Do you know where your funding flows?

5 min read · April 14, 2023
New Power Labs

TL;DR - Data equity, aimed at making sure intersectionalities are represented more inclusively in datasets, may be a key component in helping capital deployers flow capital (grants and investments) more equitably. Alongside the profit opportunities, there are tangible social benefits. New Power Labs has launched a data service to address this need for better quality data.

Despite decades of commitment and a recent acceleration of attention, equitable representation is lacking across the board — literally. When we look at how capital flows and how power is distributed, the stats are stark. One recent example: the Globe’s report on gender representation in corporate Canada highlighted that over a fifth of public companies evaluated didn’t have a single woman in the top three tiers of their organizational charts. But relying only on gender-based data doesn't tell the full story. 

As noted in the piece, “Not only has progress been very slow, but whatever progress there has been has primarily benefited white women.” Using limited data points makes it harder to grasp the full picture, and it’s difficult to make progress if we don’t have an accurate view.

Last week we talked about the economic opportunity of greater inclusion and sustainability. This week, we’re unpacking the positive societal impact that comes with inclusive growth, and why segmented data is key to getting it right. 

How can disaggregated data impact social outcomes?

Disaggregating data helps unpack what specific communities might need. Consider that average household income for Asian Americans is $86K, but when the data are disaggregated, we see an average of $119K for Indian Americans and $44K for Burmese Americans — an important disparity. Or this example: in a survey on experiences in the finance industry in Canada, when asked if they feel fairly treated based on gender, 62% of Asian women said yes, compared to 32% of Black women. If we relied on gender-based data without disaggregating by ethnicity and race, these same stats would average out to a wholly different experience, one not accurately representative of either group.

Across Canada and across the capital spectrum—from philanthropy to impact investing to venture capital and traditional financing—we do not collect disaggregated demographic data at scale. As a result, we have a limited understanding of who is being underfunded, who is making decisions and if we are making progress. The social finance and philanthropic sectors are well-positioned to address inequalities and systemic discrimination, but incomplete, limited data related to who gets funded mean we continue to navigate the sector with a lack of clarity and direction. 

Complete data equity would enable informed decision-making, to understand who participates in social finance and charitable grantmaking in Canada and assess our progress on equity over time. It would help us uncover the major, invisible disparities in how capital flows and who gets funded so we could work purposefully to address gaps. While our work goes beyond the charitable and social finance sectors, starting here makes sense, given there is a more explicit drive in these sectors to get it right.

“Racial bias—both personal and institutional, conscious and unconscious—creeps into all parts of the philanthropic and grantmaking process. The result is that nonprofit organizations led by people of color receive less money… philanthropy ends up reinforcing the very social ills it says it is trying to overcome.” SSIR: Cheryl Dorsey, Peter Kim, Cora Daniels, Lyell Sakaue & Britt Savage

“We have had ongoing conversations but haven’t established specific targets or an ongoing process. The problem is that this work has been off the side of our desk. Some work has been done, but it has not been integrated together.” Large social impact accelerator, interviewed in NPL research

So how do we get there? 

New Power Labs has launched a service to collect self-reported, disaggregated sociodemographic data and capital flow data, to understand who receives capital, who holds power over capital flows, and who is left out. 

Many organizations rely on crude, visual ways to identify their team’s demographics, which do not capture non-visible attributes (e.g., disability, sexual orientation). This can obscure internal challenges or opportunities to improve equity, diversity and inclusion. And organizations that do want to collect this data from employees are running into various challenges: the sensitivity of the data, how to ask the right questions, how to protect it,  what to do with the data, how to compare and establish useful benchmarks, the right kind of accountability and transparency. 

By using data segmented by sociodemographic groups more precisely, it is possible to target resources and support specific populations more effectively.

Through this work, New Power Labs is working to:

• Enable foundations, impact investment funds, and other capital deployers to understand their current grant and impact investment portfolios across diversity lenses.

• Enable capital deployers and social purpose organizations to understand the diversity across their organizations.     

• Develop a sector-wide view of how funding/granting flows to equity-deserving groups.

• Build the data-informed foundation for capital deployers to establish ambitious and practical goals to shift capital and power.

In this first phase, we’re launching with a limited number of organizations across Canada. If you’d like to get involved, please reach out. Learn more about the People and Capital Flows Diversity Data Initiative.

Like what you’re reading? Subscribe to get weekly Equity Shots in your inbox.