| The current relative stability, the growing importance of | | | | Hopkins University Center for Civil Society Studies in |
| the region to the global economy, and the wealth of | | | | charge of compiling a comparative list of donations in |
| opportunities for impact make LatAm an intriguing and | | | | 36 countries, said perceived social status is what is |
| attractive region for philanthropic investments. | | | | different between LatAm and first-world countries with |
| Once virtually non-existent, LatAm’s philanthropic | | | | higher philanthropic giving percentages. |
| infrastructure is emerging with many possibilities for | | | | "In the US, the more a millionaire donates, the greater |
| growth. In Mexico, 19 community foundations or similar | | | | social status they receive. In a lot of Latin American |
| organizations have been founded in recent years | | | | countries, donations are not a symbol of social status," |
| (Hispanics in Philanthropy). | | | | he said. |
| In Brazil, the most advanced country in LatAm in terms | | | | As a result, institutionalised charitable giving in LatAm is |
| of socially responsible corporate organizations, the | | | | restricted only to those who are bold, daring and/or of |
| number of foundations grew by 157% between 1996 | | | | the wealthiest UHNWI-and-above bracket. |
| and 2002. The number of institutions is set to steadily | | | | Billionaire Mexican businessman Carlos Slim, for |
| expand throughout LatAm as the social focus | | | | example, has drawn unprecedented media attention to |
| becomes increasingly important for the large business | | | | the role of philanthropy with his massive contributions in |
| sector (Fernando Rossetti, secretary of Grupo de | | | | the last two years but it is free-thinking UHNWIs like |
| Institutos, Fundaciones y Empresas Brasil - GIFE). | | | | Mexico’s leading social entrepreneur and cosmetics |
| Profile of the UHNWI philanthropist in LA | | | | business magnate Jose Ignacio Avalos Hernandez, |
| There are an estimated 300,000 HNwIs in Latin | | | | who has founded several well-developed charitable |
| America with a total financial asset wealth of USD6.2 | | | | business-managed institutions in the last 25 years, that |
| billion as of 2007 - a staggering 20.4% leap from a | | | | LatAm needs more of so that the rich may follow, |
| total of USD4.2 billion in 2005. The surge in sudden | | | | note observers. |
| wealth is mainly linked to higher global commodity and | | | | A main obstacle to the proper development of |
| oil prices. (Capgemini-Merrill Lynch 2008 World Wealth | | | | charitable family foundations and the like has been a |
| Report) | | | | general historical financial instability in the region that |
| However, with philanthropic giving by wealthy Latin | | | | has both prevented the UHNWI segment from making |
| Americans well below their counterparts in other | | | | philanthropic plans in the long-run and from recognising |
| regions of the world - just 3% of financial assets | | | | that such institutions can contribute to success for an |
| donated compared to 12% by Asian HNWIs, 8% by | | | | UHNWI's other business ventures. (Mario Kreutzberger, |
| Middle Eastern HNWIs; 8% by US HNWIs; and 5% | | | | president of Chile’s Teleton Foundation) |
| European HNWIs. (Capgemini-Merrill Lynch 2007 World | | | | Observers also cite blatantly unsupportive tax and |
| Wealth Report) | | | | inheritance laws compared to the US and Europe and |
| Interestingly enough, LatAm was also the region with | | | | the fact that the families of rich Latin Americans are |
| the highest global concentration of Ultra-HNWIs last | | | | typically more numerous - a fact that often persuades |
| year. Around 2.5% (9,600) of HNWIs in the region | | | | fortune holders to donate less to charity. |
| were ultra-rich in 2007, compared to 2% in Africa and | | | | (Oppenheimer) |
| 1.1% in the Middle East. (C-ML WW Report 2007) | | | | Estate laws in LatAm reflect this reality in effectively |
| Several of these consist of "first generation money | | | | restricting the ability of the wealthy to allocate money |
| clients" with larger portfolios than in established | | | | other than to heirs. Still, tax laws in general are slowly |
| markets - a new segment for which competence is | | | | changing throughout the region to provide incentives |
| highly important. **** | | | | for philanthropy. (Susan Raymond, Ph.D., a Senior |
| The countries that generated the most HNWI wealth in | | | | Managing Director of Changing Our World, Inc. a |
| the region last year were Brazil, Venezuela and Chile. | | | | leading philanthropic consulting firm - "Philanthropy in |
| (Ileana Van Der Linde for Capgemini in an interview | | | | Latin America") |
| with Andres Oppenheimer, El Nuevo Herald 18/08/08) | | | | "As an incentive, we are exempt from capital gains |
