Alliance Online - March 2007

Legal framework needed to help fledgling Guatemalan civil society find its feet

Archana Sridhar

For much of the 36-year-long civil war that plagued the country at the end of the last century, Guatemala was the recipient of international philanthropy. Since the ending of the war in 1996, overseas funders have begun to look elsewhere, but there is still much to be done. Eighty per cent of the nation’s population still lives in poverty, and transnational street gangs and drug-trafficking have led to a homicide rate of more than 100 per 100,000 residents in the capital city. A number of indigenous foundations have stepped into the breach left by international donors, but Guatemala’s non-profit sector faces another need - legal reform to ensure its own long-term success. A crucial task confronting the sector, therefore, is to lobby for such reforms to enhance the sector’s reputation and effectiveness.

As is the case across Latin America, philanthropy in Guatemala is largely driven by corporations, which have established many private foundations to address the country’s needs using the business principles and strategies generally known as corporate social responsibility (CSR). The term embraces much more than philanthropy or in-kind contributions, and extends to areas such as labour practices, the environment, and community relations. To many of the country’s up-and-coming foundations and NGOs, in fact, the word ‘philanthropy’ evokes decades of paternalistic charity.

A ‘do it yourself’ approach

Also following a regional trend, Guatemalan foundations tend to operate their own programmes, dedicating larger portions of their budgets to direct operations than to grantmaking. There is a general belief that the lack of regulation of the NGO sector has been the cause of many corruption scandals. Many foundations therefore prefer to use internal talent to ensure the success of their programmes.

Fundación Pantaleón, for example, founded by the Guatemalan corporation Pantaleón in 1992, manages its own programmes in education, health and the environment. Only 8 per cent of the foundation’s budget goes towards discretionary grants. It provides technical and vocational training in poor communities, and primary education for people of all ages. It also operates a primary care clinic for children at Guatemala City’s largest public hospital, serving approximately 88,000 children per year. All of the foundation’s programmes share a focus on local community development – involving families, municipalities and local NGOs with matching grants and in goal-setting and execution of its projects., ‘We see our model as investment, not just spending money,’ says foundation director Miguel Antonio Gaitan. ‘The community is our integral partner.’

CentraRSE and CFP

Fundación Pantaleón has used its experience to become a founding member of two umbrella organizations that are of growing influence in Guatemala: the Council of Private Foundations (CFP) and the Centre for Action on Corporate Social Responsibility (CentraRSE). These collectives bring together Guatemalan foundations and corporations so that they can lobby the government, exchange knowledge, and avoid duplication.

According to executive director Guillermo Monroy, CentraRSE was founded in 2003 to create a ‘cambio de raíz’ – a systemic change – in Guatemala’s corporate culture. It educates corporations on how to use the resources of corporate foundations to maximize impact. CentraRSE’s mission is ‘to foster win-win situations for corporations and communities’, using impact measurement and an investment model of philanthropy alongside the broader principles of corporate social responsibility.

CFP was founded in 1998 to involve Guatemalan private and corporate foundations in the implementation of the 1996 Peace Accords. Almost all of CFP’s members are corporate foundations, including the charitable vehicles of some of Guatemala’s biggest businesses, such as G&T Continental and Paiz. Its mission is to have a political and national impact through lobbying, to form alliances among foundations, and to find resources in common across Guatemala. One of CFP’s recent policy achievements, in concert with other NGO collectives, was the passage of the Law for Development NGOs.

The Law for Development NGOs is only the beginning of an answer to the question of NGO regulation. Owing to its confusing language and lack of specificity, the law has become an optional regime for NGOs rather than a source of legal certainty. Many legal scholars and non-profit managers in Guatemala would like to see the law amended to better categorize the types of NGO and to clarify the process of founding an NGO. Combined with more transparency from the national tax agency, this would allow donors to access key information about potential grantees.

Exemplary CSOs

Despite the disarray of the country’s non-profit legal framework, there are some outstanding examples of civil society organizations doing socially transformative work in Guatemala. The Collective of Social Organizations (COS), for example, has created a political alliance of progressive NGOs representing the interests of the poor, farmers, indigenous people, women, and labour unions. In affiliation with other NGOs including the International Centre for Human Rights Research (CIIDH), COS attempts to promote human rights legislation, and to bring to trial human rights cases in Guatemalan and international courts, primarily on matters of socio-economic equality.

