Fifteen years ago, Mexican businessman Manuel Arango founded the Mexican Center for Philanthropy (CEMEFI) – now a large, thriving organization with 400 members. What inspired him to set up a civil society support organization, Caroline Hartnell asked him. And does he think his example has encouraged other wealthy people in Mexico to follow suit? Although he downplays the importance of personal example, Manuel Arango feels that Mexico is reaching the point where people accept that supporting the non-profit sector should be part of any citizen’s life.
As an individual donor, it was an unusual decision to found a support organization like CEMEFI rather than something much more service delivery oriented? How did you come to do this?
I had previously worked with non-profit institutions in the environmental area and was impressed by what organized citizens can do to make things change. I thought more needed to be done to promote this culture of getting involved and giving some of your time, talent and money for the benefit of the common good – a culture of participation and generosity, but we didn’t have any organizations in Mexico whose role was to help the whole sector grow. So we created the centre with that idea and we published the Mexican equivalent of the state of the environment report. Now we work with corporations, NGOs, individuals, the government and international organizations, learning from them and sharing our knowledge.
So CEMEFI was always going to promote civil society in all its forms rather than just the donor side?
Yes, that’s right. We felt that if we got citizens to be organized and to share their talents and time, you could create a better balance between market forces, government and citizens working for the public good. I think Mexico has entered a very important democratic era. Many people have contributed to this process, and CEMEFI has contributed not only by assisting people in need but also by working in the area of human rights and democracy and protecting the rights of children and women. I think we’ve had an influence – it’s difficult to say to what extent, but I feel confident we have.
If the new centre was always intended to promote civil society as a whole, why the name, Mexican Center for Philanthropy?
In those days, civil society – organized civil society – was not exactly seen by the government as a very good thing. So we decided to go with the word philanthropy, which was less challenging than civil society.
You were not just unusual in deciding to set up a civil society support centre rather than a more ‘cuddly’ service-oriented non-profit. As a businessman, you were also very unusual in getting involved in the non-profit sector in a big way. What brought you to do this?
In those days in Mexico – it’s changing now – people felt that in order to be efficient and profitable in business you had to dedicate yourself to it. Community involvement was not seen as one of its functions.
A key focus of CEMEFI has always been the social responsibility of the corporation. It has made a big difference saying that individuals should share whatever resources they have – and we are more interested in the talents of the person, the time, the generosity than in their money (though money is important) – but the corporation is where the talent is more abundant. If a corporation decides to get involved and share the talents within it, it has a tremendous effect, more than if they just write a few cheques.
A recent innovation of CEMEFI’s is creating an award for corporate social responsibility. Can you tell us about this?
Companies qualify for this by meeting certain criteria and achieving certain ‘grade points’. But it’s not an award for life. They have to re-qualify every year. Everybody thought it was going to be complicated and difficult, but it has been working extremely well. We started with ten companies and last year we had over 65 achieving the award.
In fact, there have been requests for information about the programme from other countries in Latin America. Now people have seen that it works and companies want to get the award – and to show that they have received it – and this has created a tremendous momentum. And it’s a process of education too. Points awarded relate to different areas, like the environment and relations with the community and so on, so in trying to achieve points, companies have learned a lot in these areas.
Although most business people in Mexico 15 years ago felt that they had to concentrate on running their businesses, obviously you didn’t feel that. Did you carry on with your business after founding CEMEFI?
I’ve always carried on with my business, but as the years have passed, more of my time is dedicated to CEMEFI and my other non-profit activities. So while I’m president of a real estate and development corporation, I probably spend only 20 per cent of my time on it. Not that I expect this to be a model for the rest of the business community! So I’m not out of business, I want to keep the business and say both things can be done.
I think the mentality has changed. Corporations do now realize that the community appreciates a company that is responsible in every respect – the environment, giving to the community – and they are hiring people to run this area of business as professionals. We are moving, but there is still a lot to be done, especially with middle-sized and small companies.
