The Status of and Trends in Private Philanthropy in the Southern Hemisphere
By Peggy Dulany and David Winder
- The Rockefeller Foundation played a key role with FEE in Ecuador.
- The John D. and Catherine T. MacArthur Foundation with the FDC in Mozambique.
- The Carnegie Corporation with the Western Region of Zimbabwe Community Foundation.
- The Ford Foundation with Instituto Rio in Brazil.
- The India Foundation with West African Rural Foundation and the Kenya Community Development Foundation.
- The Craig and Susan McCaw Foundation and the Bill and Melinda Gates Foundation have provided major support for both the Nelson Mandela Foundation and the FDC seeing these institutions as important and effective vehicles for improving health and education.
The Executive Session on the Future of Philanthropy has thus far focused almost entirely on the United States. To the extent that philanthropy has a future beyond this country and to the extent that US philanthropists are engaged in or concerned about philanthropy beyond their own borders, it will be useful for the group also to look at what is already happening in other parts of the world.
The Synergos Institute has been engaged in studying and promoting philanthropy in the Southern Hemisphere for the past twelve years through surveys, case studies and workshops and through actively engaging with groups trying to build foundations and, more recently, associations of foundations or philanthropy support organizations. While we have followed the evolution of philanthropy in Central Europe, we have not actively worked there. This paper draws on our research and work in Africa, Asia and Latin America. Our sense, though, is that most common trends extend to that area of the world as well.
When we began this work, there was essentially no existing research on Southern philanthropy. Since that time, considerable interest has grown in several universities, primarily in the US. Lester Salomon's research at Johns Hopkins on the nonprofit sector in a variety of countries stands out, as does the work of Kathleen McCarthy at the CUNY Philanthropy Program which brings in fellows doing research on philanthropy in their own countries. Elsewhere, the Asia Pacific Philanthropy Consortium (APPC) has funded some research on philanthropy in Asia, and the Indian Center on Philanthropy has done some research on philanthropy in that country.
The Synergos Institute has surveyed the state of institutional philanthropy in Southeast Asia (Philippines, Indonesia, Thailand and preliminary surveys in Malaysia and Singapore), and Latin America (Brazil, Ecuador and Mexico) and has conducted a preliminary survey in Southern Africa. These surveys map the current universe of grantmaking foundations (private, corporate and community) and, in addition to an analytic section, provide a directory of organizations (see the Knowledge Resources for these materials). The term "civil society resource organizations" (CSROs) has been used to refer to grantmaking foundations in Southeast Asia and Southern Africa. We have also, through our work in a number of countries in these regions, met extensively with private philanthropists and corporate foundation officers to listen to their thinking and observe their work.
Overview of Findings
While the development of a philanthropic sector in Africa, Asia and Latin America is very much a work in progress, there is no question that institutionalized private philanthropy is a growing and increasingly significant reality. In every country there exists a culturally specific concept and term for what we call philanthropy. Interestingly, though, this concept has historically been more developed in poor communities, both rural and urban, than among the elite in Mexico it is known by the Indian word tequio; in Ecuador, the indigenous term minga is used while in Zimbabwe, the Ndebele word is qoqelela. These terms generally encompass a broader meaning than just giving money -- as does philanthropy. The meanings vary slightly from mutual self-help to community action for the good of the whole. Because they are terms used by the very poor, the actions refer to things like constructing a building for community use or helping a family with the harvest. The intent, however, is very much the same as philanthropy: love of humanity.
In other countries philanthropy was primarily of a charitable nature and religion based. "The Buddhist temple was the locus for philanthropy both in terms of giving and receiving. As community members gave to its temples, the temple also returned a great portion of the donations to the community via services like education, health, food and refuge for the aged, the poor, the handicapped, the marginalized or anyone else that lacked care, sustenance and protection from his/her own family" (See Juree, p.2; this giving amounts to an estimated $300 million a year).
To the extent that in these countries elites have been involved in philanthropy, it has, until recently, and with a few notable exceptions, been with a charitable orientation: supporting the orphanage founded by a good-hearted society lady or a hospital for the poor. Alternatively, there has been some support by elites for certain kinds of cultural institutions such as the modern art museum or the symphony orchestra or ballet. It has often been the wives of wealthy individuals, most of whom until recently inherited their wealth through the family business, who occupied themselves with charitable activities, bringing in their husbands' money and, where necessary, his connections.
