Charitable giving in short supply in Mexico

August 13, 2011

When social scientists and policymakers here try to make sense of the beheadings, massacres and general mayhem afflicting large parts of this country, the blame often falls on the Mexican government’s under-investment in social programs and education.

But as researchers and advocacy groups look to confront the underlying causes of the spreading drug violence, they are also focusing on another shortfall: a lack of corporate and individual philanthropy.

The numbers point to a sizable charity gap. Mexico has the lowest taxes and second-highest income inequality among the 34 member nations of the Organization for Economic Cooperation and Development, which gathers data on the world’s leading economies, and yet it also has had some of the weakest levels of charitable giving.

According to Mexico’s Center for Philanthropy, the percentage of the country’s gross domestic product dedicated to charity was 0.04 in a 2003 study, nearly 40 times lower than the United States. Colombia, Brazil, Argentina and other developing nations also ranked much higher. Mexican philanthropy has improved significantly in recent years, researchers say, but it remains anemic, despite high levels of need created by the government’s poor record of tax collection and social investment.

The number of charities in the country that can accept tax-deductible donations has increased from 1,500 in 1995 to around 5,300 today, Mexican tax reports show. By comparison, the United States — with a population nearly three times Mexico’s — has more than 1.2 million 501(c)(3) charitable organizations, according to IRS statistics.

“The long-term trend is for corporations to step up and do more,” said Michael Layton, director of the Philanthropy and Civil Society Project at the Instituto Tecnologico Autonomo de Mexico university. Layton calculates that charitable giving as a portion of GDP in Mexico increased to 0.18 percent in 2009, a more than fourfold rise, but still low for a country with the world’s 13th-largest economy.

“A lot of the giving remains informal, and many philanthropists don’t want to talk about it or take public credit,” Layton said. “That may be good for your business, but not for the problems Mexico faces.”

Mistrust and wariness

One reason for that reluctance is a pervasive fear of extortion and kidnapping among the country’s wealthy and middle class. Nonprofit agencies say that while Mexico’s criminal violence has made more people eager to donate and volunteer in recent years, it has also made them increasingly wary of attracting attention to themselves. Rampant corruption among public officials further erodes already-low levels of trust in Mexican institutions, leaving potential donors with heightened suspicions of charities.

“Mistrust permeates the whole philanthropy world,” said Alicia Lebrija, director of the Televisa Foundation, which donates $20 million to $30 million a year, mostly raising money through televised pledge drives.

Donations in Mexico tend to be spontaneous, in response to a crisis or natural disaster, research shows, but there are relatively few grantmaking institutions that underwrite smaller, localized nonprofits in a sustained fashion. Despite improvement, especially in corporate philanthropy, wariness remains, and criminality can be a drag on donations in some areas where need is greatest.

In Mexico’s especially violent border areas, many local companies are spending so much on security measures that their charitable donations have fallen off, said Karen Yarza, director for the Community Foundation of the Northern Border, in war-torn Ciudad Juarez, where more than 3,000 were slain last year.

Under ordinary circumstances, nonprofit groups rely heavily on publicity to raise money, but in Mexico’s climate of insecurity, visibility can create risk. In one instance last year, a non-profit in the border state of Tamaulipas was targeted by extortionists after a notification appeared in a newspaper congratulating it for receiving a grant.


Though donation levels remain relatively low and volunteer programs scarce, researchers say it’s not the case that Mexicans are ungenerous. They give eagerly to the Roman Catholic Church and other religious organizations, whose collections often don’t factor into philanthropy indicators. And many Mexicans prefer to give informally and directly, whether it’s a few pesos to a handicapped person in the street or paying university tuition for an employee’s child.

The problem with that type of charity, researchers say, is that it doesn’t build strong civil society institutions that can become advocates for social change and exert pressure on the government.

Slim goes his own way

Even Mexico’s largest charity, the Carlos Slim Foundation, generally steers clear of social advocacy, preferring to protect its image by staying out of politics.

Ranked by Forbes as the world’s richest man, Slim has a fortune estimated at $74 billion. He has endowed his foundation with $5 billion, paying for thousands of cataract surgeries, youth soccer leagues, college scholarships and other causes.

Yet Slim has rebuffed repeated entreaties by Warren Buffett and Bill Gates to join the Giving Pledge, a group of some 60 tycoons who have agreed to donate at least half of their personal fortunes before they die. Spending on business expansion is a better use of his wealth, Slim insists.

“The only way to fight poverty is with employment,” the 71-year-old Slim said in a speech last year. “Trillions of dollars have been given to charity in the last 50 years, and they don’t solve anything.”

Those statements have made Slim a target for criticism among those who would like him to emerge as a Mexican Rockefeller, setting an example for other business elites.

Arturo Elias, director of the Telmex Foundation, the charitable arm of the phone company which Slim has a controlling stake in, said the foundation looks to avoid creating relationships of dependency. Elias said his boss’s credo is “zero assistance.”

“He likes to say: We need to do more than teach a man to fish. We need to teach him how to build a fish business,” Elias said.

Researchers say good philanthropy is good business, and that one reason corporate giving has expanded and professionalized in the country is the arrival of many foreign companies, such as Wal-Mart, which bring philanthropic experience and may be looking to burnish their public images.

Jorge Villalobos, executive director of the Mexican Center for Philanthropy, said he was encouraged by recent increases in corporate giving. “That’s not the problem,” he said. “Mexico’s problem is that it needs tax reform.”

Nick Miroff is a Latin America correspondent for The Post, roaming from the U.S.-Mexico borderlands to South America’s southern cone. He has been a staff writer since 2006.
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