José Ignacio Ávalos Hernández -- Full-time Philanthropist with a Businessman's Mind-Set

An average day for José Ignacio Ávalos Hernández begins at 8am and ends at 11pm. This is because, explains Ávalos, he has two careers. One is as a businessman. Based in Mexico City, he runs a pharmaceutical and cosmetics company founded by his father. The other is as a philanthropist. Mr. Ávalos, who is 42, has been instrumental in creating major nonprofit organizations that address critical needs of the poor in Mexico

Working on the issues of nutrition, economic empowerment, health care and rural development, the initiatives Ávalos has supported are noteworthy because they are based on business models that aim to be accountable to donors and investors as well as beneficiaries. Large for-profit companies have aligned themselves with these efforts, providing resources while earning a social and reputational return.

How It Began

Mr. Ávalos attributes his drive towards philanthropy to early involvement in charity work. "From the age of eight I visited orphanages and homes for the elderly," he says. A devout Catholic, his efforts are also influenced by the charitable values of his faith.

Mr. Ávalos' first philanthropic project, established in 1982, was Gente Nueva ("New People" -- www.gentenueva.org), which aims to create links between civil society, government and the private sector, with a principal goal of drawing young people into social action and increasing their awareness of Mexico's marginalized communities. Educational campaigns, volunteer projects (including "Social Action Saturdays") and fund-raisers are part of the program. Working with schools, social groups and other institutions, Gente Nueva has evolved into an international youth organization as members have moved to other countries; today it also has projects in Argentina, Brazil, Chile, Colombia, Italy, Spain and Venezuela. To date, Gente Nueva has spawned 23 other nonprofit organizations.

Mr. Ávalos' next big project aims to address the problem of child malnutrition, which affects over 40% of Mexican children under the age of five. Un Kilo de Ayuda ("A Kilo of Help" -- www.unkilodeayuda.org.mx) sells food and other essential household products at competitive prices and uses the profits to fund its social and nutritional programs. An outgrowth of Gente Nueva, Un Kilo de Ayuda's programs teach families (particularly mothers of young children, from newborns to age five) better practices in nutrition, hygiene and health. They also provide nutritional support through food packets and vitamin and mineral supplements. Community members participate in these programs by serving as volunteers, helping provide training and distribute food.

Un Kilo de Ayuda is working with the Salvador Zubirán National Nutrition Institute to formally monitor family progress using software to track each child served by the program. In 2001, Un Kilo de Ayuda benefited more than 11,000 children in five states; a goal for 2002 was to reach more than twice that number, and to expand to more states. (The numbers are not yet in.)

The sales aspect of Un Kilo de Ayuda is perhaps its most original feature for a nonprofit organization. The Kilo de Ayuda brand boasts 27 products, including pastas, cookies, canned goods, cooking oil, soap, and paper goods such as diapers and napkins. The strategy is straight business. By promoting the brand, and drawing on the promotion and distribution of the companies that support it, the Kilo de Ayuda name is now known throughout Mexico -- and consumers know that they are helping children and families in need through their purchases. The products themselves are manufactured by leading Mexican companies and are sold at major supermarkets and drugstores. "They're no different than the other products the companies make," says Mr. Ávalos, "so there's no lost business." In fact, he says, Un Kilo de Ayuda products might sit side-by-side with name-brand products by the same maker, literally adding shelf space for the company.

Ávalos notes that Un Kilo de Ayuda is similar in some ways to Newman's Own, a US company founded by actor Paul Newman and a partner that initially gave all its profits to a summer camp for chronically-ill children (the company now supports a variety of nonprofit initiatives). The difference, however, is that Un Kilo de Ayuda products target average Mexicans -- getting quality food products and paper goods to them for fair prices -- while Newman’s Own produces upmarket gourmet products directed at affluent consumers.

Supporting Economic Empowerment

In the area of microfinance and economic empowerment, Mr. Ávalos was instrumental in creating Compartamos (www.compartamos.com), a micro-finance lender that helps Mexico's smallest business owners, who represent a substantial economic sector that large banks typically ignore. These entrepreneurs, from small farmers to food vendors to artisans, are estimated to generate one-third of Mexico's gross domestic product. Drawing on successful micro-finance models from Bangladesh and Bolivia, Compartamos makes loans that enable borrowers to buy more raw materials, tools or other items to expand their businesses. Loans are only made to those who agree to join so-called "solidarity groups," which use peer pressure to ensure that loans are repaid fully and on time.

As in successful microfinance programs in other countries, the vast majority who take loans from Compartamos are women. The repayment rate is a remarkable 99 percent. Established in 1991, Compartamos had assisted more than 17,000 borrowers by 1995, and 137,000 by 2002. The current loan portfolio is valued at $60 million, while total loans made approach $200 million.

One way Compartamos ensures efficiency is to discourage laxity of any kind. Latecomers to lending meetings are fined a modest sum for missing even a few minutes, and staff receive bonuses for bringing in more borrowers and maintaining a timely record of loan repayment.

Compartamos is expanding and may include larger loans to mid-sized businesses and the creation of a more structured institution. While average loans are currently about $285, Compartamos has made some loans of $1,000 and is considering raising the limit to $5,000. These changes would substantially alter the way the program works, but not its underlying goal of providing financial resources to entrepreneurs who lack access to mainstream banks.

The newest program is Mi Tienda ("My Shop") which aims to help owners of rural general stores to maintain up-to-date, low-priced inventories of products their customers need. Keeping prices low is often impossible for these small owners since, unlike supermarkets, they cannot afford to purchase in bulk. Keeping inventory current can be difficult because the owners cannot do the buying as often as they might like.

Mi Tienda's solution is to organize a network of regional buyers who visit the small owners to take orders and then buy on their behalf. Fresh products are delivered the next day. This cooperative approach enables the participating merchants to offer a more varied and fresher inventory at lower prices. It also enables suppliers to get more of their goods into these markets with faster turnover.

Mi Tienda's investors are several nonprofit organizations, which own 52 percent of the operation, and for-profit corporations, which own the remainder. The for-profits are businesses known for social responsibility, including the supermarket chain Gigante. Several months ago Mi Tienda completed a three-year pilot project with 480 affiliates (small shop owners); the program is now expanding. In two years, says Mr. Ávalos, Mi Tienda should be operating in five more regions with 2,500 new affiliates, so that nearly 3,000 shops will be involved.

Combining Work and Family

It would seem difficult for someone like Mr. Ávalos to combine work and family, considering his long hours. But he met his future wife, Verónica Miranda Gutiérrez, while working at Gente Nueva (where she still volunteers) and they involve their four children (aged five to 12) in projects to develop an early sensibility for philanthropy.

Promoting Partnerships and Strengthening the Nonprofit Sector

Perhaps in the same way that Mr. Ávalos combines business goals and philanthropy, and integrates his family into his work, he also envisions a need to create successful linkages between government, non-governmental organizations (NGOs) and philanthropic organizations. To date, he says, there have been some efforts to create working collaborations, but they have not been very successful as yet. "I think there is still a lot to do," he says. "We're covering the country, but we have a very thin veil and we're not having a profound effect as yet."

Mr. Ávalos has also launched an entity called Cooperación y Desarrollo ("Cooperation and Development" -- www.cooperacionydesarrollo.org.mx), which helps strengthen and professionalize NGOs by providing training in capacity building, governance and fund-raising. About 800 organizations are currently involved. As with his other efforts, this "reengineering" effort aims to help NGOs produce better results as well as economic returns.