For nonprofit organizations, last year was marked by a lot of gray days. A study by the GuideStar research group found that almost half (48 percent) of responding nonprofits had a decrease in private donations through the first 10 months of 2002. By the end of the year, the Philanthropy Giving Index, produced by the Center on Philanthropy at Indiana University, fell to its lowest level ever, down 7 percent from 2001.
The 25 largest Hispanic-serving nonprofits had to swim against these same currents. "The economy is a big issue," says Martin Castro, president of the Mexican American Opportunity Foundation (MAOF), the top nonprofit on the list. "There are fewer government dollars to go around. Because of the economy and the markets, foundations are giving less because they're earning less."
At a time when state governments face budget deficits and caution prevails in private spending, Hispanic nonprofits have few resources to sustain them. Only seven of the top 25 nonprofits have endowment funds to draw upon when faced with a cash shortfall.
"We don't have many options. We have to respond to needs with the resources available," says Ray Ocasio, president of La Casa de Don Pedro in New Jersey. "We have diversified income stream by going to [corporate] foundations. But we could never survive on foundation money alone."
In the economic cycle of the nonprofit sector, when revenues go down, social needs go up. "More people are back on the welfare rolls, so there are more customers," says Mr. Ocasio, referring to his agency's welfare-to-work program. Adds Mr. Castro: "We have a food bank, and we serve 5,000 people each month, up from 1,000 a year ago. A lot of service workers who have lost their jobs can't get them back. Corporate America – in particular Kraft Foods – has given us support. But again, in Corporate America the profits are dwindling, so they can only do so much."
So far, Isaias Arguayo of Los Amigos del Valle in South Texas hasn't seen his organization's income decrease, because government grants normally last for a full fiscal year. High gasoline prices, however, will affect his budget for the rest of the year. "I know we'll have increased operating costs," Mr. Arguayo says. "We know early what our funding is, and we try to live within what funds are available."
Research shows that Hispanics and their nonprofit organizations often emphasize immediate needs in their charity work. A study sponsored by the Kellogg Foundation found that Hispanics tend to donate money for immediate needs, such as disaster relief, rather than long-term fund-raising. Among the Top 25 Nonprofits, the biggest needs are core operating funds, cited by 10 of the 25, and project funding,cited by six of the 25 (see box, "Top Hispanic Nonprofits Survey: Needs").
To cope with the money shortage, Mr. Arguayo plans to cut costs on non–mission critical projects. Mr. Ocasio has moved into economic and inner-city development, starting a for-profit construction firm that builds community centers. He also plans to work the advocacy angle of nonprofit status to preserve the nonprofit stake of the state budget.
Mr. Castro talks about "creative strategies" to get through the current downturn, but he doesn't foresee any major cutbacks, because nonprofit organizations have woven themselves into the fabric of the Hispanic community. "We bridge the gap between the government, which has to provide these services, and those who need them," he says. "These are trying times for nonprofits, but we're going to survive because we're part of the delivery system."
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