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Corporate Giving Trends in the U.S.-Mexico Border Region
Presentation by: Richard Kiy
International Community Foundation&
Kenn MorrisCrossborder Business Associates
Border Philanthropy Partnership February 28, 2006
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Study Objectives
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1. Raise awareness and provide insights about corporate giving trends in the border region;
2. Encourage more active engagement and collaboration between border area community foundations, nonprofit organizations in the region, and major corporate givers;
3. Promote legal reforms to encourage, not discourage, the development of civil society and maquiladora charitable contributions; and
4. Expand the overall level of corporate giving by both major maquiladora employers, industry service providers, and businesses in general.
Study Objectives
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Study Partners
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Funding was made possible through the support of:
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Key Findings
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Key Findings1. Maquiladora giving is proportionally lower in Mexico
border communities compared to contributions made in the U.S.
– Two-thirds of maquiladoras gave $10,000 or less in cash donations;
– Less than 10% gave over $10,000 annually;
– 25.5% gave nothing ($0);
2. Maquila’s giving is due to several factors:
– Mexico’s tax rules for maquiladoras creates disincentive for companies to give — legislative change is necessary;
– Need to expand charitable giving linkages between HQ and maquiladoras;
– Border NGOs need to tell their story better, and better respond to corporate giving objectives.
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Key Findings (continued)
3. Corporate giving in the border region takes many forms: financial support, in-kind gifts of products and services, employee volunteerism, employee matching gifts;
4. Companies committed to staying in border region are more inclined to give;
5. Corporations give for a variety of reasons: corporate citizenship-CSR; employee morale; good general business practice; image or brand;
6. Most important factor for charitable giving is presence of a strong local champion (plant manager).
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Key Findings (continued)
8. Proximity of Corporate HQ to border matters;
9. Some maquiladoras collaborating with United Way and/or local service clubs;
10. Preference to give to more established nonprofits as well as those with tax deductibility (also, those with a 501c3 designation or connections in the U.S.);
11. Exists a widening gap between the “haves’ and ‘have nots” among nonprofit organizations;
12. Opportunities exist to expand giving in border region – but requires changes in policy, attitudes and perceptions by the Mexican Government, U.S. companies (HQ & Maquilas) and NGOs.
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Expanding Border Corporate Giving Recommendations
What the Mexican Government can do:
• Mexico’s tax code (Ley del Impuesto Sobre la Renta - LISR) should not penalize maquiladoras for charitable contributions made to Mexican nonprofits;
• Create more efficient and encompassing procedure for NGOs to receive charitable deductibility status;
• Create a formal procedure within the Finance Ministry (Secretaría de Hacienda y Crédito Público) that allows a provisional registration status for nonprofits while they collect all the necessary information.
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Expanding Border Corporate Giving Recommendations
What Maquiladora Parent Companies & their Plants Can Do:
• Consider raising their level of corporate giving commensurate with proportion of Mexico border operations compared to global operations;
• Expand cross-border giving options by working through U.S. intermediary organizations that are capable of granting into Mexico;
– U.S. and Mexican community foundations have an important role to play in serving as trusted partners to border area NGOs.
• In addition to cash and in-kind contributions, provide technical and training support to local nonprofits;
• Create incentives for local plant managers to become more actively engaged in their local communities.
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Expanding Border Corporate Giving Recommendations
What NGOs can do:
• Beyond financial support, consider seeking technical and capacity training assistance from companies;
• Better inform companies of how their work benefits the community, and better describe the value-added benefits they can provide to corporate supporters;
• Promote greater transparency and accountability within the nonprofit sector;
• Assist companies to identify ways to align their corporate goals and objectives with programs of border NGOs;
• Facilitate greater corporate participation in the boards of worthy border area nonprofits; and
• When good corporate citizenship is exhibited, publicly recognize it!
