Tapping Ethnic Wealth

Charities pursue minority giving as incomes rise among blacks, Hispanics, and other groups

Frustrated by watching Hispanic wealth pour out of their neighborhoods and

into the coffers of museums and symphonies, Henry G. Cisneros and Raul Yzaguirre decided to start a group devoted to linking Hispanic money with Hispanic need. By doing so, the two have tried to tackle one of the biggest obstacles facing the nonprofit world: raising money from the nation’s burgeoning population of ethnic minorities and funneling it to causes that help ethnic groups.

Two years ago, Mr. Cisneros, former secretary of the U.S. Department of Housing and Urban Development, and Mr. Yzaguirre, the longtime president of the National Council of La Raza, a Latino advocacy group, formed a nonprofit organization that encourages wealthy Hispanics to give generously to Hispanic causes. The group, the New America Alliance, in Tysons Corner, Va., already has persuaded 100 donors to give a total of $1-million, much of it to help young Hispanics earn master’s degrees in business administration.

Modeled loosely on the nation’s network of Jewish federations, New America

is in the vanguard of a wave of ethnic charities that seek not only to raise money but also to develop a culture of giving among minorities. One of the key messages: Mainstream foundations have slighted ethnic groups in their grant making, and only the generosity of minority donors can compensate.

Driven by rising incomes among Asian-Americans, blacks, Hispanics, and American Indians, and government projections that minorities will make up nearly half of the U.S. population by 2050, ethnic charities see a stellar opportunity to increase the amount of ethnic philanthropy in coming years.

“The money’s out there,” says Emmett D. Carson Jr., the first black president of the Minneapolis Foundation. “People of color have always given. We need to continue to find new ways to help them do that.”

Giving to Established Groups

Still, finding ways to tap ethnic wealth is a daunting challenge. Some minority cultures, wary of lawyers and bureaucracy, resist the notion of

drawing up wills, making planned gifts, or leaving bequests to charities. In addition, recent immigrants often focus their giving on relatives in their home countries. And many wealthy members of minority groups choose to leave their money to established nonprofit organizations, such as museums and universities, in part to gain access to mainstream social and business circles.

With all those obstacles in place, appealing to the growing population of minorities takes ingenuity, persistence, and a good understanding of cultural nuances, experts say.

“What people have learned in fund-raising school isn’t going to help them much because of all these differences among and even within cultures,” says Michael Cortés, director of the University of San Francisco’s Institute for Nonprofit Organization Management.

Adds Henry A.J. Ramos, principal in Mauer Kunst Consulting, a company in New York that advises nonprofit groups on ethnic giving: “I don’t know that there’s one silver bullet. We need to experiment with a bunch of different models.”

That experimentation already is occurring. Besides the New America Alliance, other groups that have started in the past few years include:

• The Coalition for New Philanthropy, in New York, which aims to encourage giving by minorities and more effectively dole out what nonprofit groups take in. Formed in August, the coalition is made up of three ethnic grant makers — the Asian American Federation of New York, the Hispanic Federation, and the black-led 21st Century Foundation — plus an academic research group at the City University of New York, and the New York Regional Association of Grantmakers.
• In Baltimore, Associated Black Charities of Maryland, in partnership with the Baltimore Giving Project, a nonprofit group that encourages people under 40 to contribute to charity, formed the African American Philanthropy Initiative. The program, mirrored by similar ones started recently by black-led foundations and other groups across the country, also focuses on teaching prospective donors about various types of giving. Community foundations have started similar programs in Kansas City, Mo., and St. Paul. The goal, program leaders say, is to convert blacks’ traditional ways of giving into more modern ones, as well as making sure new black wealth helps those blacks who need it. In Baltimore, the African American Philanthropy Initiative has led to several major gifts.
• Native Americans have witnessed a boom in start-ups of foundations they run themselves. Three new foundations were started within the past year, including the North Carolina American Indian Fund in December. The number of American Indian funds has grown from three in 1973 to more than 50 this year. Funds led by blacks, Latinos, and Asians have also grown in recent years, albeit more modestly.

While giving by minorities is nothing new in itself, a major impetus for the growing emphasis on it is the prospect of rising wealth among minorities in coming decades.

Income among whites still far outpaces that of blacks and Hispanics, but financial gains among Asians, blacks, and Hispanics have been far stronger than among whites in recent years. The median household income among Hispanics rose 40 percent from 1995 to 2000, to $33,447, compared with a 19-percent gain (to $45,904) among whites, according to the latest data from the U.S. Census Bureau. The median household income among Asians, which rose 20 percent, was the highest of any group in 2000 — $55,521. Incomes among blacks rose 25 percent, to $30,439.

