Corporate Racial Equality Investments—One Year Later

The Conference Board held a roundtable discussion with 55 corporate citizenship executives and conducted a survey with 86 respondents on “Corporate Racial Equality Investments a Year Later.” We found that the hundreds of millions of dollars that companies have committed to nonprofits is just part of their overall effort to address racial inequality. Even more significantly, we found that the pace of spending to date reflects the seriousness with which companies are taking this issue.  

Executive Summary

One year later, some in the media and several advocacy organizations are questioning these external financial commitments, asking where the money has gone and what progress has been made.^[2] Much of the criticism misses the mark, as it fails to appreciate what it takes for a company to commit to, design, implement, and monitor multimillion-dollar programs to address social problems.

The Conference Board held a roundtable discussion with 55 corporate citizenship executives and conducted a survey with 86 respondents on “Corporate Racial Equality Investments a Year Later.” We found that the hundreds of millions of dollars that companies have committed to nonprofits is just part of their overall effort to address racial inequality. Even more significantly, we found that the pace of spending to date reflects the seriousness with which companies are taking this issue. Companies made long-term financial commitments to address racial inequality, reflecting the fact that this is a long-term challenge. Further, companies have been actively laying the groundwork for a sustained effort: they have focused on deepening their expertise on racial inequality, building internal capacity, and forging external relationships to be able to deliver on their commitments.

Insights for What’s Ahead

There are numerous signs that corporate commitments to address racial inequality are serious, sustained, and intended to have real impact. Look for companies to ramp up their activity in the coming years. Our research indicates that companies’ commitments to redressing racial inequality are:

1. Significantly supported by senior management—half of respondent companies say the commitment originates from their CEO;
2. Rooted in company values—84 percent make this financial commitment because it aligns with their company values;
3. Intent on making a real difference—51 percent finance these commitments because it allows them to make an enduring change, and 33 percent link at least half of their funding to specific quantified outcomes; and
4. Long term—50 percent of commitments are for at least five years or an indeterminate period.

At this stage, 85 percent of respondents are focused on marshaling their resources to address racial inequality over a sustained period. They are engaging with experts on racial equity, carefully listening to stakeholders, and co-creating solutions—including with employees. Companies are also assessing where their policies may have come up short in the past, and learning from the experiences of other firms whose credibility has taken a hit because stakeholders perceived their actions to be inauthentic.

We expect most companies to continue to adopt a hybrid approach in their financial commitments, focusing on both national and community-based organizations; 85 percent of the funding respondent companies provide is evenly split between the two. With 43 percent of respondent companies’ funding going to national organizations, and 42 percent going to community-based groups, companies are taking a two-pronged approach to addressing racial equity through their nonprofit partners. This approach is likely to prove effective: national organizations offer scale, scope, and advocacy, while community-based organizations offer the opportunity to have tailored impacts. Indeed, as a participant of our roundtable observes: “Racial inequality is a national issue that requires attention at the local level.” This approach is also likely to address critics’ concerns that companies are merely writing checks to address racial inequality.

Companies that have or are developing a strong culture of inclusiveness and constant learning are well positioned to “stay the course,” leading to enduring progress toward racial equity. Factors that demonstrate this kind of culture are:

• Featuring leadership and personal involvement of the CEO, including conversations about why the company is taking a stand;
• Soliciting feedback from internal stakeholders on the company’s position and approach;
• Engaging outside experts to collaborate with the company’s own corporate citizenship and diversity, equity & inclusion leaders so they can learn from each other and inform the company’s efforts across business units;
• Co-creating aspects of community-based programs with employees; and
• Adapting approaches from the company’s sustainability programs, which are also long-term efforts that involve constant learning and responsiveness to stakeholders.

With just over 4 percent of respondent companies advocating public policy change and 85 percent of respondents forging their path alone, there is an opportunity for companies to step up their efforts to collaborate with government and each other in addressing racial inequality. Given the speed with which companies made statements—and financial commitments—to address racial inequality a year ago, it is not surprising that the vast majority of companies acted on their own rather than as part of a broader coalition. This approach is consistent with how companies traditionally handle natural disaster relief: they overwhelmingly pursue their social programs in collaboration with nonprofit organizations, but without significant collaboration with other companies.^[3] Companies thus have an opportunity to increase their impact by working with each other and with national and local public policymakers. This opportunity is accompanied by demand. Indeed, many stakeholders across cities have voiced their desire for companies to engage with city and state lawmakers to initiate policy change—leveraging corporate leaders’ influence and connections along the way to champion change that truly opens up opportunities regardless of race.^[4]

A deeper, more candid dialogue with nonprofit partners may be advisable, given that more than 60 percent of respondents report no challenges with grantee organizations. Companies point to a smattering of issues with nonprofit grantees, such as a lack of capacity, difficulty in reaching agreement on program goals, and sometimes refusal to accept corporate grants. But no single obstacle stands out. What does stand out is a clear majority of respondents’ reporting no issues with grantees—a yellow, if not red, flag for participants of our roundtable discussion, who suggest that rather than a lack of challenges, this result may indicate that companies are not hearing the full story from their nonprofit partners.

While at this point companies can measure success based on their progress in building capabilities to address racial inequality, they will need to progress to measuring and reporting on the outcomes of the programs they have committed to funding. At this stage, many companies are building their internal capabilities and external relationships to mount a sustained effort to address racial inequality. As we look ahead, companies should begin reporting objective, empirical measures of their efforts to achieve substantive progress. No one expects racial inequality to be eliminated overnight, or even over the term of the financial commitments companies made in 2020. But companies and their nonprofit partners should be prepared to provide data on their progress, especially as slightly over half the committed funds are linked to achieving objective goals.

Companies should balance their desire to respond quickly with a statement on a social issue with their need to develop and socialize an action plan to follow through on their commitment. While roundtable participants recognize the need for companies to respond quickly in the aftermath of events such as the killing of George Floyd, in hindsight, several note it would have been better to take more time to develop and socialize their response with both internal and external stakeholders. In the future, companies may wish to respond by referring to an existing statement of core business principles and values, giving themselves time to develop an action plan that has greater buy-in than they can achieve under rushed circumstances.