Is Diversity as Good for Business as it is for Communities? New Study Says Yes

Is a multi-faceted, inclusive community also good for business?

Primary to the missions of nonprofit organizations is making communities stronger. Advocates for nonprofits tout the importance of diverse communities and social safety nets because they are the right thing to do. But is a multi-faceted, inclusive community also good for business?

We’ve certainly tried to say so.

How many times have nonprofits crowed over our organization’s economic impact to impress potential partners or funders? We in the sector want to believe that our efforts have merit across the board. However, in an era where nonprofit organizations are under increased scrutiny, and where some funders want their money to go to an organization that functions “like a business,” making the case for our work can feel like an uphill battle.

Now, a new study by University of California at Santa Cruz professor, Chris Benner and University of Southern California professor, Manuel Pastor demonstrates that maybe doing the right thing is also good for business.

“Diversity and Inclusion for the 21st Century Economy”

Written in collaboration with the University of Southern California and the Association of Chamber of Commerce Executives, study authors Benner and Pastor looked to chambers of commerce to see what trends existed, what role those chambers were playing, and how that role might evolve.

Here is some of what they found:

• In general, communities are becoming more diverse. By 2050, America is expected to become majority-minority, a demographic shift driven by natural growth, not immigration.

• Latino-owned businesses increased by 34 percent from 2007-2012. African American-owned companies grew by 46.3 percent. A quarter of all new businesses were started by immigrants.

• While diversity has increased, wages and growth have not. Income disparity has created isolated pockets of America’s poor.

• People are also sorting themselves by affiliation and creating climates where only one perspective is evidenced.

• The socio-economic divide is hurting business. When businesses exist in diverse communities, they are more likely to succeed.

In an article by Melissa DeWitte, out of University of California at Santa Cruz, Benner suggests that “Chambers [of commerce] can no longer think of inclusion as an afterthought.” Indeed, Benner’s findings in the latest study reinforce his earlier learnings, which show how chambers that look beyond themselves and work with communities to assure integration across income, race, gender, and place, have, on average, better economic performance. Benner and Pastor also assert that chambers of commerce are in a unique position to spurn growth because they act as connectors between civic, business, and philanthropic interests.

Use for our sector

So how do nonprofits use this study to their benefit?

The findings are interesting and can make a case for what we do. Ultimately, the study is valuable to our sector in that it reinforces what we so often say to those we want to support our work: that reaching out and developing programs which encourage more equity and diversity, and that build opportunity, isn’t just a helping hand for those that use our services, but a means of improving the landscape of prosperity as a whole.

However, we should also take Benner and Pastor’s findings to heart within our work in a different way. Ostensibly, our aim is to develop more diverse and inclusive spaces, but in practice, we also often fall short, creating highly-stratified atmospheres and missions that say one thing (we help and embrace everyone!) and do another (we often keep those we help out of our offices and decision-making processes). Many organizations (our organization included) have boards that encapsulate one perspective in terms of race, class, or abilities.

By truly embracing diversity of gender, religion, ethnicity, orientation, and perspective we assure our own sustainability, both within the work we do and within the places we serve.

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Arin Black

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