Do Hispanic nonprofits foster Hispanic philanthropy?

Neglect of Hispanic communities by most nonprofitorganizations may help explain why relatively fewHispanics practice conventional forms of philan-thropy. However, there is evidence that Hispanicsin the United States support informal, traditionalvoluntary associations in their own communities.Historically, cultural traditions and informalmutual assistance have led to the formation of non-profit corporations controlled by members of theHispanic communities they serve. In the past twodecades, the number of formal Hispanic nonprofitshas grown rapidly. It remains to be seen if therecent increase in Hispanic tax-exempt organiza-tions will change patterns of giving among thenation’s growing Hispanic population.

2Do Hispanic nonprofits foster Hispanic philanthropy?

Michael Cortés

IF HISPANICS WERE TO GIVE MORE to charity, to whom would theygive? The editors’ introduction to this volume cites Hodgkinsonand Weitzman (1992), who report that a relatively small propor-tion of Hispanics give to charity. The introduction goes on to saythat the beneficiaries of Hispanic philanthropy are usually familyor church. De la Garza (1995) adds that Hispanics are relatively

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unlikely to give to nonprofit organizations. Under which circum-stances would Hispanics contribute more? Is there a shortage ofworthy beneficiaries, from their point of view?

Mainstream nonprofits neglect HispanicsTo understand giving by Hispanics, we should consider their choiceof beneficiaries. Let us begin by trying to look at that choice froma Hispanic perspective. As a first step, I have suspended use of theterm Hispanic in this chapter and have used instead the term I pre-fer—Latinos.

How do Latinos feel about philanthropy and nonprofit organi-zations? Based on the following research findings, their feelingsshould be mixed at best. In the United States, organized philan-thropy and formal nonprofit organizations have less to do withLatinos than one might expect.

Most grant-making foundations ignore Latinos. Of all the fundsgranted each year by major U.S. foundations, the amount ear-marked for Latinos fluctuates between 2 percent and three-quartersof 1 percent (Cortés, 1991).

Furthermore, foundation grantees and the rest of the nonprofitsector share funders’ disinterest in Latinos. INDEPENDENT SECTOR

finds that nonprofits lag behind government and business in hiringLatinos; among nonprofits, 5.3 percent of employees are Latinocompared with 6.4 percent in government and 8.6 percent in theprivate sector (Hispanics in Philanthropy, 1994).

Latinos constitute only half of 1 percent of foundation and otherboards of directors and trustees (Sánchez and Zamora, 1999),despite projections showing that within the next fifty years, one ofevery four U.S. residents will be Latino (personal communicationwith Census Bureau staff member, Sept. 1997).

Latinos are, indeed, an “invisible minority” (as the editors sug-gest in their introduction to this volume). In the nonprofit sector,their invisibility affects foundation grant-making, nonprofit hiring,and board representation. Thus, the consequences should not sur-

32 HISPANIC PHILANTHROPY

prise us. Many—probably most—nonprofit organizations in theUnited States ignore Latino communities and clientele. Are thesethe sorts of organizations to which Latinos would want to give?

Invisibility is a two-way street. Most Latinos do not see thenation’s conventional nonprofit sector as a vehicle for addressingtheir problems, aspirations, and values. They are left to seek alter-native ways of expressing humankind’s universal philanthropicimpulse. Researchers are beginning to discover Latinos’ own, sep-arate nonprofit and voluntary sector. Although most philanthropicand nonprofit activity among Latinos is informal, there is also agrowing number of formally incorporated nonprofit organizationsthat are of, by, and for Latinos. This chapter describes the resultsof new research on the emergence of formally incorporated,government-recognized Latino nonprofits in the United States.

Informal mutual assistance fosters new nonprofitsBefore we look at the emergence of Latino nonprofits, let us con-sider a bit further Latinos’ informal world of philanthropy and non-profit activity. That informal world is a traditional alternative thatparallels the nation’s mainstream nonprofit organizations. Latinos’informal world of philanthropy and community service is also anincubator for formal Latino nonprofits.

Scant participation in mainstream philanthropy and nonprofitorganizations is not peculiar to Latinos. Whenever any racial or eth-nic minority is underrepresented in public and private policymakingbodies and prosperous segments of the economy, it is also under-represented in mainstream philanthropic and nonprofit institutions.Bradford Smith and colleagues (Smith, Shue, Vest, and Villarreal,1999) describe several disadvantaged minorities, including Latinos,who have elaborated their own traditions of philanthropy and com-munity service in the midst of U.S. society. Philanthropy, mutualassistance, and community service by and for disadvantaged minor-ity communities is part of our national history. Smith, Shue, Vest,and Villarreal describe a variety of culturally specific philanthropic

33DO HISPANIC NONPROFITS FOSTER PHILANTHROPY?

traditions and informal associations formed by Latino immigrants inthe San Francisco Bay Area today. Rodríguez-Fraticelli, Sanabria,and Tirado (1991) discuss the formation of voluntary associations ofPuerto Ricans in New York City in the early twentieth century.Albert Camarillo (1991) describes the emergence of associations ofMexican Americans in the southwestern United States in the mid-nineteenth century.

