Foundation Decision-Makers Funding Practices and Biases amid the COVID-19 Pandemic

Overview: Foundation decision-maker’s funding preferences and opinions of rural NPOs are discussed. Almost a quarter of decision-makers agreed that “Rural NPOs have less organizational capacity and thus are less able to handle large amounts of money”, which may influence funding of rural NPOs. Implications for practice and policy changes are considered.Proposal text:

Background:
Typically, rural NPOs receive less funding per capita than urban NPOs in the U.S. (2,1). Private foundation funding is one of the largest sources of revenue for NPOs, but only 6.8% of funding from private foundations is allocated to rural NPOs (2). Many rural NPOs are smaller and lack grant writing or fundraising training, technology, and leadership experience (3). Recent literature focuses on building nonprofit capacity to become competitive for funding. This perspective does not consider bias as playing a role in this funding gap (4,5,6). For example, foundations may seek out urban nonprofits because they have greater potential to serve larger populations and, thus, a larger perceived impact, providing a favorable view of the foundation’s investment (7). The gap in foundations’ funding for rural NPOs hinders rural communities from meeting their needs and perpetuates the challenges they face, such as poverty (8). During the COVID-19 pandemic, rural community and economic challenges increased. With this funding gap, monetary aid may not have been directed at the rural NPOs best positioned to help.

Methods:
The current study sought to examine perceptions of U.S. public foundation (990-PF) decision-makers regarding rural nonprofits and communities and preferences in NPO characteristics, such as organizational capacity, minimum revenue, or populations served. An online survey was emailed to foundation decision-makers in July 2021 via email to 1,500 public foundations listed on Foundation Directory Online. Funding practices and changes due to the global crisis were addressed. Logistic regression analysis compared the percentage of funding given to urban areas in the past five years to the foundation decision-maker’s views of rural areas and philanthropic preferences.

Results:
Most foundation decision-makers (n = 92) were female (62%), executive directors (38%), and Democrats (62%), with a mean age of 57.8. Most foundations were located in urban areas (93.5%) with $5,473,492 mean yearly giving (median $1,500,000). Higher percentage of funding to urban areas was related to increased preference for funding larger areas (p = .007) and higher minimum revenue (p = .020). Increased urban funding was related to an increased belief that urban areas struggled the most during the pandemic (p = .005) and an increased agreement that rural areas are “behind the times” (p = .029). Further, Foundations with higher urban funding were related to increased agreement that the biggest challenge to rural NPOs being competitive for grants is “limited capacity to handle large amounts of money” (p = .046). Lastly, higher urban funding was related to increased agreement that rural NPOs “serve fewer people and thus make less of an impact” (p = .49). Overall, almost a quarter of decision-makers agreed that “Rural NPOs have less organizational capacity and thus are less able to handle large amounts of money.”

Conclusion:
These findings align with previous literature about giving practices and actual award data. This information reiterates the need to address rural giving disparities and will be helpful to funders, educators, policymakers, advocates, and nonprofit leaders to address the funding gap and thus, improve the quality of life for rural communities.