Why Should Nonprofits Invest in Diversity & Inclusion Work? Arguments for the Budget

pencilsI’ve been worried about the diversity problem in my nonprofit organization for a while.  I’m the #2 person, my Executive Director is a little aloof about these issues – he’s ultimately worried that our white, wealthier donors and board members will see this work as “fringe work” and may think we’ve strayed from our mission.  And he’s right, to a certain extent.  How can we justify spending time and resources on internal diversity and inclusion when we have so little resources to work toward our primary mission?
Add to that the fact that I’m also the go-to person for all human resource complaints.  I’ve been trying to keep a lid on things, but I know unless we do some serious work, we’re going to lose people.  We’ve already lost good people and there’s some in-fighting among staff, although the ED is quite insulated from that.  We have some staff well-versed in diversity and inclusion who are all but calling others out on the carpet for their lack of awareness.  Others are really well-intentioned, but get beat over the head by other staff when they make mistakes out of ignorance.  I’m just not sure what to do, but it’s becoming more and more difficult to manage and if I don’t move the organization on this, I will feel like a hypocrite.
 I know we need to make changes, but how do I make the case to invest in this?
If this sounds familiar, that’s because it’s not unusual.  Many people in what I call historically white organizations have a primarily white leadership tier with more diverse hires at lower levels within the organization.  Well-meaning and well-intentioned leaders struggle with how to proactively improve diversity and inclusion within their nonprofit organizations.  They struggle with how to communicate urgency about this work, how to make a case for investing time and resources in it when both are already coming from overdrawn accounts.
Let’s cut to the chase.  Even though nonprofits are mission-driven, change-making, people-focused organizations, they are still in it for the money.  Not to make a profit, but to fund the work toward their mission.  It’s the reality.  And yes, there’s a much more compelling, human reason for diversity and inclusion at your organization, but that may not be the argument your stakeholders need to hear right now.
If you’re looking at it from a purely dollars-and-cents perspective, consider these facts:
1. The cost of replacing a staff person can cost an organization anywhere from 50% to 200% of that person’s annual salary according to the Society for Human Resource Management.
And diverse staff are much more likely leave organizations they find unfair.   The 2007 Corporate Leavers Report found that people of color are three times as likely to cite workplace unfairness as the only reason for leaving their employer.  Gay and lesbian professionals said workplace unfairness was the only reason they left their employer.  Where does that 50% to 200% come from?  Consider these factors:
  • HR Staff time (exit interview, payroll administration, benefits)
  • Manager’s time (retention attempts, exit interview)
  • Accrued paid time off
  • Temporary coverage – paid and “unpaid” where another staff full-time member assumes responsibilities.
  • Reduction in program delivery
  • Disruptions to team
  • Hiring activities (job posting, resume reviewing, interviewing, HR hiring functions, orientation & training)
It’s even more expensive to replace those who have been on the job less than a year because in many jobs, an employee is not fully productive for many months. This Compensation Today article highlights the costs of employee turnover.  A high turnover rate in the first year can be extra costly for the organization.
2. Failed diversity & inclusion initiatives are expensive.
Many organizations start their efforts with diversity training.  In recent years, research has shown that some of the traditional models of diversity training actually have an adverse effect on an organization.  In the 2012 Harvard Business Review article Diversity Training Doesn’t Work, Peter Bregman shows how rather than improving appreciation for difference, many trainings have the effect of heightening and polarizing difference, leaving people feeling defensive and cynical about training efforts.  The cost of these failed efforts equals not just the cost of the training itself but also the cost of fixing the mess – which includes bringing in better, more effective training, managing the increase in the staff retention costs (itemized above) and possibly lawsuit expenses.
Organizations should start with assessing what their training needs are.  One way to go about that is to use the Intercultural Development Inventory.  It’s a research-based assessment grounded in a developmental model that is non-judgmental and offers specific training objectives based on an individual and group’s intercultural awareness levels.  Most recently, the diversity and inclusion field has been abuzz about the effects of unconscious or implicit bias – prejudices that go unnoticed by the holder.  There are new trainings specifically designed to get at these unconscious choices we make – a critical consideration in the hiring process.
3. In ten years, if you’re not diverse, you will likely find that your grant-funding options will decrease. This is already true of major urban cores and is expanding out to more rural parts of the country as well.
The D5 Coalition is a national group of philanthropic organizations that have come together across the country to advance diversity, equity and inclusion in philanthropy.  They have four main priorities for big sector changes for 2015, one of which is to increase funding for diverse communities and ensure that foundations offer all constituencies equal opportunity to access the resources they need to thrive.  Another priority involves better data collection – including greater transparency of diversity demographics of organizations funded.
In October of 2014, GuideStar, the nation’s leading nonprofit reporting group, announced that it will begin collecting and publishing demographic information about nonprofit board, staff and volunteer diversity.  This will be an incredible tool for philanthropists to access when considering their giving choices.
So let’s tally up our expenses.  While the following exercise won’t be a perfect fit for your organization, you can certainly plug in your own numbers to estimate the cost for your particular organization.
  1. Lost retention of two professional nonprofit staff members: $60,000 (based on annual salary of $45K, plus benefits = $60K x 50% = $30,000 x two people)
  2. Failed Diversity Training = $10,000 (or much more, depending on how much you spend…)
  3. Fewer grant prospects = $50,000 (5% fewer grant prospects= 5% of $1mill budget = $50,000)