Founded in 1962, Fundación del Centavo, or the Penny Foundation, now serves 3,000 people per year – primarily through microcredit programmes in Guatemala’s rural areas. It is currently experiencing a renaissance of sorts: since 2003, it has supported microcredit groups in the region of Quiche, lending more than US $200,000 to groups of 25-30 people. These people – all of indigenous origin – are thus lifted out of the informal economy, generating income and employment for the community through enterprises like animal husbandry, telephone card marketing and or agricultural development. The growth rate of these businesses is surprisingly good and the default rate near zero. Centavo manager Rodolfo Pérez said that when Muhammad Yunus won the Nobel Peace Prize this year, the rural businessmen and women receiving micro-loans from Fundación del Centavo felt in their hearts that they had won as well.

The Institute for Overcoming Urban Poverty (ISMU) is another exemplary Guatemalan organization with ties to US and European foundations, such as the International Development Exchange (IDEX) in San Francisco. According to María Elvira Sanchez, ISMU’s director, ‘During the war, the social fabric of Guatemala, especially among the poor, was torn apart because communities and families were made to distrust one another. Now, ISMU’s mission is to repair that social infrastructure and to promote values of solidarity and collective care.’ ISMU does this by working on a long-term basis with carefully chosen community-based NGOs. It provides capacity-building programmes to help them become more sustainable, and supports direct services like preventive health care, housing and primary education.

A push for increased oversight

Guatemala is at a crossroads in regard to increased oversight of the sector, with new laws entering into force and many new proposals on the table. Currently, there is no one government agency in charge of overseeing the growing third sector, and virtually no comprehensive regulation. The tax authority oversees the formalities of non-profit exemption and charitable deductions, but no agency ensures that private donations are put to the use intended and reach their intended beneficiaries.

Some of the most reputable NGOs and foundations in Guatemala, including COS and CIIDH, are pushing for more state and self-regulation of their sector, realizing that they are tainted when unregulated NGOs are the subject of scandal or used as fronts for corruption. As Barreda and others from COS have pointed out in the Guatemalan press, there is a lack of transparency when NGOs assume traditional state functions, something that is happening more and more. Hitherto, the law has prescribed accountability and reporting to the state only in relation to the public or government funds involved. In fact, the 2007 budget includes a new law requiring more self-reporting by NGOs receiving government contracts. Private donations, in contrast – from within Guatemala and from abroad – are not subject to any oversight, or ‘fiscalización’; that is left entirely up to the donors.

The Coordination of NGOs and Cooperatives (CONGCOOP) is also an advocate for such oversight. This group has worked with other NGOs and umbrella organizations, including CFP, to pass legislation for the NGO sector. According to its director, Helmar Velásquez, CONGCOOP hopes that Congress will amend the Law for Development NGOs so that it covers the many different types of non-profit association. It also recommends creating an inter-agency oversight commission with members from the government and the non-profit sector, based on the legal regime for business cooperatives.

The non-profit sector in Guatemala has made great progress in the decade since the war ended, but there are still some areas of evident need. First, for more research on philanthropy in Guatemala, and second, for more regulation, both self- and state-imposed. Increased (non-political) oversight and capacity-building will ensure that Guatemala’s NGO sector continues in the footsteps of the dedicated non-profits described above. Thus assisted, the sector can make an even greater impact in addressing some of Guatemala’s looming social needs while transforming the nation, one community at a time.

Archana Sridhar is a 2006-07 Fulbright Fellow in Guatemala City, studying tax reform and philanthropy. She received her JD from Harvard Law School in 2001. Email Archanasridhar06@fulbrightweb.org.

For more information
Fundación Pantaleón - www.pantaleon.com/index.php?id_category=34
CentraRSE - http://www.centrarse.org
CFP - Profile on WINGS website
COS - www.cosgua.org/quien/cos-quienes-self.htm
CIIDH - http://ciidh.org/
Fundación del Centavo - www.fundacen.org/
ISMU (on IDEX website)- www.idex.org/article.php?id=113

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