Latinos Should Give Philanthropy Some Thought

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Within the next 10 years, Los Angeles will see one of the single largest transfers of wealth of any major metropolitan area in the country, according to a new report by the California Community Foundation.

The report, “The Future of Philanthropy in Los Angeles: A Wealth of Opportunity,” estimates L.A. residents’ net worth to be $1.5 trillion, a net worth resulting from assets gained over a lifetime, savings and investments.

Among those driving this wealth creation are entrepreneurs who start and grow businesses, as well as highly educated immigrants with high net worth who make Los Angeles their destination of choice.

The report signals the extraordinary opportunities that wealth transfer among generations will create for Angelenos in all sectors of the economy. For instance, by 2020, Angelenos will transfer almost $114 billion between generations. L.A. non-profits of any size, but especially those considering endowment building, must prepare and position themselves to acquire a portion of this wealth.

If non-profits could capture 5 percent of the transfer of wealth taking place, the report says, “$5 billion can be used for philanthropy by 2020 [and] $5 billion would fund all of the operating expenses of 75 percent of L.A.’s active non-profits.”

The report also should be used as a call for business owners and individuals of any ethnic group to step up their charitable giving. As the report points out, “Giving by new companies is still in an embryonic stage. Entrepreneurs and immigrant business owners may not know how to give and the business advantages of being philanthropically active.”

Let’s take, for example, the case of Latinos and organized philanthropy. Latino Angelenos represent approximately 50 percent of Los Angeles County’s population and own 21 percent of businesses in the region. According to a Hispanic Business’ 500 ranking, the top 20 Latino-owned companies in the greater L.A. area produced revenues of $779 million in 2011.

According to Census data, Hispanic households with median incomes of $100,000 or more represent more than 1.3 million households in the United States. And even though the recession has hit Hispanics hard in terms of job losses and foreclosures, marketing forecasts project that U.S. Hispanic buying power will reach $1.3 trillion in 2015.

Yet, despite their economic gains, Latinos are relative “newcomers” to organized philanthropy, says Henry A. J. Ramos, a researcher on philanthropy. The reason is not that Latinos are not charitable. On the contrary, they are quite generous, but they give in ways and for reasons different than those of mainstream philanthropists.

There is a strong tradition of Latino giving to church-affiliated causes, and to family and relatives. Studies by the Center on Philanthropy and Civil Society report that approximately 41 percent of Latino households that regularly contribute to charity do so to religious organizations

Tax incentives, which in mainstream populations are a philanthropy energizer, are not the driving force for the bulk of Latino dollars destined for charity. Latin American and Caribbean emigrants living in industrialized nations sent more than $32 billion in remittances back to their homelands in 2002, according to the Inter-American Development Bank. Mexico, alone, received $10.5 billion. This extraordinary sum suggests that many Latinos direct their generosity outside of the United States, and that personal relationships and duty to family, rather than tax incentives, drive the priorities for Latino giving.

There is no time like the present for a shift in Latino attitudes toward philanthropy. Latinos must consider planned giving and support of endowment-building efforts of local mainstream and Latino-serving non-profits.

A small number of Latinos already have a voice in the planning and shaping of the future of Los Angeles. For the most part, this voice has been exercised through the political process.

An important next step must be undertaken through institutionalized philanthropy. Strong participation of Latino dollars in organized philanthropy would give the community a voice to direct grants and funding to the areas of specific interest to Latinos – be it immigration, research, image building, visual and performing arts, civic participation, violence prevention, higher education, economic empowerment or any other area that drives one’s passion.

Strategic giving requires vision, philanthropic expertise, and collaboration among leaders, policymakers and organizations. But the return on investment is high in terms of lasting benefits for individuals, communities and regions.

The California Community Foundation is using the report to call upon Angelenos to pledge to give at least half of their wealth to L.A. non-profits.

For longstanding Latino Angelenos and well-to-do immigrants, that call presents an opportunity for self-examination and strategic thinking about their charitable activities.

When Latinos accept their share of responsibility to help bring solutions to their communities’ pressing needs, they will make a very positive statement about their civic-minded presence and contributions to the vitality of Los Angeles.

Engaging in philanthropy here and now should be another important indicator of Latinos’ success and economic impact.

To read the California Community Foundation report, visit www.calfund.org/transfer.

Clara Potes-Fellow is director of community partnerships for the California State University system and is pursuing an M.B.A. in non-profit management at American Jewish University, Los Angeles.

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