The Color of Money

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When Robert S. Browne wanted to use a million-dollar inheritance to start a black foundation 28 years ago, he didn’t expect his associates to call him a racist. Browne, an economist, thought these friends, who worked at foundations, would be just the ones to help him raise additional money to give grants to black-run groups and other organizations that focus on helping African-American communities. But instead, Browne remembers, they told him: “Absolutely not. That is racist and separatist.” Besides, they said, people wouldn’t give to funds like that.

So Browne started his own endowment by investing his inheritance and waiting for the interest to grow. It was the beginning of the Twenty-First Century Foundation, New York’s first endowed black foundation. Since 1971, the foundation has given $2.4 million to 250 nonprofit programs.

Today, the opposition Browne encountered is rapidly becoming a relic. The idea of creating fundraising campaigns and giving programs specific to one race or ethnicity is now being researched and actively promoted by three of the nation’s leading funders. Local groups, in turn, are beginning to think differently about their own fundraising ambitions.

Three in particular–the Associated Black Charities, the Asian American Federation and the Hispanic Federation–are planning new long-term capital-building campaigns. Today, they depend almost totally on outside funders–particularly the United Way, which created the three organizations in the 1980s to provide technical assistance, advocacy and some limited funding for their affiliated community-based organizations. Now these groups are banking that a new breed of young professionals, as well as the monied leaders in their communities, will be willing to support their neighborhood causes.

“There are a pool of people out there…what you would call the uptown Chinese,” offers Cao O, executive director of the Asian American Federation, with a laugh. Many are American-educated entrepreneurs and investment bankers, approaching middle age, who already give to institutions like museums and universities. “These people tend to follow the American tradition of giving,” he says. “They might not give to human services as much as they might to art and culture, but there’s still opportunity out there.”

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Traditional fundraising in minority communities has always been considered a challenge. A recent article on black giving patterns in The Chronicle of Philanthropy, for example, noted that the median income for black households was around $25,000 compared with $40,000 for non-Hispanic whites. Only 2.7 percent of black households have incomes of $100,000 or more, compared with 8.9 percent of white households. The lack of big-ticket donors is a major problem for charities and nonprofits looking to mine a minority community, observed Julian Johnson, who recently departed as executive director of the Associated Black Charities of New York. As he told the Chronicle: “Endowments don’t come from $10 donors.”

The picture, however, is getting better. Census data shows that the important indicators such as wealth, household income, education and rates of business ownership among minorities have been steadily improving over the last few years. And minority communities have their own traditions of giving, albeit in more immediate ways. Extended family networks, mutual support organizations, fraternal societies and religious institutions have long had a stabilizing effect, accepting money from those who are able to contribute and passing it on to neighbors in need.

“The prevailing view is that people of color need resources,” Joel Orosz, a program director at the W.K. Kellogg Foundation, which has taken a leading role in helping establish new endowments that both give to and solicit donations from minority communities. “While we don’t want to say that is no longer true, it is also true that people of color have been donors and funders themselves.”

Kellogg, along with the Ford Foundation and the David and Lucile Packard Foundation, recently funded a series of reports and conferences aimed at exploring the attitudes and giving patterns of black, Latino, Asian and Native American communities. The reports, prepared by the Council on Foundations, attempted to explore the various interests and giving patterns of wealthy donors in these communities and examine ways in which nonprofits, local federations and community foundations could build stronger minority donor relationships.

For traditional foundations, always on the lookout for ways to build their endowments, raising and giving money around racial and cultural issues offers a new twist on the usual philanthropic focus on programs. It’s also an attempt to generate interest among people who’ve never considered giving before. The amount of money donated by minorities for minority-specific programs has been increasing in community foundations. Between 1990 and 1998, the number of program funds established by or for people of color increased from 100 to 639. Only 12 of these funds, however, were both generated and spent within a single racial or ethnic group.

A key premise of the study was that these minority groups all had increasing numbers of wealthy people with the potential to either offer large donations or set up endowments and foundations of their own. “We found out that there is indeed a strong interest in charity, but it’s not necessarily the same as Ford or Rockefeller,” says Joanne Scanlan, one of the study’s authors. Almost all of the 87 people interviewed still had connections to less fortunate people in their communities–mainly through family–and understood how tough their problems could be. “There is a real awareness of need, and that leads to real tension about spending money,” she says. “Do you give directly to people with problems or to charity? Or do you put it in an endowment where it will grow to be more useful? These are real difficult questions.” Hopefully, she adds, “you can have both.”

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In New York City, the United Way federations have begun reaching out to minority donors to build permanent endowments. The Associated Black Charities has invested $50,000 from its own grant fund, while the Hispanic Federation will soon move 10 percent of its community chest into an endowment. The Asian American Federation is still in the planning stages.

Over the coming years, these federations plan to raise enough money to produce a steady stream of useful interest income. The problem is, money sitting in an investment account is useless to the small nonprofits who desperately need the associations’ funding today.

Casita Maria Settlement House in the Bronx turned to the Hispanic Federation two years ago after more than a dozen foundations refused to help the group purchase new computers and software. The federation provided $30,000. “We’ve knocked on many doors. Theirs was the first to open,” says executive director Gladys Padro-Solér. Without the federation’s help, the group wouldn’t have been able to upgrade its financial department, or, with a later grant, make roof repairs.

Hispanic Federation president Lorraine Cortez-Vasquez admits that her organization is still deciding whether it can provide such grants while it builds its endowment, and whether it will have staff to fundraise for both current grant programs and future development. “It’s a constant discussion,” she says. The federation’s giving program “is one of the competing demands.”

Another challenge will be in identifying new donors, many of whom already give to programs and institutions they know well. The federations are competing with churches, trade and social organizations, and other countries with strong ties to city neighborhoods, all of which receive a large share of donations from their communities. Each year, for instance, Vietnamese Americans send almost $500 million back to their families and organizations in Vietnam.

The groups are planning, first of all, to improve on fundraising strategies they have long used. Last year, the Hispanic Federation raised $1 million by holding a fundraiser featuring community celebs like Daisy Fuentes. Events like these have a long, lucrative history in minority communities and can be powerful tools for reaching out to all kinds of new donors. Observes Henry A. J. Ramos, who wrote the Council on Foundations’ report on Hispanic giving: “If you want to do business with the Hispanic leadership in New York City, you better attend that function or be perceived as not being receptive to that community.”

But if the federations are to meet their goals, they will also have to find new sources of support in minority communities. Tapping into these markets is an untested science, observes the Asian American Federation’s Cao O. In his case, he has to find issues that will interest a range of different kinds of Asian donors–his federation includes 34 different groups serving different populations, including Chinese, Japanese, Koreans and Filipinos. “That has been a challenge for us,” he says. “Often people are concerned about how their gifts will benefit their own communities.”

There’s also a good chance that the Asian American Federation will have to embrace and support new kinds of nonprofits that do the work that wealthy donors are interested in, he adds. Initial surveys among Asians indicated that there is a lot of interest in supporting groups that help senior citizens as well as those that work on public health and cultural issues. Right now, the federation primarily supports human services organizations, he says, “but certainly, there are cultural programs that we could support.”

“This is an area that few people have tried before. In some ways there are unknown elements,” he adds. It’s likely, however, that the tastes of new donors will influence the work of the federation and the community groups it helps support. “The mission of the organization is going to have to be more expansive than it is now.”

Additional reporting by Kemba Johnson.