Bolstering Border Philanthropy

U.S. and Mexico join forces to combat array of problems

Over the past decade, the U.S.-Mexico border has been home to unprecedented economic

good times. For the next decade, it may be poised for a philanthropic bonanza.

Since the landmark North American Free Trade Agreement was enacted nearly eight years ago, the 2,000-mile border from Texas to California has drawn thousands of businesses in search of new markets and hundreds of thousands of workers in search of a more prosperous life, particularly on the Mexican side. But the influx of capital and labor has left in its wake a dramatic array of environmental and social problems — problems that have strained governments and nonprofit organizations and left organized philanthropy on both sides of the border looking for more ambitious and coordinated ways to respond.

Encouraged by what many see as fresh enthusiasm on the part of newly elected presidents on both sides of the border, grant makers, nonprofit leaders, and government officials are redoubling their efforts to ameliorate the detrimental side effects of economic growth, which include pollution, poverty, water shortages, inadequate housing, and the rape or murder of hundreds of women.

Among the priorities of foundation and government officials:

Assess what works. Next month, the Ford and Meadows Foundations will hold a two-day meeting in Dallas with a number of other grant makers to discuss ways to step up philanthropic efforts along the border. Among items on the agenda: expanding the role of community foundations and creating an organization that could serve as a clearinghouse for nonprofit groups to share information and ideas. The Dallas meeting follows a Border Summit on philanthropy and other matters held last month near the border town of McAllen, Tex., by the University of Texas–Pan American, at which foundation officials emphasized the need for increased collaboration among organizations.

Ease regulations. In Mexico, President Vicente Fox has ordered that complicated rules be simplified for gifts of property, food, and other in-kind goods from donors in the United States to Mexican charities. And, in the United States, the Council on Foundations recently secured an Internal Revenue Service statement clarifying that U.S. grant makers need not fully investigate overseas charities to make sure that they meet all the standards required for U.S. charity status. Instead, foundations in the United States need only obtain detailed accounts from the grantees of how the award of money is to be used.

Build civil society. A critical challenge, say foundation officials, will be to shore up the financial and management structures of small, locally rooted nonprofit groups, and to inculcate a “culture of giving” in Mexico, a country that some say has lacked a strong philanthropic tradition.

“Foundations that used to work on Mexico spent a lot of time working on strategic relationships between the United States and Mexico,” observes David Lorey, a program officer handling U.S.-Latin American relations for the William and Flora Hewlett Foundation, in Menlo Park, Calif., which is in the process of spending $10-million in grants for border projects. “There is a very appropriate turn now toward engagement with real issues on the ground that have to do with poverty and justice and environmental degradation.”

Philanthropic efforts along the border are not new. Some grant makers in the United States, such as the Ford and Meadows Foundations and the El Paso Community Foundation, have been involved for two decades or more. Since the free-trade agreement went into effect in January 1994, a growing number of community foundations have also sprung up on the Mexico side of the border, including the Fundación Internacional de la Comunidad, in Tijuana; the Fondo del Empresariado Sonorense, in Nogales; and the Fundación del Empresariado Chihuahuense, in Ciudad Juárez.

One just-announced high-profile effort: a new foundation, being created by the first lady of Mexico, Marta Sahagún de Fox, that will try to reduce poverty and improve health care in Mexico and Latin America.

Although there are no comprehensive tallies of “border philanthropy” year by year, experts agree that it has been growing by leaps and bounds. A Foundation Center study found that a subset of such grants — those from U.S. foundations to Mexican nonprofit groups — increased by 60 percent from 1994 to 1998, to $24-million. That sum made Mexico the fourth leading recipient of U.S. philanthropic funds, behind England, South Africa, and Canada.

An Integrated Region

The growth in border philanthropy stems in part from an agreement, reached in conjunction with the North American Free Trade Agreement, that eased cross-border giving by making Mexican charities the legal equals of U.S. charities for purposes of U.S. law, and likewise recognizing U.S. charities under Mexican law.

But increased interest in the border has been driven by more than mere legal changes. It has been propelled by a growing recognition that, just as the economic fates of the United States and Mexico have become increasingly linked, so too has the welfare of the people living on both sides of the border.

Experts say this recognition is long overdue. The border has traditionally been a sort of netherworld, often neglected by faraway national governments, multinational corporations, and organized philanthropy.

With the recognition that the border increasingly exists in name only, foundation and nonprofit leaders are creating cross-national institutions that will treat the area along the border as an integrated philanthropic region.

The Paso del Norte Health Foundation, a $211-million fund created in 1995 with proceeds from the sale of a nonprofit hospital to a health-care corporation, runs public-health programs in southern Texas, southern New Mexico, and Ciudad Juárez. The foundation works closely with government health agencies, charities, and universities on both sides of the border to tackle common problems such as diabetes, poor nutrition, and teenage pregnancy.

“When I can stand up and look across the border and see Juárez, it’s easy to see that there really is no border,” says Ann G. Pauli, the foundation president, speaking of the view from her El Paso offices. “We are all one country down here.”

Legal Barriers

Although promising experiments in cross-border philanthropy have begun, nonprofit and government officials from both countries agree that steps must be taken to remove lingering barriers to international giving and to increase Mexico’s capacity to build and sustain its own nonprofit organizations.

