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Funding Policy Upholds Inequities Faced by Indigenous Community-Based Organizations


In a study driven by simulation modeling, researchers elaborated on policies that contribute to widening health disparities affecting Indigenous communities.

Funding reform can help address policy-driven inequities directly impacting Indigenous-led community-based organizations’ (ICBO) sustainability, according to a recent study published in Health Affairs.

Generational trauma experienced by Indigenous people has disproportionally influences the state of their psychosocial well-being. The authors argue that these impacts are upheld and exacerbated by racist and inequitable systems that create toxic cycles hindering the types of care that can be offered in these communities.

ICBOs can deliver culturally based care that, in turn, can be more effective and beneficial to Indigenous people than forms of Westernized standard practice.

"ICBOs also are able to build stronger authentic relationships with community members compared to larger public, nonprofit, or private institutions with ongoing legacies of racial mistreatment," the authors noted.

However, there are a wealth of obstacles ICBOs face in their efforts to provide essential services to alleviate the psychosocial concerns in their communities. Primarily, the authors point to funders’ policies around grants and regulation that are incompatible with ICBOs’ needs and contribute to structural inequities furthering Indigenous oppression.

As a consequence of the funding, grant, and regulatory system, ICBOs often find themselves stuck in what is known as a “capability trap.” A capability trap is another term for identifying a short-term solution that is administered at the expense of long-term growth. These applied “quick fixes”—here, regarding funding—make it progressively harder for ICBOs to meet various goals or address unmet needs in their organization or community. Furthermore, as the authors mention, these policies and short-term solutions uphold the success of bigger, White-led institutions that hold the most power in the realm of psychosocial care.

Funding and Grants Folders | image credit: Olivier Le Moal - stock.adobe.com

Funding and Grants Folders | image credit: Olivier Le Moal - stock.adobe.com

To model these issues, researchers used a systemic dynamics methodology. In total, 148 members of a small community in the Northern Great Plains region participated and built visual diagrams to represent the underlying funding issues affecting the problematic, complex systems they exist in. Fifty percent of these participants were Indigenous and their models were further enhanced through discussions with Indigenous community partners (coauthors). These coauthors had experience in providing psychosocial care through ICBOs and navigating the private, public, and Tribal systems they encounter.

The models identified 6 key challenges related to funding policies that impact ICBOs:

  • Regulations on direct service expenditures: the costs for carrying out grant-funded projects and supplying adequate salaries, etc. is not easy. This process involves justifying expenses for ceremony, food, amongst other items that are essential to Indigenous psychosocial care. These aspects are not often recognized as valid direct costs.
  • Indirect cost rates: these negotiating rates are dependent on organization structure, not their projects. Because ICBOs typically begin with lower levels of infrastructure or operational capacity, their negotiated indirect cost rates suffer. To provide necessary services in their community, ICBOs are often forced to dip into direct cost funds that would otherwise be used to build up their infrastructure and capacity. This keeps these organizations operating more minimally—which negatively impacts the grants they can receive; thus, the cycle continues.
  • Funder requirements for grant compliance: the grantees are responsible for providing lots of information about their finances, budgets, metrics, and other data. These responsibilities are the same no matter the grant size. Since ICBOs rely on many smaller grants to sustain themselves, repeatedly undergoing this process places a lot of burden on their infrastructure.
  • Single-issue direct-service focus: certain demographics, psychosocial conditions, and prevention-intervention strategies that grants often target do not holistically service the needs of Indigenous communities. When a grant’s aim is incompatible with the community’s needs, essential services can be more challenging to provide.
  • Prioritization of Western evidence-based practices: grants often look for justification from evidence-based care and certain practices. The authors validate this requirement but point out how this can negatively affect ICBOs that may lack credentialed staff or necessary infrastructure. Culturally adapted practices can offer great benefits to Indigenous communities compared to generic, westernized ones. Finding appropriate staff or obtaining the resources to adequately balance these ideals and implement them effectively causes further strain for ICBOs.
  • Service provision as success metric: these types of grants typically evaluate organizations through a variety of metrics that cannot always represent the success an ICBO has for mitigating disparities and elevating individual’s well-being.

A common route ICBOs take to avoid the strain from these issues comes in the form of subcontracted partnerships. In these instances, an ICBO may form a relationship with a larger, non-Indigenous organization that does not face these barriers for securing funding. While these partnerships can enable ICBOs to receive adequate funding and offer effective, culturally based care, these relationships intrinsically form a hierarchy. The larger organization will continue to have control over funding and ICBOs can end up dependent on their partners and forced to endure drawbacks such as funding delays.

To confront these ongoing issues, the authors call for funders to address their indirect cost rates, include grants intended for building infrastructure and capacity, and reform what qualifies as a direct service to better accommodate Indigenous communities. They also argue that competition between ICBOs for limited grants causes lots of strife in these organizations and worsens the funding issues they encounter. Some solutions to this problem could include a multi-ICBO care grant or a shift in grant focus towards how ICBOs collectively benefit their communities.

Additionally, minimizing the obstacles ICBOs face for seeking and managing grants could help them obtain the resources they require to not only sustain themselves, but also grow to address the unmet psychosocial needs in their communities.

"Unique contexts for Indigenous communities, characterized by both oppression and cultural strength, require distinct consideration," the authors concluded. "Investing in Indigenous self-determined health requires changing the investment process from top-down provisional structures to bottom-up growth and empowerment of Indigenous communities."


Deutsch AR, Frerichs L, Hasgul Z, et al. How funding policy maintains structural inequity within indigenous community-based organizations. Health Aff (Millwood). 2023 Oct;42(10):1411-1419. doi: 10.1377/hlthaff.2023.00483.

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