New partnerships for social development: business and the third sector

One of the main issues for Latin America now that it is entering a new period of economic growth is the process of speeding up social development to catch up with economic trends. This may be seen by some as a highly profitable investment, but by most as a moral obligation. A long history of exploitation and the most recent decades of misgovernment have provoked a legacy of social injustice and disparities incompatible with the region's economic potential.

Structural adjustment policies impose a significant reduction in the size of governments which have shown an unequivocal tendency to retreat from their responsibilities regarding the social sector. Current trends of the new world order raise many concerns regarding the social perspectives of the less privileged layers of the population.

Besides the new economic opportunities, redemocratization of the region has led to a new socio-political environment in which paternalistic patterns have given way to a more participatory and mature relationship between government, civil society and business.

The so-called third sector has become of increasing importance and is growing rapidly in most countries. Business is also assuming new roles in terms of its responsibility towards social development. There is a change in culture and there are new opportunities to develop innovative forms of participation. The retreat of the State is opening up a new niche for the third sector and business to establish partnerships that can speed up social development without the risks of the heavy paternalistic and patronizing influence of governmental branches. Overall, one can observe a shift in responsibilities. Partnerships will involve the three actors, with government participating heavily in financing the operations of the third sector, while business lends its’ efficiency as well as material resources.

The business sector in Latin America is rapidly learning the social responsibility of participating in community initiatives and the benefits that such an approach can bring. Foreign companies have played an important role in bringing new values, strategies and experience of this participation. Local businessmen are adopting these values and adjusting them to their realities. The new economic and political environments have created a new sense of citizenship and there is an observable advance in the approach that business is taking in relation to the potential of its participation and of its responsibilities regarding social growth and development.

Corporate philanthropy -- or community relations, or corporate citizenship, as the local culture prefers to call it -- assumes several forms. Grantmaking is still the least frequent as companies prefer to maintain tighter control over the use of resources, either by operating their own projects in a joint effort with target communities, or by establishing partnerships with small organizations of the third sector. Stimulating volunteer work of their employees is also a form of participation.

More recently, in countries like Argentina, Brazil, Colombia and Mexico we have witnessed the emergence of associations of grantmakers and philanthropists, similar to those of the United States. Through these organizations, corporations, corporate foundations and independent foundations can share their experiences and values, coordinate their efforts and exert influence in the social and political environment.