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Global Philanthropy, Part 2: Philanthropy in Latin America: Past Traditions, Future Innovations

By Tom Watson on March 6, 2008No Comment

Philanthropy in Latin America by Susan Raymond, Ph.D.

This is the second in a five-part series on trends in philanthropy outside the borders of the United States. [Part I: Why Going Local Matters

In only two countries Haiti and Bolivia is infant mortality above the millennium development goal of 50 per 1000 live births.  Child mortality (children dying before the age of five) will have been nearly halved by 2020.  In turn, life expectancy the number of years on average a person can expect to live from birth will be within 4 years of the United States by 2020.  Indeed, today only eight countries in the region have life expectancy under the age of 70.  In 22 of them, people can expect to live, on average, to at least 75.

Equally, economies are maturing.  Inflation has been on a relatively consistent downward path for the last decade; debt service now represents less than 30% of exports. External debt is less than 30% of GDP for the first time in two decades, and real per capita incomes have risen by 41% in the last decade.

All of which bodes well for an expanded investment of Latin American philanthropy in the region’s communities.  That philanthropy and associated voluntarism has deep historical roots.  In the colonial period, Catholic Churches provided education, health care, and social services.    Secular Societies of Social Benefit (Sociedades de Beneficiencia Publica) were developed through which wealthy families made financial contributions and contributed their time to establish welfare programs.  A prime example is the Junta de Beneficiencia de Guayaquil, established in 1888 and now the largest provider of social services in Ecuador.  The Junta provides health care to over 1,000,000 Ecuadorians and educates 3,000 students in its schools. 

In the early 20th century these internal Latin American efforts were complemented by mutual aid societies created by new immigrants to the region from Italy, Spain, China and Japan.  These societies established education, healthcare, and welfare institutions supported by private voluntary contributions from the community.

Currently, “philanthropy” in Latin America wears at least four hats. 

Religious groups dominantly the Roman Catholic Church but increasingly also evangelical and Muslim groups remain major actors.  For the Catholic Church, this presence and role has extended over centuries.  The Nacional Monte de Piedad in Mexico, for example, is over 200 years old. The focus of religious philanthropy is largely charitable, i.e., the alleviation of immediate suffering, but also extends into support for community or national advocacy in such areas as human rights. 

Foundation “philanthropy” is more akin to nonprofit work in the U.S.   The term “foundation” applies for the most part to organizations that actually provide services.  They may raise funds from private contributors, but the purpose is usually for support of services they themselves provide, not for grant making to the nonprofit sector in general.  In some ways, the weakness of the private independent foundation sector may be a function both of the historically limited expansion of wealth (see further comments below), but also the limitations of the law.  Major service-providing institutions have often been owned and run by the governments, dampening the incentives for private contributions.  Moreover, estate laws have limited the ability of the wealthy to allocate money other than to heirs, and tax laws in general have only recently begun to provide incentives for philanthropy.  Historically, the wealthy have allocated only a fraction of a percentage point of their money to philanthropy.

The opportunity for the rise in individual giving, however, is upon the region.  While much of the focus has been on the commitments to philanthropy of leaders such as Mexico’s Carlos Slim, the wealth generation in the region is much broader.  In the three years 2004-2006, wealth of Latin America’s High Net Worth Individuals grew from $3.7 trillion to $5.1 trillion, an increase of 38%.  This represents higher growth than in any other region of the world, with the exception of the petroleum-driven Middle East.  Capgemini and Merrill Lynch project that between 2006 and 2111, this wealth will grow another 41% and total $7.2 trillion.

Moreover, the globalization of culture has created increased awareness of Latin American artists.  Their visibility and growing wealth has been accompanied by their public commitment to philanthropic efforts, raising the visibility of voluntary commitment to community and establishing philanthropy as a form of societal leadership.  Major artists have joined together with business and political leaders to form the ALAS Foundation (América Latina en Acción Solidaria) to raise money for programs to fight poverty throughout the region.

The place with the greatest change in philanthropic strategy and engagement, however, is not among individuals but in the corporate sector of Latin America.  Latin American businesses have developed significant social engagement and philanthropic budgets.  The Inter-American Development Bank now holds an annual conference for Latin American business leaders on topics of social engagement.  Attendance has tripled since 2002.  While the line between pure philanthropy and more engaged social responsibility programs remains poorly defined, international conferences on corporate social engagement now regularly include corporate executives not just from major parastatal firms in Brazil and Venezuela, but from firms in Chile, Peru, Costa Rica and Honduras.  While no comprehensive data are available, some isolated trends give a glimpse of the growing corporate social responsibility and philanthropy movement in Latin America.  In the five years between 1999 and 2003, for example, the number of ISO 14001 certifications (the global standards for environmental management systems) issued in Brazil grew nearly ten fold to over 1000.   In a 2005 study of corporate social investment reporting, nearly 80% of major Latin American companies analyzed reported CSI activities, a higher percentage than in the emerging markets of Asia.  Of these Latin American companies, the Organisation for Economic Co-operation and Development survey found 60% of the reports to be extensive. 

Individual company commitment is now being accompanied by the rise of national and regional membership associations to spread skills and standards of philanthropy more broadly across Latin American economies and among civil society groups.  Annual  meetings, training sessions, interactive web sites all are increasing at a rapid clip.  Soon it will be as hard to keep track of what is going on in Latin American philanthropy as it is to figure out what is going on in North America.

Not only is traditional charity alive and well in Latin America, new approaches to philanthropy and new pairings of philanthropy and social responsibility are on the rise.  There is much to be learned South of the Border.

The focus of this series is not the transfer of philanthropic resources from the United States to other regions of the world, but rather the nature of the emergence of internal institutions and leaders within these regions dedicated to the needs of their own societal commons.
The author gratefully acknowledges the assistance of Ms. Jessica Chao, 2007-2008 Harvard Center for Public Interest Careers fellow sponsored by Changing Our World, Inc. and seconded to the U.S. operations of CBM International.

Sources

C Sanborn and F Protocarrero (eds).  Philanthropy and Social Change in Latin America.  Harvard University Press, 2005.

Latin America and the Caribbean: Selected Economic and Social Data.  U.S. Agency for International Development, October 2007.

World Population Prospects.  United Nations, 2006.

World Wealth Report.  Capgemini and Merrill Lynch, 2007.

G Brown. Giving for Beginners: Real philanthropy not simply charity is in its infancy in Latin America.  But that is changing fast.  Latin Trade, January 1, 2005.

The Power of Philanthropy.  Hispanic Magazine. February 2007.

M DeLorenzo and A Shah.  Entrepreneurial Philanthropy in the Developing World: A New Face for America, a Challenge to Foreign Aid.  American Enterprise Institute for Public Policy Research.  Development Policy Outlook.  No. 3, December 2007.

Corporate Responsibility Practices of Emerging Market Companies A Fact Finding Study. Organisation for Economic Co-operation and Development.  Working Papers on International Investment Number 2005/3, September 2005.

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