“There are still rough spots in the Mexican law that they have not worked out on their own,” says Janice Woods Windle, president of the El Paso Community Foundation, whose $100-million in assets make it one of the largest grant makers along the border. “We keep hoping that, as time goes by and we do more and more work together, that the laws in both countries will become more reflective of each other so that it is very easy to work in either country.”

Legislators in Mexico are considering relaxing regulations, put in place several years ago following reported cases of charity fraud, that will make it easier for U.S. foundations to support Mexican charities. Likewise, the Mexican government has taken steps to make it easier for U.S. companies to donate goods to Mexico.

Strengthening border nonprofit groups has also gained increased support. Shortly after the free-trade agreement was enacted, the Meadows and Levi Strauss Foundations and the Houston Endowment created the Southwest Border Nonprofit Management Resource Center, based at the University of Texas-Pan American in the border town of Edinburg, Tex.

In addition, working with the Texas Historical Commission along different parts of the border, foundations have been supporting the development of a “heritage corridor” that will draw tourists and economic development to historically significant sites. The Meadows Foundation, which has made an estimated 300 border-related grants totaling nearly $26-million over the past two decades, has supported the Los Caminos del Río corridor in the area of Brownsville and Laredo, Tex. The El Paso Community and Hewlett Foundations have together given $300,000 to support the Pass of the North Heritage Corridor in the area of El Paso, Juárez, and Las Cruces, N.M.

“For any of the problems on the border, the key missing actor is a set of strong institutions,” says Mr. Lorey of the Hewlett Foundation. “This is true across a whole range of issues. There aren’t university research programs, there aren’t nonprofit activist organizations. There’s a whole missing ecology of organizations.”

Building Assets

Another strategy for bolstering Mexican nonprofit groups is to broaden and deepen their sources of financial support. For example, the El Paso Community Foundation and the Fundación Margarita Miranda de Mascareñas, in Juárez, have created a binational foundation that has also received $1-million from the Hewlett Foundation to make environmental grants along the border. The new fund will redistribute some of that money in grants to smaller charities and use the rest to develop its own management and governance-assistance programs for nonprofit groups.

Within the next few weeks, the Ford Foundation, which has supported border work since the early 1980’s, is expected to announce a new program to increase the number and assets of community foundations on both sides of the border.

Six of the nine community funds along the U.S. side of the border are young and only modestly endowed, with less than $1-million apiece. On the Mexican side, there are four border grant makers, and three more in formation, but none has an appreciable endowment, according to David Winder, director of global philanthropy and foundation building for the Synergos Institute, in New York, which is advising Ford on the community foundation project.

Richard Kiy, president of the International Community Foundation, a San Diego grant maker that has given nearly $240,000 to border projects since its creation a decade ago, argues that not only must there be more foundations, with larger endowments, but also that they should work more closely together in the border region. At the philanthropy border summit last month, he called for the creation of a “binational regional association of grant makers” whose role would include coordinating joint foundation projects, serving as a forum for foundations to share lessons learned, and “educating major national, corporate, and specific individual donors about the unique needs of the U.S.-Mexico border.”

Observes George V. Grainger, a grant officer at the Houston Endowment, which has increased its border philanthropy over the past five years: “Everybody recognizes that one of the fundamental problems with philanthropy along the border is that there are no philanthropic assets — huge needs, a lot of public charities, but little in the way of dollars available from local sources.”

Mr. Grainger also notes that Mexican nonprofit groups, even more than their U.S. counterparts, sometimes find it difficult to work with foundations, which prefer to make grants for specific projects as opposed to providing operating support for electricity, rent, salaries and other basic expenses. “That ought to be a priority,” he says.

Giving Traditions

Officials on both sides of the border argue that it will be difficult to strengthen nonprofit groups without first inculcating a “culture of giving” among Mexican individuals. Mexican nonprofit groups received 6 percent of their income in 1995 through donations from private sources, compared with 21 percent for U.S. nonprofit groups, according to the most recent research by the Johns Hopkins University’s Comparative Nonprofit Sector Project.

“It is increasingly clear to me that there is a need to promote and stimulate generosity and social responsibility among citizens and businesses, and it is also evident that, although we have moved forward in this regard, we still have a long road ahead,” Jorge Villalobos, president of the Mexican Center for Philanthropy, told the border philanthropy conference. “There is a continued scarcity of people who systematically give a share of their income in their local community. There isn’t that culture,” he observed.

Mexican companies and multinational corporations that have operations along the border represent major untapped sources of funds. Many of these companies, with headquarters far away from where they do business, are roundly criticized for failing to do enough to support the people and places that produce the profits.

“It’s not like Dallas, Monterrey, Mexico City, or Houston,” says Mr. Kiy of the International Community Foundation. “The border tends to be somewhat out of the loop on corporate foundation support.”

At the Border Summit, Bruce H. Esterline, a vice president at the Meadows fund, said that among the most pressing challenges for grant makers is to convince corporate chief executives, who have authority over assembly plants located hundreds or thousands of miles away from company headquarters, “to invest in the quality of life issues, on both sides of the border.”

Mr. Lorey of the Hewlett Foundation says such work is “tricky” but rewarding. “Measuring outcomes is difficult,” he concedes. “But the bottom line is, you have a better idea if you have made a difference doing this kind of work compared to funding some kind of theoretical policy study on the future of the U.S.-Mexico relationship.”