Discussing The Need For DEI In Nonprofit Spending

Posted by Alyssa Kotzmann
On October 15, 2021
In Blog

The backbone of a comfortable, productive, and encouraging nonprofit workspace is Diversity, Equity, and Inclusion (DEI). DEI supports and allows employees to display their genuine selves without the fear of being marginalized. And when employees feel at ease, they become motivated to share personal attributes and innovative ideas that can enhance the effectiveness of their nonprofit organization. Unfortunately, the spending habits of nonprofits have shown that, when it comes to DEI training, they have not been successful at supplying funding where it matters most  — and they need to be held accountable for this.

Addressing A Common Misconception

A common misconception is that DEI training is only used for internal practices in the nonprofit sector, but this is not the case. DEI should also reflect on the external spending of nonprofits. A valuable way to reveal a nonprofit’s adherence to Diversity, Equity, and Inclusion is to look at whether or not they are investing in companies that are led by diverse owners. Focusing on such organizations supports DEI practices by helping diverse businesses to grow and thrive through nonprofit expenditures.

Paying Attention To Trends

The “slicing and dicing” of fiscal spending highlights the reality of where nonprofit expenditures have been distributed based on spending habits. Ultimately, this can prove that DEI is not evident by allocating to predominantly white or male owned businesses. This is not an effective DEI practice of nonprofit spending, but paying attention to these trends can enhance the strength of DEI expenditures in the future. The term, “change is good” is evident in this practice of inspecting current fiscal spending and swapping the issuance of funds to more diverse businesses in subsequent years .

Recognizing A Silent Inequity

It is a well-known fact that women and people of color are underpaid. Thankfully, this is a silent inequity that many organizations recognize and feel they can escape from. An effective strategy of forcing DEI into salaries is to share data on nonprofit salaries and wages with the public. This helps to eliminate the possibility of discrimination against women and people of color by utilizing the transparency of equitable pay. This will enhance the DEI methods of equitable spending in the internal workplace of nonprofits.

There is also an extreme gap in the diversity of executive directors, and this is another concern. In 2017, Battalia Winston analyzed members of the largest foundations and nonprofits in the United States and found that 87% of all executive directors were white. Only 6% were Black/African American, 4% were Hispanic, and 3% were Asian American. Combating this issue involves ensuring that nonprofit salary and wages are fair based on job title. Again, developing a transparent compensation philosophy, and publishing the data, can help ensure effective DEI spending in nonprofits. Additionally, DEI can be forced into internal spending practices by including a written statement on compensation in the bylaws.

There is an extreme need for Diversity, Equity, and Inclusion in nonprofit spending. The allocation of funds to diverse employees and local, diverse-owned businesses will effectively rescind the burden and marginalization of women and people of color. Using nonprofit spending to enhance DEI internally and externally can effectively make our nonprofit sector a diverse, equitable, and inclusive community for all.


The Alliance for Health Equity is a philanthropic organization striving to advance a more equitable, resilient and healthy community for all residents of the Greater Coatesville area. We pursue our mission by providing grants and scholarships to local nonprofits and students that address health and economic disparities and social justice. We also build partnership programs and give voice to those often left out of community solution building to improve the overall health of their communities. 100% of contributions go directly to those in need.