Social Currency

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 Economist memorably 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.