6th GIFE Congress on Private Social Investment

Despite the heavy rains that had fallen on Rio de Janeiro since 5 April, the 6th GIFE Congress on Private Social Investment took place on 8 and 9 April in the city, bringing together about 800 national and international leaders from the social field. Under the theme ‘Visions for 2020’, the event laid out the directions to be followed by the sector in Brazil over the next decade.

‘It is precisely by the combining of views – and often their opposition – that you can build a shared vision: a view that is both positive about the future and does not underestimate the challenges presented ahead,’ said the Chairman of GIFE’s board, Denise Aguiar, at the opening of the Congress.

This thinking could be seen at the launch of Vision of Private Social Investment for 2020, presented by the Secretary General of GIFE, Fernando Rossetti. The intention of this document is to put on the national agenda the case for a more relevant and legitimate industry, covering various topics and regions and working with a sustainable and diversified set of investors.

Drawn up with the participation not only of GIFE’s network but also of other social organizations, who were invited to participate in four meetings on the topic, the document was developed under three major themes: relevance and legitimacy; scope (thematic and geographic); and diversity of investors.

Relevance and legitimacy

The first theme relates to the actions of social investors who, according to Rossetti, should be recognized as relevant by the public concerned and society in general. ‘Legitimacy can only be built if the industry is pertinent,’ he said. To achieve this, organizations must improve their management indicators and transparency as the basis for developing strategies for dialogue with society. Bradford Smith, president of the Foundation Center (USA), argued that ‘these rules are critical to the future of philanthropy, not just in the country but also worldwide. In the US, we went through a kind of “social Darwinism” where only the most prepared organizations survived.’  

Scope

Concern with the second theme, scope, derives from the fact that social investment from private sources is concentrated both regionally and thematically. ‘On the one hand, investment is concentrated in the south-east and southern Brazil. On the other, there are more consensual themes – such as education, health, culture and youth – that are untouched,’ said Rossetti.

However, to ensure sufficient coverage of urgent questions, the practice of donation needs to be expanded, and investment strategies diversified. As priority actions, the paper argues, for example, the regulatory framework for the third sector needs to be changed. ‘Brazilian law does not encourage diversity in philanthropy. Rather, in addition to all the bureaucracy, it puts a tax on its creation,’ said Rossetti.

Diversity of investors

The third main theme is dedicated to changing that, fostering over the next 10 years a more conducive environment for the creation of independent foundations, be they community, individual or family. The greater the diversity of foundations, the greater the diversity of themes addressed. ‘In countries where philanthropy is mature, scarcely any question of importance is left unconsidered by either individuals, families or independent organizations,’ concluded Rossetti.

Barry Gaberman, former senior vice president of the Ford Foundation, felt that Brazil was an interesting case. Brazilian philanthropy seems to be led by business, he said, probably because many major corporations are still in the hands of families.

‘The second thing that surprised me is that I was expecting to find a more active and dynamic community foundation sector. But the truth is that there are very few in Brazil. In Mexico, for example, there are 40 such foundations. There are 20 in Thailand, a number in South Africa and India, and 725 in the United States.’

Philanthropy in Brazil

The Congress also heard Anna Maria Peliano, director of the Institute of Applied Economic Research (IPEA), talk about the philanthropic resources available in Brazil. According to IPEA’s estimates, the private sector will invest R$8.6 billion (from some 800,000 organizations) this year. Of these, R$2 billion will come from the 124 members of GIFE’s Private Social Investment Network.

IPEA’s survey also indicated that education remains the sector that commands most resources. Social investment, according to the survey, had suffered relatively little from the financial crisis. Last year, investments were reduced by 6 per cent over the previous year. However, it is noteworthy that 29 per cent of investments originally planned had been slightly decreased in the event, and 18 per cent significantly reduced.

Judging investment

The closing ceremony was given a light touch by the staging of a mock trial, ‘What is the impact of ISP in Brazilian Reality?’ which managed to mix humour and gravity. Congress participants made up the jury, who heard ‘judge’ Francisco Tancredi, a consultant, charge Brazilian social investors with ‘placing undue stress on meeting the interests of their founders at the expense of the real interests and needs of society’.

He said that private social investors have also been accused of promoting their shares through ‘generous tax incentives’ without transparency, and achieving ‘changes that fall short of their promises’. Summing up, Judge Tancredi considered that the ‘defendant’ (represented by Fernando Rossetti) was still very young in Brazil and, pending more substantial evidence to the contrary, was of good character and intentions. While found guilty of various offences, the sector did not present a serious risk to society and there was no case for imprisonment. ‘Against the decision of the jury,’ pronounced the judge, ‘I absolve you of the greatest charges, but put you on probation and sentence you to social and community service in the areas in which you’ve been most delinquent.’

Legal framework

One of the most controversial issues discussed during the Congress was the consolidation of a regulatory legal framework for the philanthropic sector in Brazil. The speakers were unanimous on the need for private enterprise and non-profit organizations to press for clearer legal guidelines in an area where the law, they say, is confusing and multifaceted.

‘Each agency has an official interpretation of an area, nor do the courts agree among themselves – a scenario that generates a schizophrenic environment of legal uncertainty,’ said the mediator Eduardo Pannunzio of Rubens Naves, Santo Jr Hesketh Associates Law Offices.

Speakers were agreed that reform should follow some basic pillars. One is the strengthening of the identity of companies and organizations working in the sector – and the challenge of showing their worth to society. Tax incentives are also seen as key to regulating the sector. In addition, regulations must take account of the size, structure and scope of organizations. However, to achieve the long-awaited regulation, the Congress stressed that the first step is consensus between different organizations involved. All are realistic and aware that the road will be a long one. As a first step, suggested lawyer Flavia Regina de Souza, an expert on philanthropy, organizations could seek representation at local public policy level in their areas of expertise, so as to ‘at least improve the local debate’.

Event 6th GIFE Congress on Private Social Investment
Date 8-9 April 2010
Venue Rio de Janeiro, Brazil
Organizer GIFE

Rodrigo Zavala is Comunicação - Editor de Conteúdo at GIFE. Email zavala@gife.org.br

For more information
www.gife.org.br