This situation is changing quite dramatically, in some countries more than others. India, The Philippines, South Africa, Brazil and Mexico are all examples where a more institutionalized, more development (hereafter referred to as strategic) as opposed to charity-oriented philanthropic ethos is emerging, among many wealthy individuals and corporations.
We attribute this change in the overall ethos to a number of different factors. It is hard to say which of these is the most important, but certainly high on the list is the growing extent to which the gap between rich and poor is making life untenable or, at least disagreeable, for rich and poor alike.
In South Africa, the struggle to overthrow apartheid made white elites realize that they were going to have to deal with social injustice in a very different -- and more collaborative -- way. In The Philippines and Mexico, strong business and philanthropic leadership from the Philippine Business for Social Progress (PBSP) and the Centro Mexicano para la Filantropía (CEMEFI -- Mexican Center for Philanthropy) engaged and educated individuals and corporations in more strategic philanthropic initiatives.
A second trend affecting the growth of strategic philanthropy in many countries of the southern hemisphere has been the increasing possibility for partnership and dialogue across different sectors and, to a lesser degree, levels of society. After the confrontational decades of the 1960s and '70s, a belief in partnership approaches began to emerge in the United States.
It was not until the late '80s that this same trend started to take hold in southern hemisphere countries (and it has been far slower in some than others). This was perhaps partly inspired by the sense of desperation caused by the effects of the growing gap between rich and poor mentioned above. It was probably also facilitated because civil society organizations (NGOs, church groups, labor unions, community organizations, etc.) began to play a more prominent role in many countries. In The Philippines, for example, the overthrow of the Marcos regime by groups organized by NGOs and in South Africa the role of civil society in ending apartheid brought the relevance and potential power of civil society to everyone's attention. This phenomenon may also be attributed to growing numbers of "cross-over" individuals (or couples) with one foot in government or business and another in the civil society, capable of bringing different groups together.
A third trend, which has played an important role in some countries, is the emergence of community foundations. These foundations have roots that are close to the needs of people in poor communities and the ability to involve multiple donors. The process of bringing people from diverse backgrounds onto the boards of these foundations and exposing them to community development issues needing philanthropic support, has educated a previously uneducated segment of the population about ways in which their financial support could make a difference in conjunction with the time and effort of people in communities. It has also had the side effect of helping the staff and directors of these new foundations to learn management and financial skills that had traditionally been missing in the NGO world.
As we will describe later in this paper, these community foundations not only represent a new trend within southern countries; they also constitute a new model of organized philanthropy: one generally not originated by a single donor and not exclusively devoted to giving away money. They are meeting the need for a range of services to support and strengthen civil society. In addition to channeling grants and technical assistance to civil society organizations, they convene groups to identify solutions to a range of social problems at the local and national levels. At the outset they all may receive significant external funds but over time their capacity to mobilize local funds increases.
The Emergence of Institutionalized Philanthropy in the South
A few countries like Colombia, The Philippines, South Africa and India have a relatively long -- if limited in size -- history of organized philanthropy. But even in these countries, most charitable contributions, until about ten years ago, were made by individuals. There was also some assistance provided by multilateral or large national corporations and, more significantly, by overseas development assistance. Fundacíon Carvajal in Colombia and Philippine Business for Social Progress, both more than twenty-five years old, are definitely the exceptions. Both sought from the outset to develop a clear strategic approach to supporting community development initiatives and building a strong professional staff.
The number of foundations in many countries has increased steadily in the last few decades. These include foundations created by individuals, by groups of individuals and corporations.
The origins of the funds vary widely and include personal contributions, earned income and donations from foreign individuals, foundations, corporations and governments.
There is no question that effective and well-respected leadership has enabled some of these groups to advance more quickly than others. Manuel Arango's initial leadership of CEMEFI, together with competent professional support, helped kick-start a focus on philanthropy in Mexico. His own credibility as a philanthropist, business leader and peer of other elites, and his strategy of bringing in foreign (particularly US) philanthropists to speak about their experience attracted the interest and participation of many Mexicans.