It’s a win-win situation, though, not a giveaway. We have seen that most of the Fortune 500 corporations and the equivalent in other countries are always the ones with the best responsibility programmes. So it pays back!
How important do you think your example in founding CEMEFI 15 years ago was in encouraging other business people in Mexico, other wealthy people, to think about contributing to society in different ways?
I’m not sure about the personal example. Some people like to think, correctly, well if he can afford it and that’s what he wants to do, that’s fine. I think it’s CEMEFI, rather than the personal example, which has made the difference. It has a very diverse board, very specific programmes, professionals running the organization. I think really that’s what’s created most of the impact.
It’s true that I’ve served on the boards of many different organizations and I’m invited to take part in many forums. But it’s maybe not so much what I have to share, more that there are very few business people who dedicate a lot of time to this field and really have knowledge of the subject and are willing to join in these forums. I’m seen as a rare specimen, coming from the business sector but working seriously on the non-profit sector.
But whether or not it’s down to your influence, great progress has surely been made?
Yes, many individuals and corporations in Mexico now accept that the non-profit sector is part of life. That’s what happened with the environment. When I started in that area more than 30 years ago, most companies thought, well, if they’re romantic enough and they want to protect animals and butterflies, that’s fine. It took a lot of time for the environment to become part of the life of the corporation, a necessity in order to survive in the corporate world.
I think the same thing is going to happen in regard to the social life of wherever a company is operating. Companies will come to see it as necessary to share the talent they have with the neighbourhood. So I think we are moving. Before it was, ‘I pay my taxes, I pay my dividends, I give work, what else do you expect from me? That’s my job, the rest belongs to the government.’ Now companies realize that they have to do more, and that this won’t harm their profits. It’s not a giveaway.
You say you don’t think the personal example amounts to that much, but this is not the general consensus. Organizations that are involved in promoting philanthropy – like Synergos, with its Global Philanthropists Circle – talk a lot about the importance of peer example.
I don’t want to talk a lot about myself, but yes, I do agree with you. What really gets people motivated is not, for example, reading books, but seeing things happen, projects that have been created by individuals. That has an impact without any doubt. People say, ‘Yes, I would like to do something like that.’
That brings me to the younger generation. We don’t want the younger generation to say, ‘This is something I will do when my children have grown up and I have more free time and more money.’ This is something that you have to start from childhood.
For me it’s a passion. For some people politics is a passion, but for me this is a way to participate indirectly in politics. In the non-profit sector you have everything, you have all sorts of organizations. It’s my passion because I think this is what creates the balance in society, between market forces and government and the voices of citizens, which are now beginning to be heard.
This may never be a passion for everyone, but how would you at least reach the situation where every person with any money to spare in society, and particularly wealthy people, feel it would be almost embarrassing not to be contributing?
One key thing is trying to promote a standard of giving. People might or might not accept it, but the standard allows people to compare where they are. For example, we say corporations should put aside 1 per cent of their profits before taxes. It’s not a very large amount, but it gets people thinking, ‘One per cent of my profits, how much would that be? How much am I sharing at this moment?’
But that’s just the economic side of it. We want corporations to share their talent – and when I say corporation, I mean everybody that works in a corporation. We are trying to tell citizens that they should share 1 per cent of their income and give at least one hour a week to voluntary work. We’re trying to create a culture where people will begin to feel something is missing in their life if they’re not part of it. I’d like to see business people serving on non-profit boards, and not seeing this as something to be delegated to someone else. CEMEFI’s task is to create the feeling that this is part of any citizen’s life.
And do you think you are reaching that point?
Yes, I think so. In fact, this has led to a different problem. So many people have been motivated to create projects in every area, from culture to health to education to development, that now everybody is searching for funds. And they go always to the same individuals and corporations. So projects have proliferated but the economic base of giving has not grown.
One problem is that we have very few grant-giving foundations. The few foundations we have in Mexico operate their own projects, they don’t make grants, so most of the money there is comes from the business sector or from individuals – and sometimes from outside institutions, from foundations that operate internationally.