The existence of Latino nonprofits is largely the result of incom-plete integration and lack of opportunity for Latinos in mainstreameconomic and legal institutions. Latinos formed many of theirinformal associations as a collective response to persecution byother U.S. residents and institutions. Informal associations of Lati-nos eventually led, in some cases, to establishment of formal, tax-exempt nonprofit corporations controlled by Latinos for the benefitof their own communities.

For example, the nation’s first Latino nonprofits were formed afterthe end of the Mexican War. Under the terms of the Treaty ofGuadalupe-Hidalgo in 1848, Mexico ceded half its territory to theUnited States, including much of what is now Arizona, California,Colorado, Oklahoma, Nevada, New Mexico, Texas, and Utah. Manyof our Mexican ancestors did not cross the border to become U.S. cit-izens—the border crossed to them. The treaty guaranteed protectionsfor former Mexicans who were native to the newly acquired south-western territories. It promised Mejicanos their full U.S. citizenshipwith attendant civil and property rights. Nevertheless, Mejicanos weregradually robbed of their land during the ensuing westward migra-tion of English-speaking residents from the nation’s eastern states.Anglos who took control of the region forcibly prevented U.S. citi-zens of Mexican descent from exercising their rights of citizenship,including voting and running for office. As a result, Mejicanos formednonprofit mutual assistance associations as they struggled to survivein an increasingly hostile social, political, and economic environment(Camarillo, 1991). Several of those associations were formally incor-porated during the late nineteenth or early twentieth century.

The tradition of forming new organizations for mutual assistanceand defense against persecution has continued among Mexican


Americans throughout the twentieth century. In a more recentexample, the League of United Latin American Citizens wasformed in 1929 to “promote good citizenship among MexicanAmericans and thereby change the image of Mexicans in U.S. soci-ety” (Camarillo, 1991, p. 23). The League is now the largest indi-vidual membership organization of Latinos in the United States.The second largest is a Mexican American veterans group—theAmerican GI Forum—founded in 1948. The impetus for its cre-ation was the refusal by Anglos in a south Texas town to allow theburial of a Mexican American hero of World War II in the town’smain cemetery. Later, in 1968, the Mexican American LegalDefense and Educational Fund was created to carry on the work ofvolunteer attorneys who were challenging segregation laws, exclu-sion from juries, and other violations of Mexican American civilrights (Martínez, 1991).

New dataThe presence in the United States of formal and informal Latinononprofits poses challenges for students of philanthropy and thenonprofit sector. We need new data and multidisciplinary conceptsto understand and measure the diversity of philanthropic, non-profit, and voluntary phenomena lying outside the national main-stream. The following pages report the results of a small step inthat direction.

The best single source of data on formal nonprofit organizationsis the Internal Revenue Service (IRS). Unfortunately for our pur-poses, IRS data do not identify Latino organizations as such. I devel-oped a strategy for coping with this problem. I scanned the namesof all nonprofit organizations known to the IRS in an effort to iden-tify Latino organizations serving Latino communities in the UnitedStates. I applied that strategy to the IRS Business Master File ofExempt Organizations, which lists all tax-exempt nonprofit organi-zations known to the IRS. The Business Master File has data onmore than a million tax-exempt nonprofits. I used a combination of


computerized content analysis and systematic judgments in orderto isolate data on Latino organizations in the files (Cortés, 1998).That strategy was used to create a statistical profile of Latino non-profit organizations in this country (Cortés, 1999).

Rapid growth of Hispanic nonprofitsPreliminary findings suggest that Latino nonprofits account forfour-tenths of 1 percent of all tax-exempt organizations. I found4,068 nonprofits in IRS files that appeared to meet the followingcriteria: they exist primarily to serve Latino communities in theUnited States, they are controlled or led by members of Latinocommunities, and they are not churches. Churches were excludedfrom the analysis because the IRS records are incomplete in thatrespect. Churches are not usually required to apply to the IRS forrecognition of their tax-exempt status. However, I did include othertypes of religious organizations that—like other nonprofits—arerequired to apply to the IRS for recognition. The analysis alsomissed many or most nonprofits with assets and annual incomes ofless than $5,000, because they too are exempt from applying to theIRS.

