Overview: Black-led and Black-empowering nonprofit organizations in California contribute significantly to the state’s economy, employing 4,000 people and generating $335M in salaries in 2024. However, these organizations face funding inequities and understaffing, with 74% citing insufficient revenue as the reason for inadequate staffing. The Black Equity Collective (BEC) commissioned a report highlighting the economic contributions of these organizations and recommending that funders increase their support and visibility of their efforts.
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In less than five years, dozens of corporations have pulled back or altogether eliminated funding and support for Black-led or Black-empowering nonprofit organizations (BLOs) as a result of several legislative decisions. Federal funding cuts have been made to grants and contracts related to diversity, equity, inclusion and accessibility (DEIA).
The dwindling support can be traced back to the Supreme Court’s decision to strike down Affirmative Action in higher education, which impacted funding and grant opportunities for students of color, to the Trump administration’s executive orders criminalizing DEIA practices.
Though the declining support came as a surprise to some, Kaci Patterson, founder and chief architect of the Black Equity Collective (BEC), and her team expected this. In their anticipation, in 2024, BEC commissioned the Nonprofit Finance Fund (NFF) to conduct primary research and analysis to highlight the economic value created by Black-led and Black-empowering nonprofit organizations in California.
“Our thinking behind this is that if we position the economic benefit of investing in Black-led organizations, then we’ll be able to position an argument that funding them is not only morally right — it’s not just about repairing harm, but funding them really has an economic imperative for our communities and for our state,” Patterson explained.
In May, NFF and BEC released the report called the “Strengthening California’s Economy & Communities Survey” which quantifies the economic contributions and financial challenges of Black-led nonprofit organizations.
The report surveyed 217 respondents who identify as Black-led or Black-empowering organizations across the state, with 62% of respondents serving Los Angeles County and 17% primarily serving the Inland Empire.
“What I hope this report elevates is that there are stories to be told about the ways in which we contribute to this country, we contribute to this economy, that continue to go unnoticed,” Patterson said. “So, this report is also a way to push back on Black erasure — to try to act as if we don’t matter, to try to act as if our work can just go away and people won’t be affected. It’s absolutely not true.”
With BEC’s focus to strengthen the long-term capacity and infrastructure of Black-led and Black-empowering social justice organizations in Southern California, primarily Los Angeles County and the Inland Empire, the report revealed that these organizations actively work toward racial equity and provide essential services. They also contribute to the state’s economy. According to the report’s findings, these organizations collectively employ more than 4,000 people, generated $335M in salaries and paid over $22 million in payroll taxes in 2024.
Although Black-led and Black-empowering nonprofit organizations contribute greatly to the state’s economy, they are often understaffed, face ongoing funding inequities and oftentimes don’t have the revenue to meet service demands.
74% of respondents said the reason staffing is insufficient to meet organizational needs is due to not having enough revenue to pay for additional needed staff. With cuts to federal funding for nonprofit organizations who practice DEI policies or initiatives, many Black-led and Black-empowering organizations have, and will continue to see a sharp reduction in federal funding.
The report noted that the government was the largest source of revenue for over 40% of respondents surveyed.
“With the slashing of dollars, we know that it is impacting Black-led organizations, who, as we often say, serve really as our community first responders,” Patterson said. “A lot of times, Back folks don’t feel comfortable going to government agencies for support, but they will go to their local nonprofit.”
With this in mind, BEC continues to work to emphasize what Black-led organizations are facing, what they’re doing on the ground in their communities, and highlight how demand for their services is increasing as revenue is decreasing.
“Our organization is interested in keeping money in the Inland Empire and Black communities and other minority communities, especially people affected by sickle cell disease, because people with sickle cell disease face economic challenges due to the manifestations of the disease,” one respondent stated in the report.
Approximately 67 Black-led and Black-empowering organizations are part of BEC. Before being admitted to the collective, members submitted applications and had to meet specific criteria, including embodying the principles of Black equity. Launched in 2021, the BEC was born out of the collective concern of Black leaders who wanted to understand how philanthropy could be involved in supporting and advancing Black equity. In their mission to strengthen the long-term sustainability of these organizations, BEC creates programming designed to help them such as understanding institution building, growing their board, budgeting and funding.
“We also create structured space for them to engage with funders because we know that a lot of times the gap in funding persists because there’s a relationship gap,” Patterson explained. “There’s a social gap that exists. So, what we do is we help create ways for them to engage with funders, so that funders get to know them, get to trust them, get to understand their work, and ultimately will fund them.”
The BEC also develops programming for funders. An upcoming program, part of a quarterly learning lab with funders, will help funders “interrogate their practices, to really sort of think more deeply about racial justice and racial equity, how they work with Black communities,” Patterson shared.
According to the report, Black-led organizations that primarily serve the Inland Empire responded that their primary revenue source was the government (41%), with individual donors making up 27%, and foundations 18%.
Additionally, these organizations were also more likely to have lower budgets and smaller asset sizes, with 78% of Inland Empire organizations reporting having less than $250,000 expense budgets compared to 42% of their peers serving all other counties, and 84% had less than $500,000 in total net assets compared to 62% of their peers serving all other counties.
Despite the shortfalls Black-led nonprofit organizations in California face, these organizations reinforced their commitment to advancing racial justice, with 92% of respondents “staying the course with their commitment or increasing it.”
The report outlined several recommendations for funders, encouraging them to emphasize their support of Black-led nonprofit organizations by funding their efforts, bringing visibility to the economic impact of these organizations and rebuild trust.
“Funders have to level up in their courage. They have to level up in their defiance, quite frankly, of an administration that’s trying to scare them into defunding Black-specific work,” Patterson said. “Organizations are going to have to level up in their sophistication around how they collaborate, how they talk about their work, how they stay strong and steady in the face of opposition.”
As the BEC continues to shine a light on the economic contributions of Black-led nonprofit organizations in California, state leaders are working to acknowledge the economic impact of organizations driven by equity and inclusion.
In May, California Attorney General Rob Bonta, along with a coalition of 18 attorneys general, filed an amicus brief in support of a challenge to the Trump Administration’s executive orders targeting programs that incorporate equity, inclusion, diversity, and accessibility.
“In California we recognize the importance of diversity, equity, inclusion, and accessibility, especially when it comes to ensuring that all Californians have an equal opportunity to thrive and feel empowered to contribute to society,” Bonta stated in a press release.
“The Trump Administration’s attempt to remove programs and policies that combat discrimination and promote economic and social benefits is frankly un-American. Programs and practices that incorporate diversity, equity, inclusion, and accessibility are critical to states, as they not only drive innovation and economic growth, but also provide essential benefits to ensure a safe and welcoming environment for all.”