Long an ‘afterthought’ for banks and the government, Latino wealth is getting more and more funding from philanthropists

Hernandez was able to provide the loans averaging $33,000 each after his organization received a two-year, $100,000 grant from the Latino Community Foundation’s Latino Entrepreneurship Fund in July 2021. He says the money from the community foundation helped his nonprofit secure more funding from other foundations and corporations, such as Wells Fargo, enabling his fund to do more lending.

Hernandez leads Creser Capital Fund, which lends to people traditional banks often are reluctant to help.

The growth his organization has experienced is the result of a growing effort by private foundations and nonprofit organizations like Latino Community Foundation and Hispanics in Philanthropy to advance economic growth for Latinos in the United States. Foundations have committed nearly half a billion toward economic development over the course of seven years, according to data compiled by Candid and Hispanics in Philanthropy.

And such giving seems to be on an upward trajectory in the wake of both COVID and the racial reckoning, which revealed that Latinos have been neglected by financial institutions and government. In May 2020, the Stanford Latino Entrepreneurship Initiative found that 86% of Latino business owners reported they immediately felt a negative impact on their businesses because of the pandemic. They were also less likely to receive federal loans and assistance than white business owners during the crisis. The Hispanic or Latino unemployment rate was more than three percentage points higher than the white unemployment rate in December 2020.

“It was important for us to make sure that, as we moved into this crisis mode of COVID, that Latino- and immigrant-led businesses weren’t an afterthought,” says Jacqueline Martinez Garcel, CEO at the Latino Community Foundation, a grant maker that supports Latino-led organizations in California.

The foundation started the Latino Entrepreneurship Fund in 2020 with $4 million from the James Irvine Foundation to help Latino entrepreneurs and community financial lenders assist Latino businesses. Since then, it has provided $1 million to help start three new community-development financial institutions, including Creser Capital Fund. Such financial institutions, which have charity status, typically provide loans of up to $75,000 to low-income entrepreneurs or small businesses owned by people of color.

In July 2020, Hispanics in Philanthropy, an organization that works to attract charitable funds to serve Hispanics, launched the PowerUp Fund to help Latino-owned small businesses in California, New York, and Texas. Google.org, the tech giant’s philanthropic arm, gave $3 million toward that effort. Then PowerUp awarded $5,000 grants and business coaching to 500 Latino business owners, including Laura Bruce, who owns Mi Casa Es Tu Casa in Austin, Texas.

Bruce used the money to help keep her employees working during the pandemic and to move its Spanish music classes for young children online.

“I was able to invest in a new idea that actually ended up being super successful,” she says. Two years later, that virtual program has helped bring families from across the country to her classes. The business coaching also was among the most valuable part of the grant, according to Bruce. “I was able to get kind of one-on-one attention into some questions that I have for my business.”

The fund also awarded a grant to Jessica Betancourt, owner of Bronx Optical Center, after a looting spree left her store with $170,000 in losses in the summer of 2020. Betancourt used the money to pay overdue bills and to purchase fliers and marketing materials to promote the store.

Meanwhile, the Aspen Institute Latinos and Society Program, which researches ideas to advance economic mobility for Latinos, raised more than $1.6 million in corporate and foundation funding in 2021 from Google.org, the Coca-Cola Company, and the Ewing Marion Kauffman Foundation for its Action Lab program.

The program brought together leaders in six cities to devise solutions that provide capital and other forms of support to help Latino-owned businesses thrive. As part of the program, the Illinois Hispanic Chamber of Commerce in Chicago developed training to help businesses secure government contracts, according to Domenika Lynch, executive director of the Aspen Institute Latinos and Society Program. While in Miami, leaders are working to create a project that will advise entrepreneurs seeking loans and other resources.

Funding small businesses also builds on a strong interest in entrepreneurship among many Latinos. A report from the Stanford Latino Entrepreneurship Initiative released last year found that the number of Latino-owned businesses grew by 34% over the last 10 years compared with just 1% for all other small businesses.

For Martinez Garcel, that trend presented a promising opportunity for the foundation. “If we invest in Latino entrepreneurs, we would, in fact, really just begin to accelerate closing this wealth gap, but also lean into a strength in our community as immigrants who are very entrepreneurial,” she says.

Other community foundations also have started to provide more grants to nonprofits building wealth for Latinos in their cities or states. The Boston Foundation’s Latino Equity Fund is supporting nonprofits advocating for state and local policies that help workers, as well as for organizations that offer training in English and low-cost housing.

The Oregon Community Foundation’s Latino Partnership Program will make its first grants of up to $10,000 each this year to nonprofits focused on building wealth. The foundation is part of the Latinx Community Wealth Building Network, a group of nonprofit and government leaders collaborating to advise philanthropy on wealth creation for Latino communities in Oregon.

“When we started those conversations, the Latino leaders said, we really want to think about how we can truly support our community in Oregon beyond a survival state,” says Mirna Loreli Cibrian, program officer at the Latino Partnership Program.

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This article was provided to The Associated Press by the Chronicle of Philanthropy. Kay Dervishi is a staff writer at the Chronicle. Email: kay.dervishi@philanthropy.com The AP and the Chronicle receive support from the Lilly Endowment for coverage of philanthropy and nonprofits. The AP and the Chronicle are solely responsible for all content. For all of AP’s philanthropy coverage, visit https://apnews.com/hub/philanthropy.