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Next Steps
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BPP Next Steps
• In partnership with CEMEFI, advocate for change in Mexico’s tax code to create incentives for expanded corporate giving in the border area;
• Expand outreach to companies, maquiladoras and their suppliers to increase corporate giving in communities along the border;
• Increase linkages with maquiladora sector and BPP;
• Promote expanded involvement of maquiladora senior management in the boards of Border area NGOs;
• Consider border corporate philanthropy conference (2007)
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The Border Philanthropy Partnership believes that strategic collaboration and a
passionate commitment to the border region in partnership with the maquiladora
sector and their suppliers can go a long way towards effectively addressing the
region’s persistent social, economic and environmental challenges.
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Survey Highlights
Profile of Respondents
– Developed randomized listing of firms in border states, participation voluntary
– Over 800 maquiladoras contacted
– 110 maquiladoras participated
– 46% from Baja California
• Slight overrepresentation of Baja CA, Coahuila, and Tamaulipas firms
– Nearly 70% had US-based headquarters
– 85% had 100 or more employees
• Highest response from largest firms
Survey Participants:Number of Employees at Firm
9.16.4
20.9
40
23.6
0
10
20
30
40
50
10 to 49 50 to 99 100 to 249 250 to 999 1,000 or
more
perc
enta
ge %
Baja
California
46%
Sonora
13%
Chihuahua
11%
Coahuila
11%
Nuevo
Leon
2%Tamaulipas
17%
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Survey Highlights
Levels of Giving
– Over 75% of maquiladoras provided some degree of charitable contributions to their local community
• Two-thirds gave less than $10,000 in 2004
• About one-fifth did not give charitably
• Despite tax implications, over 9% gave more than $10,000 in 2004
– Nearly 70% gave some level of in-kind contributions to local NGOs
• Nearly 60% gave $10,000 or less of in-kind contributions (usually products)
• Appears to be slightly more common to give contributions in the $25,001-$50,000 range in form of in-kind instead of cash
% Maquiladoras: Value of Cash Donations
25.5
65.5
7.30.9 0.9
0
20
40
60
80
0 (zero) 1 to
10,000
10,001
to
25,000
25,001
to
50,000
more
than
100,000
perc
enta
ge %
% Maquiladoras: Value of In-Kind Contributions
31.8
59.1
6.42.7 0
0
20
40
60
80
0 (zero) 1 to
10,000
10,001 to
25,000
25,001 to
50,000
more than
100,000
perc
enta
ge %
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Survey Highlights
Broad range of charitable activities, but cash contributions, community events, and supporting local schools were top activities in 2004
Philanthropic Activities in 2004 - % of Maquiladoras
30
63.6
51.8
17.3
51.8
44.5
25.5
46.4
66.4
52.7
29.1
39.1
70.9
40
45.5
59.1
46.4
23.6
17.3
7.3
9.1
11.8
8.2
10
15.5
7.3
10
0% 20% 40% 60% 80% 100%
Implemented Written Charitable Guidelines
Sponsored a Community Event
Sponsored a Youth Team
Paid Employee Volunteer Time
Gave Support to Local Schools
Provided Scholarships
Matched Contributions of Employees
Product Donations to Local Group
Cash Contribution to Local Group
Yes No DK/NA
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Survey Highlights
Authority & NGO Preferences
– Authority for cash donations of up to $1,000 is primarily held at local level (62% of maquiladoras)
• Sizable proportion (25%) of maquiladoras also able to make decisions of $1-$10K, and nearly 10% can make local decision for cash donations of more than $10K.
– Maquiladora charitable giving most focused on education (75% rated high/very high), health (71% rated high/very high), environment (61%), and supporting civic groups (35%).
– 31% reported providing support to 4 or more NGOs
Authority for Cash Contributions
(% of Responses; by Size of Donation)
9.1
25.5
61.8
10.9
15.5
10
18.2
20
7.3
61.8
39.1
20.9
0% 25% 50% 75% 100%
More than
$10K
$1K-$10K
Up to $1K
Locally Both Corporate HQ N/A