By Deborah Van Hoewyk
It’s the end of the year, and this issue’s theme is (what else?) giving. If you haven’t started receiving year-end appeals from every organization you’ve ever come in contact with, you must have been on Mars for a year or two!
If you come from Canada or the United States, you’re used to the notion that the work of our economy is carried out by government (public sector), business (private sector), and the social (nonprofit) sector, often called the third sector. Education and culture; health, animals, and the environment; poverty alleviation and a whole range of programs that benefit society as a whole—they all get done largely through the work of nonprofit organizations, large (universities, hospitals) and small (dog rescue associations, community gardens).
The Impact of Nonprofit Organizations
The “nonprofit and voluntary sector” produces 7.7% of Canada’s gross domestic product, pays 10% of the country’s workforce, and boasts about 90,000 organizations. In the U.S., the nonprofit sector produces 6.5% of the GDP, pays 8.7% of the workforce, and includes about 1.6 million organizations. In US dollars (through economist-magic, translated so they’re globally equal), the value of Canada’s nonprofit sector is about $65 billion, while in the US, it’s about $580 billion. Big. Pretty Big.
Mexico’s third sector does not look the same. Not Big. Not Very Big at All. Often described as “under-developed,” Mexican nonprofits produce 2.2% of the country’s GNP, pay only about 2.7% of its workforce, and comprised an estimated 5,600 organizations in 2005 (there had been about 7,000 organizations right before that, but a good number failed to comply with financial requirements and lost their certifications as one or another type of Asociación civil). That’s a little paltry for the world’s twelfth-largest economy, and the world’s eleventh-largest population.
How does Mexico lag behind?
There are historical and cultural explanations, and we’ll get around to what the researchers and analysts say, but a brief look at the structure of support for all three countries is revealing. In terms of giving—in all three countries—we actually give very little, and nonprofit statistics combine what WE donate with all those grants from foundations and corporations. “Giving” apparently doesn’t get the job done for most nonprofits.
The pie charts show the relative contributions, on average, to nonprofit budgets by government sources, including government grants and contracts (in blue); donations by individuals, foundations, and corporations (in red); and fees for goods and services produced by the nonprofit (in green). If you have worked for a nonprofit, or have volunteered at a nonprofit, you might have noticed that the sources of funding have a major impact on how the organization operates.
If the economy and/or politics of a country, state, or locality are stable, and government allocates funding on a regular basis, then a nonprofit can establish a stable operating environment for as long as the funding is stable. If the economy or politics are not reliable, as they haven’t been in the U.S. for a number of years, then government funding becomes uncertain and has to be replaced. And if the government does not provide much support to nonprofits, as in Mexico, then it is difficult to establish organizational stability.
If an organization relies on donations and/or grants, it has to do the work to solicit those donations or grants. Many donors and grantors see the percent of funding that goes directly to providing goods and services as a mark of organizational success, which means no one gets paid for writing the appeal campaigns or grants. In Mexico, there aren’t that many foundations and corporations that are available to give grants—about 22,000 compared with the 130,000 in the U.S.
That leaves the nonprofit organization in the position of having to produce the goods and services for which it can charge enough to cover both the cost of production and the cost of operating the organization. If the organization is working all the time to earn its money, it has very little time, and very few resources, to build its capacity for succeeding at what it does.
Mexican nonprofits, in comparison with those of the U.S. and Canada, spend considerably more time working for their money, while receiving very little from sources that would allow them to develop new programs, train staff, solve new social problems, create new cultural events, plant new gardens—that is, develop new directions and new competencies.
Why does Mexico lag behind? Or is it catching up?
People have argued that over history, the Mexican government has opposed grassroots “civil society” organizations as challenges to its authority, that Mexico doesn’t have a tradition of philanthropy, that social trust is lacking in Mexico and people would rather give to individuals, that people still believe the Church will do it, that giving is always weak in countries with long-standing and severe income inequality, that people don’t give because they fear being targeted for attack—any or all of which may have some truth to it.
On the other hand, Telmex tycoon Carlos Slim, arguably the richest man on the planet, is “investing” over $4 billion in environmental, health, and educational programs (he allegedly thinks that charity breeds dependency, so no social programs); more persuasively, “remittances”—money sent back to home villages by Mexican workers in the U.S.—currently hover around $2 billion a month, a form of giving that builds churches, schools, and homes, that provides food and agricultural supplies, whatever a home village needs. And that’s despite crackdowns on international financial transfers and opposition to immigration in the U.S.
A couple of new developments, however, are building a foundation for a more vibrant nonprofit and philanthropic environment in Mexico. In 1988, the Mexican Center for Philanthropy (Centro Mexicano para la Filantropía—CEMEFI) was founded to promote and coordinate philanthropy and civic participation in the effort to “achieve a fair, supportive and developed society.” CEMEFI, in an effort to assist nonprofits in developing their credibility—and thus enhance their ability to generate funding—has developed a set of 10 indicators of institutional development on which any given nonprofit can achieve accreditation. The indicators range from whether the organization actually exists and conforms to legal requirements, to whether it is accountable for funding received, and whether it has any activities that increase the confidence of society in the competency and capacity of nonprofit organizations.
Of even greater help to Mexican nonprofits, perhaps, is the Philanthropy and Civil Society Project (Proyecto sobre Filantropía y Sociedad Civil) at ITAM (Instituto Tecnológico Autónomo de México) in Mexico City. It conducts research on giving, volunteering, and nonprofits, and does policy work and analysis to support a context for domestic philanthropy. Directed by Michael Layton, Ph.D., an associate professor in international relations, the Project has collaborated with the Foundation Center in New York (the key resource for funding, both in the U.S. and around the world), and Alternatives and Capacities (a Mexican nonprofit that works to help nonprofits grow—Alterativas y Capacidades) on a database of 22,000 Mexican funders (Fondos a la Vista).
Layton, who is actually from Philadelphia, PA, uses broader research to address the issues involved in growing Mexico’s nonprofit organizations, accompanied by a recognition of the complexity of the Mexican context. He’s come up with the concept of a five-part “enabling environment.”
- Does the legal framework for nonprofits empower organizations, or “shackle” them?
- Does the nonprofit tax structure offer incentives, not penalties, to successful operation?
- Is there an accountability system that builds confidence in nonprofits?
- Do organizations have the institutional capacity to implement their activities well?
- Do organizations have the resources to undertake the activities they propose?
Layton argues that there are major roadblocks in each of these aspects of the enabling environment. Moreover, the Project’s national survey shows that a “culture of giving” is indeed lacking in Mexico, and that it is only with greater accountability (especially the ability of organizations to measure their results, rendición de cuentas) that the latter can be overcome. Layton is a bit pessimistic on the chances that this can happen. “Without a thoughtful, persistent effort to understand and adapt these practices to the Mexican context,” the environment may not change. Of course, the more optimistic view is that CEMEFI and Layton’s own Philanthropy and Civil Society Project are already contributing to favorable change.