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Column 041006 Emmond

Monday, April 10, 2006

 

Mexican Philanthropy often Individual and Nameless

 

By Kenneth Emmond

 

It’s become fashionable for the world’s super-rich to give away part of their fortunes.

 

In a trend reminiscent of the Rockefellers, the Carnegies, and the Ford family in the last century, lots of wealthy people are getting on the philanthropic bandwagon. For example, Intel co-founder Gordon Moore, investor George Soros, and the Walton family of Wal-Mart fame have each given away more than US$1 billion.

 

Microsoft mogul Bill Gates, the richest of them all, has endowed the Bill and Melinda Gates Foundation with US$29 billion. Since 2000 this foundation has provided more than US$10 billion, mostly in health care and education.

 

The tradition of giving however goes far beyond the super-rich. The Johns Hopkins Comparative Nonprofit Sector Project estimates that philanthropic giving in the United States totals almost two percent of gross domestic product.

 

Many small donors, and even some large ones, still give money to their church or their alma mater, but big-time givers are becoming more management-oriented and goal-oriented. More use their time and connections to work toward specific goals – tackling a disease, or a pocket of poverty, or an environmental problem.

 

The largesse of the wealthy has not escaped criticism, more for results than intentions. “Billions are wasted on ineffective philanthropy,” says Michael Porter, a management specialist at the Harvard Business School. “Philanthropy is decades behind business in applying rigorous thinking to the use of money.”

 

One reason: it’s harder to define results, since social goals replace the bottom line in measuring achievement.

 

Increasingly, the rich are hiring professional managers to make their gift dollars work harder. Some foundations seek to give their funds leverage, to do more with the large but still limited funds. For example, the Gates Foundation works with pharmaceutical companies to stretch dollars in its anti-AIDS program.

 

That money stretching, along with research on philanthropy, is the kind of work that’s done at the Mexican Center for Philanthropy (CMF).

 

Manuel Arango, 70, one of Mexico’s richest men, is founder and honorary president. Most of his wealth comes from a joint venture with the retailer Wal-Mart, under the name Wal-Mex.

 

Arango defines philanthropy as “sharing time and talent … for the common good, for the good of society. Whether or not it includes money – which is always welcome – the most precious human gift is time, because once it’s gone it cannot be recovered.”

 

Although CMF’s 630 philanthropy-minded members are wealthy, Arango wants to get businesses of all sizes involved in giving. He’d like to see Mexican business donating one percent of profits and an hour a week toward the greater good.

 

Formal philanthropy in Mexico is still a long way from Arango’s goal. Carlos Slim, the Telmex tycoon, has a billion-dollar foundation and there are a few others, but they’re still the exception rather than the rule.

 

CMF executive president Jorge Villalobos estimates there are about 20,000 private non-profit associations in Mexico. Even Chile, with just 15 million people, has about 35,000 such organizations, he says.

 

This doesn’t mean Mexicans are less generous than other people.

 

Many Mexicans give privately, anonymously, and often on a one-to-one basis. Some families help their maid send her children to a better school; some employers help their workers pay their medical bills. None of this gets any publicity.

 

There are reasons for this individual approach. In most countries, including Mexico, philanthropic gifts bring with them a tax advantage. If a family or business evades taxes – and many do in Mexico – it will enjoy no such benefit. On the contrary, publicity might attract unwelcome attention from tax authorities.

 

For people who might give to established charities, there’s another barrier: widespread distrust of public institutions – including even recognized do-gooders like the Red Cross.

 

In a society with a history of corruption, it’s not unreasonable for potential donors to worry that part of the donation might end up in the hands of an unscrupulous treasurer, or be wasted in needless administration. It’s safer – and more satisfying – to help someone you know, who’s certain to put the funds to good use.

 

This means that to increase the size and efficiency of philanthropic contributions, it will be necessary to clean up Mexico’s institutions and build public trust.

 

Arango, who describes himself as a “worried optimist,” puts it best: “We need a prosperous economy, an economy which works, and for this we need investment, and to have investment we need trust, and for trust we need institutions, we need the Rule of Law, we need democracy.”

 

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Kenneth Emmond, an economist, market consultant and journalist who has lived in Mexico since 1995, is also a columnist with MexiData.info.  He can be reached via e-mail at Kemmond00@yahoo.com.