Are there the resources in the country, in the hands of corporations and private individuals, to meet this need?
Not enough. There are so many needs.
The biggest potential source for extra money is the government. The Johns Hopkins study of Mexico looked at the participation of government in providing funds for NGOs, and of all the 19 countries studied, Mexico came last. Mexican non-profit organizations receive hardly any aid from government, unlike other countries, where governments believe that channelling part of their budget to non-profits is very worthwhile and very efficient. So we’re trying to get more money from the government. And we’re succeeding. Slowly it’s increasing. It is beginning to share some of its budget for social affairs with the non-profit sector.
Of course, corporations could be more generous too, and so could individuals. It’s a matter of putting the puzzle together.
But it sounds like government is the big one to tap into?
Absolutely. But we would like to have more grant-giving, rather than operational, foundations in Mexico. One was set up recently, by an individual who put aside around US$500 million for making grants in the areas of health and other specific issues – a very high figure for Mexico, and very, very rare. And it is professionally run.
What about companies, should they be setting up grant-giving foundations?
If they don’t want to start a foundation, they could start a professional corporate giving programme. Even in the US, many corporations do not have their own foundations. Instead, they have grant-giving programmes, but these are professionally run programmes, rather than casually making grants as the requests come in. We want corporations to be very professional in this area.
What sources of funds are available for organizations like CEMEFI? Are there donors that have followed your lead and are willing to fund a sector support organization?
Very limited. A lot of people, once they’re convinced about donating money, want to see results. They want to target their donations to very specific things so that they can see the effect. Which is fine, it’s the mentality of the corporation. CEMEFI can show specific achievements of course, but most people don’t want to give money so that CEMEFI can promote this or that cause. They want to give directly to the cause and see the impact. So we have a lot of problems raising money specifically for CEMEFI.
Moving on from Mexico, how do you think we can galvanize more global giving – the subject of the Alliance special feature and roundtable?
We have 4 billion people in the world who earn on average $1,500 a year and around 100 million people who earn more than $20,000 a year. How are we going to approach this disparity? But money is only part of the problem. First you have to have the ideas, and once you have the great ideas and the talent, the money will flow from different directions. So I see networking at a global level as extremely important.
Sometimes we talk about money as the mover for everything, but sometimes information is really what makes things change. Power used to be in the hands of very few people. Now, with technology, we are getting power in the hands of citizens. With information and technology, you can make a difference in all sorts of ways. Of course, you can never put aside the need for money, but I think information, will, generosity and organization can make the difference in reversing many of the things that we don’t like in the world. We shouldn’t wait for governments and global institutions to solve problems. Each person can be part of the solution in this global network.
How important do you think it is for donors to have information about how well projects are performing?
I think it’s very important. Just as we are grading corporations on their social responsibility, so we need to grade non-profits – at CEMEFI, we are working on a programme to do this which we’re very close to launching. Then as a donor I can see there are organizations on which I can rely and to which I can donate.
Just one final question: if you could introduce one innovation to foster more giving, what would it be?
Probably the ability to present, either electronically through the internet or through publishing, projects from different parts of the world that could make a difference. Take Transparency International – how did it start? What difference has it made in the world? The ability to take cases like that and put them on the internet and say, here we have 50 or 60 or 100 projects that can really make a difference. Read about them. These projects didn’t need $60 million or $25 million or $10 million; they needed will, imagination, and an idea, which has been supported, is working and making a difference. We might also want to profile individuals that have made a difference … information again!
Manuel Arango was co-founder and partner of a large general retailing business, today WalMart de México. In 1983, he established Compartir Fundación Social, a family foundation that supports education, health and community development initiatives, and in 1988 he founded the Mexican Center for Philanthropy (CEMEFI), of which he is the Honorary Lifetime Chairman. He serves on the board of many national and international bodies, such as Transparencia Mexicana and the Institute of the Americas, and continues a business career through the Chairmanship of a real estate company, Parque Reforma. He has also been instrumental in setting up other foundations dedicated to the environment and education.
He can be contacted at email@example.com