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. Read More