$125,000 – TOTAL SAVINGS
By engaging in strong internal diversity and inclusion work, the average one-million-dollar nonprofit has the potential to reinvest a considerable amount of its resources into its mission, build a strong and diverse staff team, reduce turnover, improve service and strengthen its organization.
It’s a new year and time for a new way of thinking.  Let 2015 be the year you decide to do something different.


Kathleen LaTosch at NCRC Annual Conference 2012
Kathleen LaTosch is a consultant specializing in diversity and inclusion planning for nonprofit organizations.  For more information about Kathleen’s work and availability, email her at klatosch at gmail.com

The Cost of Diversity Without Inclusion

Part 3 of One Nonprofit Story on Creating a Plan for Racial Inclusiveness

By Kathleen LaToschNoEntry

More and more these days, organizations are joining the chorus to become more diverse and inclusive.  The private sector is abuzz with discussions of “return on investment,” while  nonprofit organizations often start the conversation with a visual audit of board and staff members and a quick acknowledgement that “we need more diversity.” Experienced diversity professionals know there is a significant distinction between being diverse and being inclusive.  And diversity without inclusion is costly.

As noted diversity expert Andres Tapia states, “many companies have gotten comfortable with the idea of bringing in people who look different.  The problem is if those people start to act differently, they get told, ‘We don’t do it that way here.’  And so the person says, ‘I thought you wanted me because I was different.’ And the unspoken answer is, ‘We like the fact that you look different, but we don’t really like the fact that you think and behave different.’”   In fact, this was exactly the issue facing Affirmations, Metro Detroit’s community center for lesbian, gay, bisexual and transgender people.

In the years leading up to 2006, Affirmations had committed to developing a diverse staff and had begun the process by actively recruiting and hiring racially diverse candidates.  One new hire was charged with the responsibility of being Outreach Coordinator.  The plan was flawed on several levels.  Not only had no work been done to create an inclusive culture at the organization, the Outreach Coordinator was charged with both reaching out to communities of color and designing and implementing diversity training for the agency staff.  In essence, the responsibility for diversity and inclusion was being siloed on the shoulders of this lone staff member.

As someone who was on staff and a member of the interview team at the time, I distinctly remember when our proudly Afro-centric potential staffer turned to me and said, “Kat, are you sure Affirmations is ready for this?”  I nodded emphatically, ignorant to the kinds of micro-aggressions that people of color often face when joining a primarily white staff.  No work had been done internally to shift organizational culture.  Styles of communication, dress code policies and layers of unconscious bias created a work environment that left people of color, especially African American staff, feeling isolated and undervalued.  When staff left in 2006 citing a hostile work environment, it was these experiences they voiced publicly in the media.

