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Yue Ming1 , Laurie E. Paarlberg2
1Tsinghua University, Beijing, China, 2Indiana University Indianapolis, USA
When we think about why some nonprofit organizations receive larger grants than others, we typically focus on factors like organizational size, track record, or leadership capacity. What we do not often consider is something much more fundamental: where these organizations are located—and more importantly, where their funders are located.
Consider how place shapes perceptions in everyday life. A job applicant listing an address in an affluent suburb might be viewed more favorably than one from a neighborhood associated with poverty or crime, regardless of their actual qualifications. The same dynamic may operate in philanthropy, where the location of a grantee could influence funding decisions in ways that have little to do with organizational merit.
This phenomenon, known as “place-based stigma,” refers to the negative perceptions and symbolic “taint” attributed to individuals and organizations based on the racial and class characteristics associated with their geographic location. Places stigmatized in this way are often labeled with terms like “the wrong side of town”—and these labels carry real consequences for those who live and work there.
Despite growing awareness of these dynamics in other sectors, the role of place-based stigma in philanthropic decision-making remains largely unexplored. To investigate whether similar geographic biases operate in grantmaking, we examined the funding patterns of U.S. community foundations.
The Geography of Bias
The concept of place-based stigma suggests that where you are located can shape how others perceive you, independent of your actual qualifications or performance. Our study examined grants awarded by 729 U.S. community foundations between 2012 and 2016, analyzing over 232,000 individual grants to understand the effect of the racial and economic characteristics of both grant makers’ and recipients’ locations influence philanthropic funding decisions. We used zip code-level demographic data to measure the proportion of white residents, nonwhite residents, and poverty rates in both foundation and recipient communities. Drawing on research showing that job seekers from certain zip codes face discrimination in hiring, we hypothesized that nonprofits in marginalized communities might face similar challenges in philanthropic funding.
However, our findings reveal a more complex dynamic than simple neighborhood disadvantage. Contrary to our initial expectations, we did not find that nonprofits located in zip codes with higher proportions of nonwhite or low-income residents automatically received smaller grants. In fact, we found a positive relationship between poverty in a recipient’s zip code and grant size in some models.
Instead, our most significant finding was that disparities in grantmaking were shaped by the differences between grant makers and recipients. It is not just about being located in a low-income area or a community of color—it is about the difference between where grant makers and recipients are located. When community foundations in predominantly white, affluent areas consider funding requests from organizations in neighborhoods with higher proportions of nonwhite or low-income residents, grant amounts tend to decrease.
The Proximity Paradox
These stigmatizing effects were strongest when grant makers and recipients were located in the same county. This contradicts our initial hypothesis that local knowledge would reduce bias. Instead, local proximity appears to amplify it.
Why might this be? One explanation is that distant grants are more likely to go to large, elite institutions—such as universities and hospitals—organizations with reputations that transcend local stigma. In contrast, local grants may be more susceptible to subjective perceptions of place, where neighborhood names or reputations can signal “unworthiness.” This suggests that local familiarity may actually reinforce, rather than mitigate, place-based stigma.
Implications for Community Foundations
These findings have important implications for how we understand philanthropic inequality and community foundation practice. They suggest that disparities in grantmaking may be less about the characteristics of recipient organizations and their communities, and more about status differences between grant makers and recipients. When funders and nonprofits come from demographically similar backgrounds, funding may flow more readily than when racial and class divides separate them. This challenges traditional explanations for philanthropic disparities that focus primarily on recipient organizations’ capacity, networks, or legitimacy. While these factors certainly matter, our research suggests that funders’ geographic and demographic context plays an equally important role in shaping funding outcomes.
For community foundation, the findings raise concerns about their ability to fulfill place-based missions. Despite their presumed local knowledge, community foundations may unintentionally reproduce geographic inequalities through their grantmaking. This is particularly concerning given community foundations’ growing influence in public service delivery and their tax-advantaged status, which comes with expectations of serving diverse community needs. When philanthropic capital does not reach marginalized communities, it can exacerbate existing disparities and limit opportunities for community-led solutions to local problems.
As private philanthropy plays an increasingly important role in addressing local needs, we must pay closer attention to how philanthropic resources are distributed geographically. Systematic underinvestment in marginalized areas undermines equity and the potential for inclusive, locally grounded change.
Click here to read the free full-text article: Ming, Y., & Paarlberg, L. E. (2025). Place-Based Stigma and Community Foundation Grant Making. Nonprofit and Voluntary Sector Quarterly, 0(0). https://doi.org/10.1177/08997640251359855
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