Half of all Latino nonprofits I found in IRS files are located inthe states of California, Texas, and New Mexico. Other jurisdic-tions with small but significant concentrations of Latino nonprof-its are (in declining order) New York, Florida, Puerto Rico, Illinois,the District of Columbia, and Colorado.

The number and percentage of Latino nonprofits I found in IRSfiles seem small when compared with the nation’s rapidly growingLatino population. Nevertheless, their rate of growth is impressive.Analysis of IRS recognition dates for those 4,068 nonprofits pro-duced some interesting results, as follows.

During and after World War II, new Latino nonprofits applyingto the IRS for recognition of tax-exempt status numbered between1 and 14 annually. The rate picked up in the 1960s, rangingbetween 4 and 71 annually (except for 1966, as I will explain in a


moment). In the 1970s, an average of 67 new organizations formedeach year, and the average for the first half of the 1980s was 84 eachyear. From 1985 through 1989, the average rate surged to 151 peryear. The rate continues to increase. The rate of formation of newLatino nonprofits now exceeds 300 per year.

A deviation from that steady growth trend occurred in 1966.That year, the IRS recognized 277 new Latino nonprofits. Theincrease apparently was caused by implementation of PresidentLyndon B. Johnson’s War on Poverty, authorized by the EconomicOpportunity Act of 1964, which Johnson signed into law in 1965.The oft-criticized War on Poverty was an important success in atleast one respect: during the first two years of the campaign, thefederal government established and funded hundreds of new com-munity action programs and related nonprofit agencies designedto serve and empower poor communities and neighborhoodsthroughout the nation (see Marston, 1993).

An uncertain funding baseThe proportion of Latino nonprofits classified by the IRS undersubsection 501(c)(3) of the Internal Revenue Code is rather highcompared with other nonprofits. That subsection is reserved forcharitable, educational, literary, religious, and scientific organiza-tions. Forty-eight percent of all nonprofits known to the IRS areclassified under 501(c)(3). In contrast, two-thirds of Latino non-profits are classified under 501(c)(3). Most other Latino nonprof-its are classified as 501(c)(4) (civic leagues or social welfareorganizations engaging in social action), 501(c)(6) (business andtrade associations), or 501(c)(7) (social and recreation clubs).

The high proportion of Latino organizations classified under501(c)(3) is important for fundraising purposes. Exemption under thatsubsection assures donors that their contributions to the nonprofitare deductible on individual or corporate tax returns (under section170 of the Internal Revenue Code). Classification under 501(c)(3) alsomakes it easier to raise funds from private foundations. Under some


circumstances, donations to nonprofits exempt under other subsec-tions are also deductible. Fully 70 percent of all Latino nonprofits areeligible to receive tax-deductible contributions.

Ninety percent of Latino nonprofits receive significant financialsupport from government, fees charged for services, or various pri-vate sources such as foundations or individual donors. Unfortu-nately, the IRS data I analyzed do not distinguish among thosesources. Without mounting my own survey to collect additionaldata, I cannot disaggregate that 90 percent into its componentparts; that is, government grants and contracts, fees charged forservices, grants from private foundations, and individual donations.

According to IRS records, the most popular activities amongLatino nonprofits are programs for veterans, scholarship and edu-cational programs, and promotion of business and commerce.Other widespread activities include cultural and educational activ-ities, discussion groups and public forums, and community service.Activities undertaken least often by Latino nonprofits are youthservices, legislative and political activities, litigation, and legal aid.

Only 122 Latino nonprofits (4.4 percent of those classified under501[c][3]) were classified as private foundations. Eight of them wereprivate operating foundations. These numbers may be low; I sus-pect our estimation procedure is biased against family foundations(Cortés, 1998). In any event, we have much to learn about Latinoprivate foundations. The number of affluent Latinos in the UnitedStates is growing. Ana Gloria Rivas-Vázquez (1999) and HenryRamos and Gabriel Kasper (1999) explore that phenomenon andsuggest ways in which Latino donors’ use of private and commu-nity foundations could be increased.

Anecdotal information suggests that through most of their his-tory, Latino nonprofits with the largest budgets have depended pri-marily on non-Latino institutions for the majority of their income(see, for example, Nicolau and Santiestevan, 1991). Governmentand a small number of large foundations (notably the Ford Foun-dation) have contributed the bulk of that support (Cortés, 1991).Contributions by large U.S. corporations have also played animportant role.


ConclusionMost Latino nonprofits are small, and they have small budgets.Analysis of IRS data found that 62 percent of Latino nonprofits inIRS files have incomes small enough to exempt them from filingannual returns. (The IRS requires exempt organizations to fileForm 990 when annual income exceeds $25,000 per year.) Recallthat the IRS does not even have files on nonprofits with less than$5,000, so the proportion of small Latino nonprofits is probablyeven higher. Nevertheless, a small but influential group of Latinononprofits have large incomes and have acquired significantfundraising experience and expertise. Large Latino organizationsgenerally target most of their fundraising efforts on non-Latinodonors, as do many—perhaps most—small Latino nonprofits.

