News Column

Facing the Funding Challenge

May 2006, HISPANIC BUSINESS Magazine

Jesús Chavarría, Editor & Publisher

Money Sky

This past month was fast-paced – which month isn't – with some notable public highlights. Much public energy was spent across the country on an issue of some importance, to say the least, to the social and economic advancement of the U.S. Hispanic population.

At the height of the spectacle I asked a friend, one of the hallowed figures of the Los Angeles civil rights struggle of the 1950s and 1960s, "What do you think of the guest-worker program being proposed?" He said, "Well, you know, my thinking is very simple: We should find jobs and opportunity for those who are here."

That's what the nonprofits we feature in this issue try to do, day in and day out, and with some innovative spin to their operating strategies. Some of the nonprofits operate for-profit projects or programs while others charge fees for certain services.

But Hispanic nonprofits still have a way to go before their capabilities will enable them to compete for the "big money" from large foundations. With this issue we show how major foundations are just beginning to invest in Hispanic nonprofit projects. To their credit, some foundations, such as the Ford Foundation, have a long history of investing in Hispanic projects, and their historic profile stands out.

Meanwhile, Hispanic nonprofits are gearing up to compete in more sophisticated markets for scarce foundation monies. As our coverage shows, the large foundations require return-on-investment standards from all of their grantees (see "Taking Charge of ROI"). Hispanic nonprofits seeking grant funding from large foundations must set up tracking systems to produce ROI metrics. And of course setting up such systems, and operating them, is an expense.

As in the private sector, the amount of investment monies flowing to the Hispanic nonprofit sector remains small overall. But we should see this trend changing and the funding growing in the years ahead.

This issue's technology report illustrates that, just as nonprofit entrepreneurs are finding ways, innovative and traditional, to attract investment, tech entrepreneurs in the private sector are tapping into the capital sources required to launch and grow new ventures. Our report showcases tech ventures in California, New Mexico, and North Carolina that have learned to play the game, and do so with panache and shrewdness.

Start-ups are also tapping into a savvy entrepreneurial pipeline that's building in the technology sector, powered by the organizational muscle of groups such as Hispanic-Net, formed to promote high-tech business builders and executives in Silicon Valley.

Their advice, says Hispanic-Net Vice-President Steve Montoya, is that entrepreneurs need to decide between the acquisition option or taking the company public. Case in point is Daniel Dalarossa, co-founder of Cyclades, an IT infrastructure management provider that sold in January 2006 for $90 million.


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