What’s more, incomes among blacks and Hispanics reached record highs in 2000, U.S. Census data show. An estimated one million black people earn more than $75,000 per year, according to the data.

Measures of Generosity

Besides rising wealth, minority donors also offer great potential for generosity. Federal income-tax data suggest, for example, that black and Hispanic homeowners tend to give a higher proportion of their incomes to charity than do white homeowners.

Among people who itemized deductions on their tax returns — typically people who own their homes — those living in majority-black ZIP codes gave 5.1 percent of their adjusted gross income to charity, according to an analysis of 1997 federal tax returns conducted for The Chronicle by the Urban Institute, a nonprofit think tank in Washington. Those in ZIP codes where the majority of itemizers were Hispanic gave 3.8 percent, while people in ZIP codes populated mostly by whites gave 3.3 percent.

Such numbers aren’t surprising to minorities who lead nonprofit groups. Ethnic groups have been stereotyped as receivers, not givers, of charity, they say. “When we use the word ‘philanthropy, ‘ people think of Rockefeller,” says Erica Hunt, executive director of the 21st Century Foundation in New York and board chair of the Coalition for New Philanthropy. “They don’t think of people of color as philanthropists.”

Then, too, many members of ethnic groups give in ways that are not always easily measured. Signs of that generosity, some experts say, are the billions of dollars that immigrants send back to their homelands each year. Families in Mexico receive as much as $10-billion annually from relatives living at least part of the year in the United States, studies estimate, while those in the Philippines get $8-billion.

Other minority giving that typically goes untallied is money funneled through so-called hometown associations, groups in the United States that support road projects and other public works in donors’ native countries. But such associations nonetheless bode well for the future of minority giving, says Mr. Cortés, because they often turn into full-fledged American charities with missions focused squarely on the needs of minorities living in the United States.

Reluctance to Make Planned Gifts

With the ranks and assets of minorities growing swiftly, it would be easy to envision a golden era of philanthropy in coming decades, but experts say that huge obstacles remain in translating minority wealth into minority giving.

One barrier comes in the form of cultural resistance among some minorities to traditional approaches to philanthropy.

Many blacks, for example, are not prone to making planned gifts, says Donna Jones Stanley, executive director of Associated Black Charities of Maryland. “There’s been a historic shying away from bequests and endowment building,” she says. “We haven’t planned for our deaths very well.” One reason, she says, is that blacks have not had much trust in banking institutions and lawyers who help make such plans.

Many members of the black middle class are dying without wills, she says, creating a problem for their heirs and limiting the philanthropic potential of the dollars they leave behind.

With a lack of trust in institutions and the lack of a tradition of planned giving often standing between black nonprofit groups and the emerging wealthy, asking people to plan for their deaths in order to benefit charity isn’t easy to do, Ms. Stanley acknowledges. Likewise, blacks sometimes decline to contribute to endowments because they feel that saving money for the future is unacceptable when present needs are so great.

Still, Ms. Stanley says, black charities need to solicit minorities for bequests and other major gifts, lest mainstream charities beat them to the money.

“We need to ask,” she says. “In fact, we need to be more aggressive in asking.”

She says her organization has incorporated planned giving into its strategy of courting donors over a number of years.

Seeking to Change Giving Patterns

Besides facing cultural resistance, ethnic charities often find it difficult to persuade minorities — even major donors — to earmark their money for minority causes.

Several Hispanic donors have given large sums to mainstream nonprofit groups in recent years, with, for example, the financier Alberto Vilar last year pledging $116.4-million to the Kennedy Center, the Washington Opera, and two major universities.

But Mr. Yzaguirre, the co-founder of the New America Alliance, says that many wealthy Hispanics — even ones who engage in philanthropy — have not given to Hispanic causes. “Those donors weren’t going to our groups because they weren’t being asked,” he says. “We’re saying that, strategically, a higher percentage of Hispanic philanthropy should go to Hispanic causes.”

Mr. Carson, of the Minneapolis Foundation, echoes Mr. Yzaguirre’s point.

“More minority members are tasting the fruits of democracy,” he says. “We have plenty of people of color doing well in Minnesota. Why aren’t they starting funds with us [at the Minneapolis Foundation]? Where are our marketing efforts failing? That’s what we have to do — we have to break through to them.”