Challenges to the Development of Effective Institutionalized Philanthropy in the South
Despite an overall trend toward increasing the number and quality of philanthropic institutions in southern hemisphere countries, there is no doubt that there is wide variation, even among neighboring countries, in the manner and speed with which this trend is taking hold.
The culture and history of a given country or region impacts the ease and velocity of movement toward institutionalized philanthropy. In Ecuador, for example, where there are huge needs and plenty of wealthy people, it has been extremely difficult to get most of those with money to part with any of it. Even those board members of Fundación Esquel Ecuador (FEE), the country's most active and strategic foundation, mostly do not see it is their role to support the foundation financially.
One can only speculate as to the reasons for this here as in contrast to other South American countries. The fact that the country is highly divided along several axes (class, region, ethnicity) appears to lead people to retreat to their own enclaves. The fact that, until recently, the country has suffered no significant social unrest could have lulled the elites into the belief that they did not have to get involved because they were not threatened. A mutual distrust between wealthy elites and NGOs may have made the former feel there were no effective and trustworthy groups to support. And finally, a generalized culture of corruption, in which government officials regularly divert funds to their own use, wealthy people do not pay taxes and struggling NGOs have no system of accountability for their funds has created a cynical ethic of "watch out for number one" that works against collaboration and generosity. In the case of the Fundación Esquel, the fact that the foundation was created with the support of international ODA agencies and foundations and continues to rely heavily on them may have also acted as a disincentive to local philanthropic contributors, including board members
In Zimbabwe, social and political conflict has also impeded the development of any national movement toward organized philanthropy. And the growth of these difficulties in the past five or so years has caused even those individuals more inclined to participate to draw back.
There is no question that regulatory issues, like tax incentives, also affect philanthropic involvement. In countries where people by and large do not pay taxes, wealthy individuals are not eager for contributions to be publicized because they may expose wealth that is undeclared. And where taxes may be more regularly collected but there are no exemptions for philanthropic contributions, people unused to giving need to be motivated to start. In Thailand for example only 1% of civil society organizations have been granted tax exemption status.
For this reason, a number of local and US groups focus on changing the regulatory framework. For example the International Center Not-for-Profit Law (ICNL) has provided a valuable service by documenting not-for-profit-law, including tax regimes, in a range of countries, and advising country governments and The World Bank on ways of strengthening legislation. In addition, organizations such as CEMEFI and GIFE are working with other organizations at the national level to design legislation that incorporates incentives for individuals and corporations to make philanthropic contributions.
In other countries traditional attitudes towards private philanthropy and mistrust between government and NGOs and corporations and NGOs has impeded the development of strategic philanthropy. In Thailand for example, apart from some corporations that set up their own foundations or engage in philanthropy through their public relations departments, most corporations have not addressed philanthropy in a systematic and proactive manner. Corporate giving programs are generally not professionally managed and only give in one or two areas like annual scholarships or awards. There is also an inherent mistrust of philanthropic activities carried out by well-paid professionals. Giving to projects sponsored by the royal family figures high in corporate and individual giving. It is seen as enhancing one's prestige, status and position. Also important are gifts to disaster relief and social service delivery.
There's a tendency to mistrust NGOs, considered as militants and threatening to peace, order and harmony. In Thailand, this mutual mistrust has made it difficult for the public, business and civil society sectors to work together. In Indonesia, Suharto and his family absorbed most available corporate and private philanthropic dollars for their "foundations", and other independent groups found it extremely difficult to raise money domestically.
Poor relations across sectors, as mentioned in the case of Ecuador, also act as disincentives to philanthropic involvement. Unless mistrust and mutual hostility can be overcome, it is self-evident that nonprofit groups will not find donors and potential donors will not be willing to give support to existing groups.
The Unique Role of Community Foundations in Enhancing Philanthropy in Southern Countries
The recent trend of building what we in the US would call community foundations is an important contribution to overcoming some of these impediments to strengthening philanthropy in the South. The money raised for all of these foundations does not even begin to add up to the endowment of The New York Community Trust (over $2 billion) or even of somewhat smaller foundations. But, as mentioned earlier, it is not the money alone that makes these organizations a potent force in promoting philanthropy.
