How Do You Fund Resource Groups?

June 13, 2013 12:31 pm

By Barbara Frankel

How Do You Fund Resource Groups?What’s the typical budget for a resource group? Does it vary from group to group? How do you get increased budget? How are resource-group leaders held accountable for how they spend their budgets?

Based on interviews with more than 20 companies and discussions held at our spring event with more than 200 diversity leaders, here’s a guide to answer these and other questions on funding resource groups.

    1. How much should they get each year?

DiversityInc research shows that the average annual amount per resource group is between $7,000 and $15,000. However, that amount is literally all over the place. Some organizations, especially those just starting out, have no funds for their resource groups, while successful groups at large corporations can be allocated as much as $75,000–$100,000 annually.

    1. Do all groups get the same amount?

Not necessarily. Several companies have told us that their resource groups submit individual budgets, usually to the diversity department, that are evaluated based on their contributions to business goals in such areas as recruitment, engagement, retention, talent development, diversity training, supplier diversity, community relations and inroads with customers/clients.

Donna Johnson, Chief Diversity Officer at MasterCard Worldwide (No. 5 in the DiversityInc Top 50), says her company gives equal funding to all groups “to avoid the perception of inequity.”

Julie Hansen, Senior Manager of Diversity & Inclusion at AbbVie, was the head of diversity at Abbott before the company split in two. “In my former company, Abbott (No. 14), we did not support the employee-resource groups. They got all of their funding through their executive sponsors, and you’ll definitely see that the smaller groups have less sponsors and thus less money. There tended to be a little bit of consternation between the women’s network—let’s just not even talk about how much money they had—and maybe the PRIDE network that had a much smaller constituency,” she says.

She notes that at AbbVie, “We are looking to try the different model, which is where HR will give them all a little bit of seed money to get started so that at least the playing field is level right out of the gate.”

    1. Where does their money come from?

It can come from any of the following sources: direct funding from the diversity departments, support from executive sponsors, groups’ own fund-raising, and extra money from HR, communications and/or marketing.

Some organizations factor in an executive sponsor’s ability to bring financial resources to the group as part of the selection process.

At jcpenney (No. 50), “when we approach sponsors, we set the expectation that it’s not just your expertise that we want but your budget as well. This has been very, very beneficial for us. For example, when you look at our PRIDE team, they wanted to participate in LGBT Pride parades across the country in some strategic markets. We didn’t have the dollars within our Inclusion and Diversity budget to support it at the level that it needed. The executive sponsor did have the budget and he also had the talent within his division to design the T-shirts and produce the banners,” says Kelley Johnson, Divisional Vice President, Diversity and Emerging Talent. “Fifteen or 20 thousand dollars could be an accounting error for an executive sponsor’s budget, but getting $20,000 in addition in my budget is really difficult.”

Donnie Perkins, Chief Diversity Officer at University Hospitals (No. 1 in the DiversityInc Top 10 Hospital Systems), also discusses funding with potential executive sponsors. “I’ll generally ask a question that relates to their engagement on diversity and inclusion. I do that by asking them: ‘What is our strategy?’ ‘What resources are you going to use to support that strategy?’ and ‘What’s going to be the outcome for our patients?’”

In a survey of 20 companies, DiversityInc found that 56 percent of executive sponsors fund the groups from their own budgets, but they may not be funding every activity of the group. Executive sponsors most often fund dinner/lunch meetings with resource-group leadership teams, give money for members to attend national conferences, can fund leadership training, and pay for speakers and other activities for group events. At 89 percent of the companies surveyed, funding also comes from diversity departments and, in some cases, from HR and/or lines of business.

A handful of companies charge resource-group members a nominal fee to participate, usually $25. This adds to the coffers and, the organizations say, “gives the members skin in the game.” Most organizations disagree, believing fees will impede participation.

    1. How do they spend their budgets?

The most effective resource groups—and the ones that continue to get the most support—tie their budgets into their stated missions, which link directly to corporate business goals. Those goals can include: recruitment, on-boarding, retention, talent development , mentoring, diversity training, product development, community outreach, finding suppliers, marketing outreach and focus groups.

At Ernst & Young (No. 4), Amy Munichiello and Diana Solash, Directors in the Americas Inclusiveness Office, tell us that E&Y has put emphasis on employee hours needed for leadership courses and training, as well as strategic sponsorships and marketplace efforts.

    1. How are they evaluated?

The success of the groups is linked at most companies to measurable results in human-capital progress—recruitment, retention/engagement, promotions of both group leaders and others from the designated affinity group. Groups’ contributions to specific business goals—sales, market share, client/customer service—is also measured. Improved relationships with community-based organizations and suppliers are factored in, as well as use of resource groups as focus groups for products and advertising. Compensation/performance reviews of executive sponsors and resource-group leaders are increasingly linked to group performance.

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