New regulations imposed on New York-based nonprofits have hit Latino organizations particularly hard. A recent report by Marlene Peralta on City Limits shows that lack of access to capital in the Latino community has put nonprofits serving them at a disadvantage.
One of the requirements to land city funds is that an organization have capital available. In addition, funds are given through reimbursements, meaning the organization must spend money in advance before receiving compensation. This puts Latino organizations—which according to the most recent Census data, represent the poorest group in New York City—at a great disadvantage.
In addition, representatives say there isn’t a culture of philanthropy in Latino communities.
New York has 40,000 nonprofits, which employ more than 490,000 people or 15 percent of the city’s nongovernmental workforce—and 2,500 of them do business with the city.
Many of these organizations survive thanks to private donations. However, Latino groups depend mostly on public funds. “For our community, philanthropy is foreign to us,” Calderón says. Charitable foundations give less than 2 percent to Latino institutions, “and that is tragic,” he added.
Such funding challenges are nothing new for Latino nonprofits.
Latino nonprofit organizations grew during President Lyndon B. Johnson’s “war on poverty” in the 1960s. “There was a need to serve the Puerto Rican population in the ’60s,” says Carmen Cruz, ex director of the Leonard Covello Senior Center.
When federal funds became scarce, that forced many organizations to seek more funding from local government. Cruz says that the crisis in the sector began during the administrations of Mayors Ed Koch and Rudolph Giuliani, who implemented major funding cuts. Nevertheless, everyone interviewed agreed that the policies of the current mayor were what ended up “choking” groups.
All nonprofits struggle to compete for funding, but according to City Limits discretionary funding from the City Council Speaker has come under scrutiny. Add to that the case of the Alianza Dominicana, a once thriving organization that was derailed after the organization’s director was accused of financial mismanagement.
Alianza, based in Manhattan’s Washington Heights, at one point had 350 employees, an annual budget of $15 million and “an amazing record helping the Latino community,” Calderón says. Founded in 1985, Alianza offered programs on domestic violence, addiction and childcare.
However, an investigation by DOI, which referred the case to the state attorney general, found that some of the organization’s employees, including its leader, Pérez, misused funds.
According to two official reports, Pérez and two of his employees invested in an organization (whose owner also worked at Alianza) that was also hired to manages Alianza’s finances, despite having no experience in the nonprofit sector. The investigation also found that the leader failed to send workers’ contributions to their pension funds, among other charges.
Pérez—who denies any wrongdoing—claims that the investigation was an intimidation tactic to prevent the strengthening of Alianza Dominicana, because the organization exceeded expectations despite the “unfair” rules imposed by the local government.
Charges were never filed against Pérez, but the organization is struggling with tremendous debt and now limits its once robust work in the community to serving only youth.
José Calderón, executive director of the Hispanic Federation, says that there are broader structural issues to blame for the challenges Latino nonprofits face.
“Part of the reason is that no one invested in its infrastructure,” he says. He added that, although the organization received a lot of money for contracts with the city and the state, the government grants money strictly to fund the programs offered, without taking into account administrative expenses. “No one was investing in finance management, human resources, things that are key for that type of business,” he says.
Still other have pointed to lack of leadership in the Latino community, something the Pew Research Center found Latinos think is sorely lacking.
Political scientist Angelo Falcón says that the “excessive dependence” of nonprofits on local government has a “detrimental effect,” causing the loss of “much-needed independent activism” that is able to put the issues that impact the community at the forefront.
Compounding this is “a lack of political leadership,” Falcón says, adding that while the majority of Council members are African American or Latino, an agenda to benefit these groups isn’t being promoted. “They don’t organize, they don’t work together,” Falcón adds. “We don’t have enough influence to pressure the Council speaker” to push an agenda for Latinos or people of color. An example, he added, is that Latino leaders disagreed on which mayoral candidate they would endorse before the primaries.
Experts recognize that being almost absolutely dependent on the local government is at the root of the financial problems of these organizations, which at one time were also the major activist voice of the community. Calderón says that as long as the community isn’t an important part of the progress of the organizations serving it, the problem will continue. “The Jewish community is the best example,” he says. The big difference is that Latinos have the highest growth and are the poorest group in the city.
Read the full investigation on City Limits.
Fi2W is supported by the David and Katherine Moore Family Foundation and the Ralph E. Odgen Foundation.