funders for Race Equality Alliance is a group of charitable foundations working together to advance race equality in the UK and support a sustained and thriving race equality sector. It does this by increasing funders’ focus on race equality; seeking more and better funding for race equality and Black, Asian and Minority Ethnic-led organisations; and improving meaningful racial representation in foundations. Equally Ours acts as the secretariat for the Alliance.

You can read more about the Alliance and its work here (pdf).

The racial justice funding audit

One of the Funders for Race Equality Alliance’s aims is to increase the amount of funding that is allocated to the Black, Asian and Minority Ethnic* sector and to racial justice work. To achieve this, we need to be able to track how both project funding and core funding changes over time.

*We understand and recognise that there can be differing views on terminology and how best to discuss the race equality agenda. We consulted race equality campaigners and advocates on specific terminologies in order to ensure consistency with the sector. However, we are conscious of the evolution of language, identity and limitations of these terms, as well as the sensitivities and complexities involved. We recognise that BAME is a term which greatly reduces complex ethnic, racial, cultural and religious differences and we are constantly reviewing this language.

We designed a simple audit tool to enable funders to analyse their portfolios, and to help them develop targets and strategies to ensure they are properly supporting race equality work.

The audit asks funders four questions about each grant:

  • Is the grant-holder led by the minority ethnic communities it seeks to support?
  • Will the funding benefit minority ethnic communities?
  • What type of work will the grant be used for (for example services, buildings, campaigning)?
  • Is it aimed at the root causes of inequality or at alleviating the consequences?

The audit gives funders a snapshot of their current portfolio and will support greater transparency of current foundation expenditure. It is also intended to be used by the Alliance as a baseline against which to measure progress in achieving our aims, and to better our understanding of racial justice funding.

Audit results

13 funders who conducted an audit of a sample of their portfolios shared their data with the Funders for Race Equality Alliance. In all, they audited £122 million-worth of grants, approximately 5% of the value of the total given by the top 300 foundations in the UK.

1. Grant intended to benefit BAME communities?

As chart 1 shows, of the funding awarded:

(You can view a larger, interactive version of this chart here.)

  • 56% were granted to beneficiaries whose ethnicity was unknown or not mentioned by the applicant,
  • 23% was for projects designed to benefit Black, Asian and Minority Ethnic communities,
  • 19% benefited Black, Asian and Minority Ethnic groups, but the project was not specifically designed for this purpose,
  • 2% were not classified.

The audit also looked at which types of organisation were funded:

  • 6% of funding went to Black, Asian and Minority Ethnic organisations.*
  • 14% went to organisations who had the mission or purpose of supporting BAME or minority communities.

*The criteria used to classify a Black, Asian and Minority Ethnic/minority sector organisation required that organisations have a mission and purpose to benefit Black, Asian and Minority Ethnic communities, and the majority of the leadership (at least half of the senior team and the Trustee board) must be from the minority community(ies) the organisation serves.

2. Project type

(You can view a larger, interactive version of this chart here.)

As chart 2 shows, of the funding that went to Black, Asian and Minority Ethnic organisations:

  • 45% was for service provision,
  • 20% went on core/general funding,
  • 18% went to campaigning/influencing projects,
  • 3% went on individual capacity building,
  • 6% went on organisational capacity building,
  • 4% on research/policy work,
  • 3% on other projects (including arts and community cohesion),
  • 1% on community cohesion/understanding,
  • <1% went on capital projects.

3. Project focus

(You can view a larger, interactive version of this chart here.)

As chart 3 shows, of the funding intended to directly address racial inequality 50% was aimed at addressing root causes of racial injustice and 42% at alleviating its consequences (for example improving access to services or providing culturally-specific support).

How has the audit impacted racial justice funding practices?

“Lloyds Bank Foundation used the Audit tool to categorise our active grants portfolio and to analyse the success rates of Black, Asian and Minority Ethnic-led charities applying for funding.

“Alongside our wider commitment to Equity, Diversity and Inclusion, the evidence from the audit tool led to changes in our foundation’s grant-making approach, including the introduction of a 25% ringfenced fund in August 2020 for Black, Asian and Minority Ethnic-led charities. The findings were also used as a tool to advance organisation-wide conversations and a more targeted approach to work towards becoming an anti-racist funder.”

Next steps to increase funding for racial justice

The audit is an important tool for funders’ accountability, but it requires analysis to be carried out after funding decisions have already been made, rather than being part of routine data collection. Our ambition is that all funders will be able to track and share information about where project funding and core funding is going.

We are currently working with 360Giving and The Social Investment Consultancy to create a Diversity, Equality and Inclusion data standard to increase accountability and transparency around how much funding is going to the Black, Asian and Minority Ethnic (and other protected characteristics) sector.

We encourage all funders to begin to use the audit tool as a way of understanding how your funding is, or is not, supporting Black, Asian and Minority Ethnic-led organisations and contributing towards race equality outcomes. If you’re a charitable foundation and you would like to complete the racial justice funding audit, click here to access the audit toolkit on Google Drive. The spreadsheet must be downloaded to be filled in. If you have any questions, please contact us at this email address.

Participating funders:

  • Barrow Cadbury Trust
  • Comic Relief
  • Esmée Fairbairn Foundation
  • John Lyon’s Charity
  • Joseph Levy Foundation
  • Joseph Rowntree Charitable Trust
  • Joseph Rowntree Foundation
  • Lankelly Chase
  • Lloyds Bank Foundation for England and Wales
  • Bedfordshire and Luton Community Foundation
  • Paul Hamlyn Foundation
  • Smallwood Trust
  • Trust for London

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