ed. note: The following is a guest post by SITAWI's Rob Packer who was a guest in NFF's National headquarters in New York in the Fall of 2012.
In 2009, The Economistmemorably described Brazil as
like the United States but in “one of those novels with alternative endings”: Both
have histories as colonies of European powers, marked by vast unexplored
wilderness and waves of immigration. I worked for a number of years with a US
corporation and am now with SITAWI, a
social-sector organization based in Rio de Janeiro. This fall I spent several
weeks onsite with Nonprofit Finance Fund in New York and, while there, I was struck
once again by the similarities and differences not just between the two
countries, but between their nonprofit (or social) sectors. At the heart of
both NFF and SITAWI is a need for quality services to provide financing to the
nonprofit sector in the form of loans or equity.
In the Brazilian case,
SITAWI launched in 2007 after our founder, Leonardo Letelier, saw a need to
resolve a number of problems that the country’s nonprofits were facing. First,
they were excluded from the traditional financial system. Our first client was
a case in point: Solidarium had signed
a contract with Walmart in Brazil to produce recycled plastic bags using
low-income labor, but, despite having a signed contract, they were unable to find
a bank prepared to loan them the capital to get the business up and running.
Many nonprofits in the US have similar stories.
At the same time,
Brazilian nonprofits needed advice on how to expand and grow, but Letelier perceived
that just advice or just funding wouldn’t be enough: Advice provides the tools but
not the resources to implement great ideas, and funding alone could lead to the opposite
problem. Central to the resource problem is the size of Brazilian nonprofits: most
are very small compared with the US. And
they rely on donations from the public, which total R$10 billion a year (around
US$5 billion) and average R$25,000 (around US$12,000) per nonprofit. In the
United States, a legacy of philanthropy, dating back to Benjamin Franklin and
beyond, means individuals alone in the US give US$227 billion, nearly 50 times more than in Brazil. Of course
Brazil, which has just a third less population than the US, suffers from much
more extreme inequality. Clearly, the
current level of Philanthropy is insufficient to create the large-scale
transformational programs that Brazil needs.
But these differences
in size and scale seem superficial and a sign of two sectors heading in the
same direction but at different stages of development. For example, nonprofits
in both countries are equally dependent on philanthropic or government funding
with the attendant risk of unexpected financing shortfalls. They experience difficulties in attracting and
retaining the best people. And making long-term plans is complicated by the
fact that funding is only secured for, at best, a limited number of years.
Perhaps one of the biggest potential challenges is limiting the damage that a
couple of bad eggs can have on the whole sector: Corruption scandals over the
past few years in Brazil involving a limited number of nonprofits have damaged
Brazilians’ opinion of the vast majority of good eggs.
Brazil and around the world, the professionalization of the sector has accelerated
in recent years, and this has the potential to attract even more talented
individuals and spur innovation. One result
has been the growth in social enterprise which takes the best of the nonprofit
and for-profit sectors and builds sustainable businesses that make a firm
commitment to social impact. This can work equally well in either Brazil or the
US, and concepts like impact investing have generated a lot of excitement around
the promise of directing more traditional financial resources towards social
This fall, Rio hosted
the Social Enterprise World Forum
sponsored by NESsT (and with a keynote speech from Antony Bugg-Levine, NFF’s
CEO). The conference provided an opportunity for actors in the social
enterprise sphere around the world—and from Brazil in particular, one of social
enterprise’s global hotspots—to learn from the experiences of other countries. The ideas ranged widely across panel discussions and breakout
sessions, chronicling a variety of exciting innovations: New financial instruments like social impact
bonds are being pioneered in the UK and the US. New institutions like social enterprise
incubators and social investment funds are launching. And new relationships are being fostered by
grassroots organizations that connect artisans with traditional markets, young
people from low-income communities with internships, and remote rural
communities with healthcare services. What was most exciting about the forum was the newness and excitement
around social enterprise resulting in a global laboratory, where new ideas and
concepts are tested, improved and refined.
While the difficult
part will be sharing, blending and reimagining these ideas between different
countries and regions as they develop, the building blocks are in place for
Brazilian nonprofits to learn from the US experience and vice versa, while
social sector organizations from all over the world—from Boston to Guangzhou—are
newly emboldened to work with their peers to create and innovate new ways to
fulfill their missions.
---- Rob Packer is a Fund Manager at SITAWI - Finance for Good, a
Brazilian nonprofit that develops financial products for the social sector. He
is from London and has a range of professional experience in banking and
microfinance in Europe, Asia and Latin America.