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Latino philanthropy tackles Covid fallout while aiming to stem growing wealth gap

Hispanics in Philanthropy saw a drop-off from smaller donors while bigger ones picked up the slack to help small businesses, but the real challenge is staving off growing inequity.

In March 2020, Fred Sotelo was excited about the "astronomical growth" of his business in San Diego, Tolteca Corp, which distributes craft beer and coffee to mom and pop shops, as well as restaurants.

Days after he celebrated the business's second anniversary, the country went into lockdown due to the coronavirus pandemic.

“We lost half our clients overnight. We were frantic.” he said. He had to shift some of his more "traditional brick and mortar" ways of doing business, such as people signing off on a delivery on a piece of paper, and instead had to figure out how to shift things online.

Thanks to a program offered by Google through the organization Hispanics in Philanthropy, Sotelo obtained training, as well as a grant that allowed his business to stay operational.

The pandemic has hit Latinos across the nation disproportionately, not only in the number of Covid cases and deaths, but also with job losses. Latino small businesses were also hit hard, especially with many of them unable to access Paycheck Protection Program funding at the same rate as other business owners. Unemployment was higher among Latino workers than U.S. workers overall. Pay cuts often kept Hispanics from losing their jobs, but resulted in families being unable to pay bills and buy groceries.

Early in the pandemic, Hispanics in Philanthropy, a nonprofit group that connects donors with foundations and nonprofits that provide resources for Latino families and businesses, saw a drop in small donations. Many people no longer had the same amount of disposable income, and at the same time, the tax code changed, making charitable contributions under $250,000 not eligible for the same tax shelter as before.

But even while grappling with job losses, many Latinos were still doing a lot of “informal philanthropy,” said Nancy Santiago, who was most recently vice president of the nonprofit group, and is now working with U.S. Surgeon General Vivek Murthy as deputy director of engagement.

Rather than donating to Hispanics in Philanthropy, many were helping neighbors, members in their community or donating to their church, she said.

Most of the businesses the group helps are mom and pop shops. In addition to monetary assistance to help keep the businesses open, the group works to provide coaching, mentoring and support so businesses can remain open throughout the pandemic.

Little by little, Santiago said, bigger donors such as Google and MacKenzie Scott, the billionaire philanthropist, stepped in. Google made a $3 million commitment, while Scott contributed $15 million.

Latino-owned small businesses "are part of the economic backbone of this country," said Hector Mujica, economic opportunity lead, and a board member of Hispanics in Philanthropy. "When I think about Latino SMBs, I think about my family. I think about the role small businesses have played in my family’s story in the United States."

Latinos lost 66 percent of their household wealth during the last recession and now there is the worry over the fallout from the Covid pandemic.

“Just like the Black community, all the equity is in our homes," Santiago said. "So as people lose homes, we lose our equity in this country. How do you influence policy if you can’t influence the political process? And you can’t influence the political process without resources.”

To combat this, Santiago co-founded the nonprofit group's Power Up Fund, a donor-advised fund, which specifically addresses the issue of economic inequity. It recently did their first distribution of cash and capital to startup companies. The first big investment came from a partnership with Google, where the money went directly into the Power Up Fund and in turn, they gave grants in addition to coaching and support, to 500 entrepreneurs in California, Texas and New York.

“When we can’t find a way to fix a problem, we come up with a solution," Santiago said. "It’s not in our wheelhouse to do small business but we knew nobody else was doing it in this kind of philanthropic way."

The HIPGive platform has launched new tools including digital giving circles and crowdfunding to increase Latino giving throughout the Americas.

This week, Hispanics in Philanthropy held a conference in Los Angeles as well as virtually, that united Latino business and philanthropic leaders in a space to strategize and share findings.

"This year’s conference encouraged us to have hard conversations about the inequities that still exist in Latinx communities," Ana Marie Argilagos, president and CEO of the nonprofit group, said. "Funders have begun conversations of commitment to close the inequity gap."

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