Do Your Nonprofit's Financial Operations Reflect Your Commitment to DEI?
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Diversity. Equity. Inclusion.
For the last few years, the #MeToo and #BlackLivesMatter movements have brought DEI work into sharp relief. White people are increasingly unable to ignore their inherent privilege. While many whites shift uncomfortably in their seats, marginalized communities across the US continue to sing, walk, stand, sit, and kneel in protest so that their voices may be heard.
In the nonprofit sector, thought leaders and people of color across the country have rallied to develop tools to begin breaking down barriers and structures that are built to oppress. We are learning terms like implicit or unconscious bias, microaggressions, and social justice. We are crafting DEI policies and public statements. For many of us white people, our work is only just beginning.
Most of the tools and articles on organizational implementation of DEI principles cover topics about boards, bylaws, and hiring practices. But what about DEI and finance? What are the links between them?
Inequitable and unjust practices easily and unconsciously embed into systems and structures around payroll and finance. Let's talk about 4 areas where you can examine your financial operations relative to DEI.
1. Pay Transparency & Equity
In the traditional business environment, which nonprofit boards often encourage the sector to emulate, there is great secrecy regarding payroll. You know what I'm talking about. In a very dramatic fashion, budgets that outline staff salaries are only shown to select individuals. Talk of who makes how much only happens around the water cooler in hushed tones. And no one in management wants the least paid individual on staff to know what the most paid individual on staff makes annually.
This is an outdated, unjust, and toxic approach in direct opposition to DEI principles. An organization seeking to align its pay practices in an equitable manner will demonstrate that by developing a transparent compensation philosophy and publicizing it. Are you committed to paying a living wage, or a salary competitive to for profit wages? Do you have your own "minimum wage," a floor that represents the least you will pay a team member? What about compensation ratios? There's a deep and obvious commitment to pay equity when you have a written statement in the bylaws and/or handbook that says something like: the Executive Director will not be compensated in excess of XX% of the least paid employee.
Are pay ranges/rates published in job postings and internally for all staff to see? It might sound like a radical idea, but let's be honest: the only reason traditional management doesn't want this information available to the rank and file employees is because they know pay scales are inequitable! Women and POCs are chronically and methodically underpaid. But this kind of discrimination is hard to sustain when the information is out in the open. Eliminate the possibility entirely with a shift to transparency and pay equity.
2. Paycheck Frequency
In addition to pay equity, nonprofit organizations should consider the frequency with which they run payroll as a matter related to DEI. This is not something leaders ordinarily might consider as relevant to their DEI principles but consider this: it is the height of privilege to pay staff just once a month. Think about it: how many people work paycheck to paycheck in this country? (Almost 80%, according to Forbes.) The longer the time between paychecks, the more of a financial strain it puts on the employee, especially our lowest paid workers. Weekly or biweekly payroll frequency is the most equitable pay frequency.
Another course correction could be made in terms of the philosophy on paycheck timing and pay periods. Do your employees work 2 weeks and then get a paycheck sometime after that period, meaning they are paid in arrears? Or do you pay them at some point in the current pay period? A current pay structure sends a strong message to your team that your organization honors its labor. It demonstrates both care about their financial well-being, and the deep trust that the organization has in them from day one.
3. Expense Reimbursement Policies
In my first (and last) job in corporate America, I managed a 30-person traveling sales team. Each of the sales reps had company credit cards, but they each also submitted hefty expense reimbursement requests. More than just mileage, our team averaged about $500/month in out of pocket expenses that they paid on the company's behalf. Additionally, it took the accounting department roughly 45 days to review, approve, and process the reimbursements. That's a remarkably inequitable process. How many people do you know who can float $500 for their employer, or even $100?
Enter the business prepaid credit card. Never heard of it? Google and be amazed. These are becoming more and more popular, especially among nonprofits. You can issue these to any team member, virtually eliminating the need for them to incur out of pocket expenses while also setting a limit on how much they can spend. Some cards even offer integrated receipt imaging with an app, which is sure to delight your finance team.
If a prepaid card doesn't work for you, then at least allow your team members to submit weekly expense reports. And then commit to processing them within 5-7 days. No employee should have to shoulder the burden of organizational expenses for an extended period of time, especially not our least paid workers.
4. Financial Transparency & Inclusivity
We know that nonprofit transparency builds donor trust. We share our financial data with donors in our annual reports, hopefully on our website, and definitely with third party sites like Guidestar. We do so in an effort to reveal our financial priorities and to show the impact arc of an investment in our work.
It would stand to reason, then, that internal transparency would build team and employee trust. Trust is the first step towards inclusivity. If decolonizing the sector means "less hierarchy, more collective decision-making," as Neesha Powell puts it, then let's make sure that our entire team from the ground up understands the organization's financial position at any given time. Sound collective decisions require a shared collective understanding of the facts.
"But my staff will never understand our financial operations! They're too young/new/[insert inequitable adjective] here." Don't make excuses. Sure, it might take some mentoring or coaching here or there to help folks understand what a profit and loss statement even is (we're not all numbers people!), but that is a worthy investment of your time and a demonstration of your commitment to the values of DEI across the organization.
And hard truth time: if you're a nonprofit leader and there's something in your financial operations you don't want certain others on your team to see, chances are you need to seriously consider and evaluate why.
Bloomerang reminds us in this post that "diversity and inclusion are both outcomes. Equity is not." Equity is a process. It's an approach. It's a continuous commitment to a culture that creates opportunities for marginalized people to "grow, contribute, and develop."
As a friend, colleague, and DEI role model of mine wrote last year, "The goal of DEI work should be to create institutions and communities that are humanizing to all." Humanizing. Read that again. It's not enough for us to create DEI statements and add a few POCs on our board or staff and declare success. To be true allies and work toward lasting social change, we must evaluate, continuously, the structures and systems within our organizations for evidence that they perpetuate white supremacy and oppression.