Philanthropic activity across Latin America is led by private businesses, foundations, multilateral organisations and religious networks to name but a few. Donations do not function, nor are channelled to where they need to go in a silo. Rather, they are strongly influenced by political realities and policy choices not least in the realm of tax incentives which can be a powerful tool to increase donations.
An ESG expert working with philanthropic capital in Peru explains, “VC’s are showing more interest in social aspects, and there are more companies focused on having a social commitment. There are more social companies raising capital and they are being more supported by investors, both public and private.”
“VC’s are showing more interest in social aspects, and there are more companies focused on having a social commitment.”
ESG expert, philanthropist, Peru
Despite different forms of financing, philanthropic actors across the region are increasingly collaborating. This has become especially important since pandemic-induced economic sluggishness has put into sharp focus how philanthropic activity can help plug glaring fiscal deficits especially in education and health. The Open Society Foundations for example, works with several local partner organisations across Latin America to improve government transparency and reform drug policy.
“In matters of non-financial philanthropy, technical advice can be offered. This is an area where I see growth. Importantly, those that provide the funds do not provide technical advice, but rather the capital is directed so that the technical advisors are self-sustaining initiatives.” adds the ESG expert.
“In matters of non-financial philanthropy, technical advice can be offered. This is an area where I see growth. Importantly, those that provide the funds do not provide technical advice, but rather the capital is directed so that the technical advisors are self-sustaining initiatives.”
ESG expert, philanthropist, Peru
Cross-sharing of data, better use of technology and impact assessments to really understand how philanthropic activities can make a meaningful impact on local and indigenous communities has become increasingly common.
Education is another area ripe for the philanthropic spotlight; according to date published last year by the Gates Foundation, universities across Latin America received just USD 24 million in philanthropic donations between 2010-19 compared to European universities which in the same timeframe received in excess of USD 2 billion in charitable donations.
Regarding ESG red flags, philanthropic activities will not stop, but donors will be stricter as to who they will give their money to, poor partners can cause long-term reputational damage. Investors have become more cautious and rigorous in the due diligence they conduct before progressing a philanthropic investment.
Naturally, philanthropic activity across the region should focus on environmentalism and addressing social inequalities. Encouragingly, a sizeable number of wealthy and influential Brazilian families have signed up the Giving Pledge, an initiative of the Gates Foundation to encourage grant making and philanthropic donations across the world and for which Latin America is a key geographic focus. What is hoped for now is a herd mentality instinct among the region’s rich and powerful.
Positively, there is a trend of philanthropic capital is also tending to be stricter in the sense that the impact is greater, it is no longer giving money for the simple fact of giving it, but that the business model is more durable and sustainable.
There will always be philanthropic capital for special causes such as health, for example – this is an area where philanthropic actors can be more innovative in terms of funding, by way of government or directly to startups where some of Latin America’s brightest tech minds are creating long-term healthcare solutions.