Alliance Online - December 2007

Social investment evolving in Latin America, but has a way to go

Rodrigo Zavala

EVENT Leadership Forum on the Future of Social Investment in Latin America
Date 23-25 September
Venue São Paulo, Brazil
Organizer IDIS/CAF

In September, over 60 experts on private social investment got together in São Paulo to discuss the future of social investment in Latin America. The event started from the premise that social and environmental challenges are similar around the world and that local expertise from Latin American countries can point to new ways of tackling these issues. What emerged from the Forum is that while social investment is developing gradually in the region, political instability, poor legislation and lack of a clear distinction between the roles of government and civil society are handicaps to its evolution.

The event was sponsored by the Institute for the Development of Social Investment (IDIS) and Charities Aid Foundation (CAF) and supported by GIFE, the Brazilian grantmakers’ association.

Threats and opportunities

On the first day of the Leadership Forum, the 32 Latin American participants came together to review the context of private social investment in the region and to assess the strengths, weaknesses, opportunities and threats facing the sector

The strengths identified were increasing recognition for this kind of investment and growing financial resources for it; and ten years of documented practices and accumulated knowledge. Weaknesses were the fact that private investment is put before social investment, that countries of the region are at different stages of development respecting social investment, and that the organizations involved are working according to different rationales, so making dialogue difficult. Threats included political instability, poor public administration, distrust between sectors, and misunderstandings about the different roles of corporations, civil society and government. However, globalization of business, the involvement of more stakeholders, the revolution of information and communication technologies, and the possibility of investment in innovative organizations all present opportunities for the development of social investment.

However, the private sector still needs to create more strategic ways to act for the common welfare. ‘Latin America does not enjoy a grantmaking culture,’ said Jorge Villalobos, President of CEMEFI – the Mexican Center for Philanthropy. ‘Mexico is an example: only 250 grantmakers exist in the country.’ Similarly, Carolina Langan, General Coordinator of the Argentine Group of Foundations and Businesses (GDFE), argued that ‘In Latin America, private social investment happens in the form of social assistance, influenced mostly by Christian charity.’

In this context, the need to develop a systematic view among investors was a recurrent topic. ‘What we seek is a more sophisticated and professional sector, with more innovative funding options. Focusing on the causes rather than on the effects of social issues has become a main challenge for grantmakers who expect returns from their donations,’ said Russell Prior, Executive Director of CAF.

From donation to investment

These reflections on private social investment may be uncomfortable, but they reflect the self-analysis of a sector that is trying to improve its performance. According to Cláudio Giomi, Corporate Manager for Business Social Responsibility at the Arcor Foundation, the change in concept from donation to investment that has taken place over the last few years has led to the hiring of professional social managers.

‘It was realized that there was no longer room for amateur and precarious actions with a partial view of reality. Today this seems to be very clear, but it was not so a couple of years back,’ said Giomi.

This, in turn, has had an impact on corporate social policies. ‘Change comes gradually. Actions that used to be ad hoc and scattered are giving way to ongoing programmes with constant monitoring and follow-up,’ said Flavio Flores, Coordinator for Social Investment of the Andes de Cajamarca Association, Peru. Another positive indicator of the evolution that private sector social investment has undergone is the perception of sustainable local development as a goal. ‘This shows a greater involvement of the organizations, the so-called “working with, instead of working for”,’ said Flores.

All these factors come together to explain the increasing public awareness of the relevance of private social investment. According to Guillermo Carvajalino, Director of Business Leaders for Education, Colombia, this is happening because more resources are now available and more actors are involved in social actions. ‘When joint efforts are made in major change processes, recognition of the work is much greater,’ he said. He also highlighted the importance of organizations such as Forum of Institutions and Businesses and the Inter-American Social Investment Research Network that operate as organizers of private sector social policies. ‘We are witnessing the expansion of learning networks no longer linked just to businesses or governments. They are cross-sector networks, connecting private and public organizations,’ he said.

Fernando Rossetti, Secretary General of GIFE, agreed and suggested that organizations like GIFE and the Ethos Institute in Brazil, for example, reinforce the infrastructure of civil society. He spoke of the importance of the Forum for the development of private social investment. ‘No consistent bibliography, research or study is available for reference. The solution must rely on systematic conversations like the one that took place in this meeting.’

Rodrigo Zavala is Communications coordinator at GIFE. Email zavala@gife.org.br

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