After 2020’s renewed focus on racial justice, many corporations and foundations pledged nearly $11 billion to support organizations and movements that promote racial equity. However, only around $5.8 billion of that amount has translated into real investments that create lasting change within communities of color, according to Candid.org.
There are many reasons why corporations’ real-world contributions don’t match their initial pledges. Many companies run into difficulties when deciding where to invest, given the wide range of racial justice efforts. Additionally, some companies struggle with measuring tangible, short-term success when many results take years of progress.
A 2020 report by Stanford University also asserts that racial bias is another factor that affects philanthropic efforts. The report found that nonprofits and other organizations led by people of color struggled more than their white counterparts to obtain funding from large companies. They assert that this was due to BIPOC-led organizations not having as many immediate social connections with predominantly white-led corporations.
Robert F. Smith’s Work to Bolster Private Sector Engagement
In August, Robert F. Smith joined PayPal CEO Dan Schulman and Boston Consulting Group CEO Rich Lesser to publish an op-ed on CNN on how corporations can advance racial equity in their workplace. The op-ed proposes three ways companies can support and promote racial equity:
- Taking a holistic, long-term approach by making long-term commitments to a variety of causes.
- Breaking down silos through establishing partnerships with other companies that share similar social responsibility goals.
- Establish clearly defined metrics for every project that measures the impact of racial equity efforts.
Smith is no stranger to helping corporations in their racial justice efforts. In 2020, he received a Forbes Diversity & Inclusion Award for lifting up The 2% Solution, an innovative plan to help corporations close the racial wealth gap. The 2% Solution argues that if private companies invested just 2% of their net income directly into Black communities and businesses, they could have a tremendous impact in the fight to fix racial inequality. These corporate donations aren’t supposed to be mere acts of charity, but direct investments into location-based and solutions-based areas of need for Black people. Companies have come to similar conclusions in the past year, including Netflix, which pledged to dedicate 2% of its earnings to banks supporting Black communities.
“I think that [The 2% Solution] will show Americans there is hope, there is an opportunity for the American dream to now be revitalized,” Smith said during the 2021 Forbes’ 400 Summit on Philanthropy. “And frankly, to give us all confidence that we can actually make this a better country and a better place to live.”
Along with external efforts, corporations should also work internally to prioritize diversity, equity and inclusion within their workforce. Smith is a member of the Thirty Percent Coalition, a pioneering initiative working to increase diversity in corporate boardrooms by advocating for 30% of board seats across public companies to be held by women and people of color. In 2019, a study found 37% of S&P 500 firms did not have a single Black board member. Clearly, there is more work to do. Smith participated in the Coalition’s annual summit in 2020 (held virtually), and discussed why diverse representation is a necessity for businesses to remain sustainable.
“One of the things I’m most optimistic about is that this is the broadest call for inclusion that I’ve seen in my lifetime,” Smith said at the summit. “And I’ve seen underpinnings of actions to support that.”
Focused Work with The Southern Communities Initiative
In an effort to focus efforts to achieve quantifiable results, The Southern Communities Initiative was created earlier this year to coordinate and accelerate racial equity funding, programming and convening in six southern communities that are home to approximately half of the African American population. The Southern Communities Initiative was launched in April 2021 by Robert F. Smith, CEO and President and Vista Equity Partners; Rich Lesser, CEO of Boston Consulting Group; and Dan Schulman, CEO of PayPal. This initiative focuses on six cities — Atlanta, GA; Birmingham, AL; Charlotte, NC; Houston, TX; Memphis, TN and New Orleans, LA — and their surrounding areas. The Southern Communities Initiative focuses on directing resources in areas where Black community is most adversely impacted, raising the profile of organizations on the ground that will deliver the most impact for Black community, breaking down silos to improve effectiveness of local efforts and tracking progress and long-term impact.
Learn more about The Southern Communities Initiative and how it’s forming an interconnected group of private sector partners to work with community groups on the ground.