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Overcoming Funding Barriers for Black-Led Nonprofits

NataliaDaies

As we advocate for more locally-led development on the global stage, we must also address inequities in the nonprofit sector here in the U.S. Whether it’s international aid or domestic philanthropy, the future of impactful development lies in trusting and investing in the communities that are closest to the challenges. Supporting Black-led community initiatives in the U.S. empowers those best positioned to create change.


Black-led organizations play a vital role in their communities, leveraging deep cultural connections and a nuanced understanding of the challenges they face. These organizations are rooted in the struggles of their communities and hold the keys to sustainable, community-driven solutions. Their approach is often centered on empowerment and self-determination, fostering a sense of ownership in solving local problems rather than relying on external charity.


Despite these strengths, Black-led organizations face significant financial disparities compared to their white-led counterparts. Systemic racism and unconscious bias continue to shape philanthropic decisions, resulting in fewer funding opportunities—overlooking deep cultural ties, nuanced understanding of community challenges, and effective grassroots strategies.


  • Revenue Disparity: Black-led nonprofits operate with revenues that are 24% lower than white-led organizations. This limits their ability to expand programs, hire staff, and fund long-term initiatives, putting them at a disadvantage in achieving sustainability.

  • Smaller Net Assets: On average, Black-led organizations hold 76% fewer unrestricted net assets than white-led organizations. This lack of financial flexibility makes them more vulnerable to economic downturns and less able to weather unforeseen challenges.

  • Cash Flow Vulnerabilities: Many Black-led nonprofits rely on single sources of funding, making them particularly susceptible to shifts in political or economic landscapes and in need of additional support to build sustainable programs and long-term infrastructure.


These disparities reveal the deep-rooted barriers Black-led organizations face, yet they continue to deliver impactful, community-driven solutions despite these challenges, often achieving more with fewer resources. Their close connection to the people they serve uniquely positions them to develop solutions that resonate culturally and structurally within their communities. With greater access to unrestricted funding, these nonprofits could cover operational costs, invest in infrastructure, and continue meeting the evolving needs of their communities. 


A recent study by The Share Trust and the Warande Advisory Centre highlights that investing in local nonprofits is more trustworthy, cost-effective, and sustainable. Last year, 42% of international funding went to locally-led organizations, nearly tripling in just two years. This shift in locally targeted funding is growing and delivering measurable results. But the question remains: who is benefitting?


Equity starts by addressing barriers to access to ensure sustainable and equitable funding for Black-led nonprofits. It’s time for donors to take bold steps toward equity in funding, ensuring local and Black-led organizations have the resources they need to sustain and scale community-based programs and services.

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