The damage done by attempting to diversify without making the necessary organizational culture changes led to a significant back-step and resulted in our community being painfully torn apart.  Not only did it negatively impact staff diversity, it affected the diversity of people participating in programs.  Many people of color no longer felt Affirmations was a support or resource for them.  When the stories of a hostile work environment surfaced, African Americans boycotted the organization and stopped attending programs.  Historic racial wounds were ripped open and Affirmations was faced with a much larger, more difficult problem.   The only real solution that would have lasting results was to work toward healing, which meant inviting a reluctant community to sit down with us at the table and embark upon the journey together.

When we began this process at Affirmations, we didn’t have a roadmap to guide our work.  The Race Relations Team, which had been formed internally following the public walk-out of African American staff in 2006, wasn’t sure which way to turn.   We knew we needed to bring the community together, we needed to acknowledge the pain and own the cause, and we needed to work together to create a plan for change.  We decided to create a very special committee called the Multicultural Advisory Committee (MAC).

The team discussed critical ingredients for the committee’s composition, agreeing that success would require several key elements:

  1. The committee needed the voices of those wronged.  Concerns about Affirmations’ history had become stories passed from community member to community member, mainly within the LGBTQ African American Community.   The stories were so prevalent that even those who had never been to Affirmations now avoided it.  We needed to get at those concerns and bring those voices to the table to have solid input on making change.
  2. The committee needed more voices of color than white voices.  Affirmations, as the largest LGBT organization in the state, had a significant presence within the community and it had been led and operated out of a mostly white culture.  White culture often imposes its own normal as the normal for all and from that perspective sets the standard for everyone to adhere.  It was important to ensure that the white constituency on the committee did not comprise too great a percentage of participants so as to frame normalcy.  They could not dominate the conversation.  As we frequently talked in jest, “we’ve never had a shortage of white people; what we really need is diverse voices at the table.”
  3. The committee needed to be broadly diverse.  Although the race concerns tended to be framed largely in a black-white context, the Race Relations Team knew, even at that early point in the process, that other groups were missing from the conversation.  If we were failing the African American LGBT community, how were we doing with other communities?  So the team went about ensuring that several of the most populous communities of color were at the table.  For the Detroit area, that included Arab Americans and Latino/a Americans, specifically.
  4. The committee needed key community leaders.  Although we also wanted a community-wide invitation, encouragement to participate amidst the backstory meant we needed community leaders to model participation.  Leaders within each community of color were personally invited in order to ensure accountability from the group itself and also to encourage other members of each community to participate.

Once these priorities were documented, the Race Relations Team requested formal approval from the Board of Directors to establish a Multicultural Advisory Committee under these terms.  The approval and public announcement of that approval provided a measure of accountability to those who committed to serve on the MAC.  With two staff, two board members, and eleven community members, the Multicultural Advisory Committee held its very first meeting at Affirmations in May of 2008.  It was tasked with creating a set of recommendations for racial inclusion at Affirmations.

While not all organizations will begin a racial inclusivity effort under these circumstances, many will attempt to diversify their staff or board without making the necessary organizational culture changes for successful inclusion.  In a sense, Affirmations was lucky that a few very vocal African American staff shared their concerns publicly.  In so many cases, people simply walk away from an agency, sharing stories in their communities and neighborhoods, discouraging future participation.  Agency staff may never realize why they just can’t seem to be successful at their diversity efforts.  In our case, we were able to listen to the concerns and work with the community as a whole to create and implement the changes necessary to truly become a diverse and inclusive organization.

For a complete copy of Affirmations’ “Blueprint for Change” visit www.GoAffirmations.org and click on About Us.

Read Part 4: Building Trust After Trust is Broken

This is one post in a multi-part story documenting one historically white organization’s journey toward becoming racially inclusive.  The series seeks to document the challenges and successes faced along the way in an effort to provide a learning tool for other nonprofit organizations who wish to do the same.  For a complete copy of Affirmations’ “Blueprint for Change” visit www.GoAffirmations.org and click on About Us.Kathleen LaTosch at NCRC Annual Conference 2012 
Kathleen LaTosch is a consultant specializing in diversity and inclusion planning for nonprofit organizations.  She worked at Affirmations, Michigan’s largest LGBT organization, from 2002-2011 and served as Chief Administrative Officer from 2007-2011.  While there, she was responsible for facilitating a broad-based racial diversity and inclusion initiative.  For more information about Kathleen’s work and availability, email her at klatosch at gmail.com