Strong marketing efforts alone may not do the trick, however, minority-philanthropy leaders say. Whether they have been asked or not, many wealthy minorities give to big universities and cultural institutions in hopes of gaining access to mainstream business or social circles. Mr. Yzaguirre acknowledges the problem, but sees ways to overcome it.

“What we have to do is tell people that there is a special opportunity to give to their own communities, to help their own people. We are not ignorant of the need to seek business ties and other connections outside of philanthropy. Part of our ideology is that we can provide those kinds of links within the community.”

Small Donors

Still, some advocates of minority philanthropy question whether tapping high-end donors is the right way to help minorities. They contend that because many minorities assimilate into mainstream culture after becoming wealthy, giving to ethnic causes no longer is a priority.

“When you become wealthy, you almost always move out of the neighborhood in which you were raised,” says Hanmin Liu, president of the Wildflowers Institute, a nonprofit group in San Francisco that documents cultural traditions for foundations and others. “There are plenty of successful people who give, but don’t give back to their communities.”

Mr. Liu says that ethnic charities must cast a wide net when looking for money.

“If you look at how communities are strengthened, it’s not the million-dollar donors who do it,” he says. “It’s the lesser donors. If we can find ways to encourage those people to give, based on how they’ve used philanthropy to form their immigrant cultures, we’ll be successful in our fund raising.”

One way some groups are trying to cast a broad net is through nonprofit coalitions — multicultural groups that raise money from a variety of minority donors and use the money for causes that cut across ethnic boundaries.

The Coalition for New Philanthropy represents one such approach. “What we want to do through this group is affirm the giving we do get and show people what we can really do when we harness this power of giving,” Ms. Hunt says.

The coalition’s ethnic focus reflects U.S. Census figures that show the majority of New York residents are minorities. By educating donors on such facets of giving as building endowments and starting donor-advised funds, coalition officials hope to increase minority giving from within.

Jessica Chao, the group’s project consultant, says that besides promoting giving, the group aims to better identify charities whose missions and track records merit donations.

“We want to connect community assets with community needs,” she says. “Part of the education process is letting donors know what these nonprofit groups do in the community.”

Not everyone agrees that building rainbow coalitions is the best way to advance ethnic philanthropy. Mr. Carson, of the Minneapolis Foundation, urges organizations to concentrate fund-raising efforts on prospective donors within separate minority groups, whether black, Hispanic, Asian, or others.

“It makes much more sense to encourage giving in families of color,” he says. “By and large, there’s been no community buy-in for these endeavors” — meaning that donors in one ethnic group have sometimes been hesitant to support causes that primarily benefit other minority groups.

But some minority-giving experts believe that the pan-ethnic approach can work, especially when mainstream foundation and corporate grants are mixed with gifts from individual donors and the money is used for grants to nonprofit groups run by people from a variety of ethnic backgrounds.

Tony Espinoza, president of the United Latino Fund, which distributes $200,000 in grants annually to Hispanic charities in Los Angeles County, says such organizations provide an opportunity for minority groups to take care of many of their own needs.

Still, he acknowledges, the challenge is getting ethnic donors to contribute in the first place.

“For things to work, Asians, Latinos, and others are going to have to come up with their own funds and get their own people to back them,” Mr. Espinoza says.

“We have to convince our people about this thing called philanthropy.”

KEY EVENTS IN MINORITY PHILANTHROPY

1787 Free African Society of Philadelphia formed to aid free slaves
1816 African Methodist Episcopal denomination formed
1832 African American Female Intelligence Society formed
1862 Freedman’s aid societies organized in North to provide supplies and send teachers to former slaves
1909 National Negro Committee, the precursor to the NAACP, formed
1911 Society of American Indians formed
1944 United Negro College Fund formed
1963 First chapter of 100 Black Men of America formed
1968 National Council of La Raza formed
1972 National Black United Fund formed
1980 Federal court rules that National Black United Fund had been unfairly excluded from Combined Federal Campaign, the charity drive for government employees
1984 Greater Kansas City Hispanic Development Fund, the first community fund created solely for nonprofit groups that help Hispanics, is created
1987 John W. Kluge gives $25-million to Columbia University to recruit minority students
1988 American Indian College Fund established
1990 United Latino Fund founded
1999 Bill & Melinda Gates Foundation commits $1-billion over 20 years to provide college scholarships to minority students
1999 New America Alliance, an effort to raise money from Hispanics, is formed