It remains to be seen whether the nation’s growing number of Latino nonprofits, both big and small, will eventually target the Latino community for a larger share of their income. Appro-priate fundraising strategies and techniques, developed in collabo-ration with professional fundraisers and scholars, might help thesenonprofits develop larger donor pools in the communities theyserve. Perhaps that is the key to increasing conventional forms ofphilanthropy and volunteering among our nation’s growing Latinopopulation.

ReferencesCamarillo, A. “Mexican Americans and Nonprofit Organizations: An Histor-

ical Overview.” In H. E. Gallegos and M. O’Neill (eds.), Hispanics and theNonprofit Sector. New York: Foundation Center, 1991.

Cortés, M. “Philanthropy and Latino Nonprofits: A Research Agenda.” In H.E. Gallegos and M. O’Neill (eds.), Hispanics and the Nonprofit Sector. NewYork: Foundation Center, 1991.

Cortés, M. “Counting Latino Nonprofits: A New Strategy for Finding Data.”Nonprofit and Voluntary Sector Quarterly, 1998, 27 (4), 437–458.

Cortés, M. “A Statistical Profile of Latino Nonprofit Organizations in theUnited States.” In D. Campoamor, W. A. Díaz, and H. A. J. Ramos (eds.),Nuevos Senderos: Reflections on Hispanics and Philanthropy. Houston: ArtePúblico, 1999.

de la Garza, R. O. Latino Voluntarism: A Preliminary Empirical Investigation.Commissioned paper. Berkeley, Calif.: Hispanics in Philanthropy, Oct. 1,1995.


Hispanics in Philanthropy. “Latinos Represent 5.3 Percent of Nonprofit Sec-tor.” Hispanics in Philanthropy News, Summer 1994, p. 3.

Hodgkinson, V. A., and Weitzman, M. A. Giving and Volunteering in the UnitedStates: Findings from a National Survey. Washington, D.C.: INDEPENDENT

SECTOR, 1992.Marston, S. A. “Citizen Action Programs and Participatory Politics in Tuc-

son.” In H. Ingram and S. R. Smith (eds.), Public Policy for Democracy. Wash-ington, D.C.: Brookings Institution, 1993.

Martínez, V. S. “Hispanic Advocacy Organizations.” In H. E. Gallegos andM. O’Neill (eds.), Hispanics and the Nonprofit Sector. New York: FoundationCenter, 1991.

Nicolau, S. O., and Santiestevan, H. “Looking Back: A Grantee-Grantor Viewof the Early Years of the Council of La Raza.” In H. E. Gallegos and M.O’Neill (eds.), Hispanics and the Nonprofit Sector. New York: FoundationCenter, 1991.

Ramos, H.A.J., and Kasper, G. “Latinos and Community Funds: A Compar-ative Overview and Assessment of Latino Philanthropic Self-Help Initia-tives.” In D. Campoamor, W. A. Díaz, and H.A.J. Ramos (eds.), NuevosSenderos: Reflections on Hispanics and Philanthropy. Houston: Arte Público,1999.

Rivas-Vázquez, A. G. “New Pools of Latino Wealth: A Case Study of Donorsand Potential Donors in U.S. Hispanic/Latino Communities.” In D. Cam-poamor, W. A. Díaz, and H.A.J. Ramos (eds.), Nuevos Senderos: Reflectionson Hispanics and Philanthropy. Houston: Arte Público, 1999.

Rodríguez-Fraticelli, C., Sanabria, C., and Tirado, A. “Puerto Rican Non-profit Organizations in New York City.” In H. E. Gallegos and M. O’Neill(eds.), Hispanics and the Nonprofit Sector. New York: Foundation Center,1991.

Sánchez, D., and Zamora, R. “Current Issues Affecting U.S. Hispanic Foun-dation and Nonprofit Directors/Trustees: A Survey of the Field.” In D.Campoamor, W. A. Díaz, and H.A.J. Ramos (eds.), Nuevos Senderos: Reflec-tions on Hispanics and Philanthropy. Houston: Arte Público, 1999.

Smith, B., Shue, S., Vest, J. L., and Villarreal, J. Philanthropy in Communitiesof Color. Bloomington: Indiana University Press, 1999.

MICHAEL CORTÉS is assistant professor of public policy at the Universityof Colorado Graduate School of Public Affairs in Denver, where he directsthe Program on Nonprofit Organizations.


Do Hispanic nonprofits foster Hispanic philanthropy?

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