Perhaps the most important function these foundations play is their cross-sectoral, cross-level, cross-ideological convening power. In many divided societies like Mozambique or Ecuador, this is an extremely hard role to play. There is no question that, in these two countries, individual leadership was key to this convening power. Cornélio Marchán, a founder of the FEE, was a former Planning Minister who had also been chair of the national petroleum board. He was respected in civil society circles as well. He himself is a bridge across many gaps. To build a foundation with the capacity to reach across sectors, he put in place a board of trustees that truly spanned the societal divides. The foundation was founded under a center-leftist government and could have failed when the next -- center-right -- government came in, except that the new Minister of the Interior, drawn from the business community, was a founding board member of FEE. Now, with the country seemingly about to fall apart, FEE is convening a series of national dialogues to try to find areas of agreement. This similar to the role FEE played during the Peru-Ecuador war, when it worked with a Peruvian partner to convene organizations and individuals to build a constituency for peace.
Similarly, Graça Machel, a founder of the Community Development Foundation of Mozambique (FDC), and by no means neutral as a founding member of the FRELIMO liberation movement in Mozambique, that later became the ruling party, had the wisdom to include on her board people with different views. The FDC initiated programs across the country, including particularly those where the opposition was in the majority -- and which felt sorely under-served by the government. The FDC convenes Mozambicans and even Southern Africans around issues as varied as landmines, AIDS and micro enterprise.
Both foundations have played and continue to play important roles in the evolution of their countries' development. In the course of that, business people, elites, social activists, religious groups, government officials and others -- people who would not otherwise have met -- begin to know each other as individuals. Out of this exposure, trust inevitably begins to build.
The role that these and other community foundations are playing in providing technical assistance to NGOs and community groups on issues such as accounting, reporting, fundraising and program administration has been possibly of greater importance than the dollars allocated in grants. Through this work, nonprofit organizations become more effective, problems get solved in a more lasting way, and the credibility of the nonprofit sector grows, both in working with other sectors of society and donors.
Because these community foundations have a stake in strengthening philanthropy in their own countries -- for that is ultimately where much of their support will come from -- many of them have begun to explore how to change the regulatory framework to motivate individuals and corporations to make donations. As we were told by a leading Brazilian businessman, this is extremely useful, for when the business sector lobbies for changes in tax laws, it is seen as purely self-interested. The foundations and their associations were these exist, are able to muster a diverse and credible constituency to support change.
ODA agencies have also played a role in creating some independent foundations. For example, the US Agency for International Development facilitated a debt swap that led to the establishment of the Foundation for the Philippine Environment (FPE), and the Swiss Government played a similar role in endowing the Foundation for a Sustainable Society, Inc. (FSSI), primarily an endowed loan-making institution that supports community-based enterprises.
In addition to the money provided by these US foundations, the exchange of experience on how to run a philanthropic institution has been invaluable to groups that were often the first of their kind in their country. Southern groups intending to launch foundations have visited US community foundations and other foundations to see how they worked. Now that there is a critical mass of successful southern foundations, though, southern groups can also learn from other southern foundations with which they have more in common. To respond to this need Synergos started a Senior Fellows program that enable some of the best professionals in southern foundations to provide up to two weeks of technical assistance a year to other, younger groups. These exchanges have largely been funded by US foundations.
While many southern philanthropists -- no different in this from many northern philanthropists -- want to make their mark and gain recognition through their own private foundations, some are including in their philanthropic portfolios support for community foundations in their country. In Mexico, President Fox played a role in initiating community foundations while he was still Governor of the State of Guanajuato and is an advocate of community foundations throughout the country. This will undoubtedly inspire wealthy business and individuals to increase their support to the more than twenty community foundations in existence or being launched around that country.
"An Overview of Philanthropy and Civil Society in Thailand", Juree Vickit-Vadakan, Manuscript APPC-2001.
"Promoting Civil Society Resource Organizations in Southeast Asia", David Winder, Voices, Newsletter of The Sasakawa Peace Foundation, Number 29, Fiscal Year 2001, Vol. 1.