| Although these figures point to an alarming | | | | taxes and from social security matching for the 2,600 |
| socio-economic trend of severe economic disparity in | | | | employees of the foundation," said Jefferson Romon, |
| LatAm, local analysts have cast doubt upon their | | | | administrative and financial manager for Brazil's |
| accuracy. The rich in LatAm are known to make | | | | Fundacion Bradesco, who added that there are bills in |
| donations confidentially, in a bid to avoid excessive | | | | Congress to increase them. |
| publicity that may expose themselves or their loved | | | | According to Eduardo Pannunzio, a legal advisor to |
| ones to kidnapping and/or extorsion schemes that are | | | | Brazil's Grupo de Institutos, Fundaciones y Empresas |
| common in LatAm, they have pointed out. | | | | (GIFE), charitable entities can deduct 100% of their |
| (Oppenheimer, El Nuevo Herald 18/08/08) | | | | donations to cultural projects, up to 4% of taxes on |
| Education, Public Health and Food Distribution are the | | | | earnings owed to the government. The same |
| areas that receive the most backing by both | | | | incentives, however, are not available for donations to |
| philanthropic individuals and institutions in LatAm. (Anne | | | | educational or environmental projects. |
| Veneman Unicef executive director, La Nacion, 19/04 | | | | "In Argentina, charitable entities can only deduct up to |
| 08) | | | | 5% of earnings in just four areas, one of which is to |
| The UHNWI Philanthropist in General | | | | back political foundations," commented Enrique Valiente |
| UHNWIs across the world account for 1% of the total | | | | Noailles, president of Grupo de Fundaciones de la |
| HNWI population (about 95,000 people total) and about | | | | Argentina (GDF). "We estimate that the annual volume |
| a third of its financial wealth, and are generally better | | | | of donations in the country is USD10 million. It's a drop in |
| informed, more sophisticated and aggressive than | | | | the bucket, but if there were more incentives it would |
| other HNWI investors when it comes to managing their | | | | increase significantly."("The new philanthropy: Latin |
| assets. A segment made up of "thought leaders," their | | | | America Inc. turns to foundations as a strategy for |
| behaviors and attitudes about wealth management set | | | | serving social ends" Latin Trade. January 2007) |
| trends for HNWIs and financial institutions everywhere. | | | | Other challenges include the region's governmental |
| (C-ML WW Report 2006) | | | | penchant for bureaucracy and the lack of regulation |
| In regards to philanthropic giving, they generally donate | | | | for family offices that would assure potential |
| almost twice as much of their wealth to charitable | | | | philanthropic investors the long-term security of their |
| causes than HNWIs and take up a very active role in | | | | investments. (Mariano Sardás, president of FDI - |
| managing and monitoring for optimal social results. For | | | | Financial Design International, in INFOBAE article "Cada |
| an UHNWI, they approach their philanthropic | | | | vez hay más "family offices" 07/04/08) |
| investments in much the same way as their traditional | | | | The increase in philanthropic institutions in Brazil, |
| investments. | | | | particularly, has inspired the government to step up |
| In recent years and in regards to LatAm specifically, | | | | controls of the sector. Organisations there are newly |
| UHNWI have been aggressively directing a higher | | | | required to disclose their sources of financing, list |
| percentage of its assets to a greater number of | | | | executives, and provide a breakdown of their plans |
| emerging markets, including LatAm, away from North | | | | and locations of operations as well as a host of |
| America. This trend among UHNWIs indicates HNWIs | | | | supporting documentation on pain of closure or, if |
| as a whole are moving funds out of mature | | | | foreign, of expulsion from Brazil. |
| economies, such as the United States, and into | | | | While campaigners criticise the move as one that |
| attractive growth economies in other parts of the | | | | discourages and burdens the mushrooming movement |
| world. (C-ML WW Report 2006) | | | | with additional bureaucracy, the fact that the |
| Structural Challenges in Giving | | | | government is pushing for legitimacy and financial |
| What is holding LatAm back in terms of UHNWI-based | | | | accountability has been applauded by a number of |
| Philanthropic Giving is the lack of a well-developed | | | | stakeholders. ("Brazil increases scrutiny of NGOs" |
| culture of charitable giving, say the experts. | | | | Alliance Magazine. |
| Wojtek Sokolowski, a researcher from the Johns | | | | |