In the Spring of 2005 the International Community Foundation (ICF), the Synergos Institute, Crossborder Business Associates, the Fundación Empresarial Sonorense, A.C. (FESAC), and El Paso Community Foundation (EPCF) undertook research of charitable corporate giving trends along the border to provide an initial assessment of general levels of giving by Mexico’s maquiladora industry to better understand their philanthropic policies; to identify and describe specific cases of outstanding community participation within the maquiladora sector; and to assess some of the outreach efforts of non-profit groups that are active in maquiladora communities. Over 800 maquiladora facilities were contacted in six Mexican Border States, with 110 maquiladora facilities of Fortune 500 and major third country multi-nationals participating anonymously in the study. The sample set represents 8.2 % of total maquila employment along Mexico’s northern border. Additionally, 50 Mexican border area nonprofit leaders were surveyed to gauge their perceptions of corporate giving in the region.

The key findings were as follows:

• While there are notable exceptions of corporations setting the standard through their philanthropic leadership (Mattel, Johnson & Johnson, Sony, Sanyo, Medtronic, Kyocera and GM), for the vast majority of companies operating maquiladoras along Mexico’s northern border, charitable giving is substantially lower in Mexican border communities when compared to contributions made to comparable nonprofits in the United States.
• Of the companies surveyed, 65.5% contributed $10,000 or less in cash donations to charitable causes annually, and 25.5% contributed nothing to charities along the border where they operated. A mere 9.1% gave over $10,000 annually.
• Limited funding authority at plant manager level. Only 10% of maquila managers have funding authority above $10,000. 66% can fund up to $1,000. Lesss than 25% can authorize funding up to $10,000.
• In-kind assistance is preferred over cash donations. Among maquiladora operations, the preferred form of charitable assistance is on an in-kind basis. 68.2% of maquiladoras surveyed made in-kind gifts, with the majority valuded at less than $10,000 annually. While the most common justification by maquila operators for preferring inkind donations over monetary contributions is an apparent absence of reliable charitable institutions to effectively manage their donated funds, there are, in fact, a growing number of community foundations along the border as well as United Way affiliates (Fondo Unido) that are well positioned to assume this role. Here there appears to be a need for greater collaboration between maquiladora operators and public charities operating in the border region.
• Companies cited their desire to be a good corporate citizen and to build employee morale as the two primary reasons that they give to nonprofits in the border region.
• A strong internal champion is a key determinant to giving: The single biggest determinant for charitable giving by companies operating in the border region is the presence of a strong champion(s) within a given company for a specific nonprofit or public charity. More often than not, key funding decisions are not taken by headquarters but rather based on the recommendations of plant managers.
• The proximity of corporate headquarters to the border is a factor. Companies with headquarters or regional office locations within close proximity to their border operations are more inclined to have senior managers actively involved with border area charities on a voluntary basis, and subsequently, are more inclined to be strong advocates for specific charitable causes.
• A nonprofit’s track record, brand, size and programmatic focus are key factors in funding. Companies have a preference toward funding larger, more established charities with a strong board and brand identity and/or those with an existing U.S. 501(c)(3) counterpart organization. Maquilas are also more inclined to fund education and health care related nonprofits as opposed to environmental and human rights/justice related groups. Smaller, less established nonprofits are less likely to receive maquila funding. Many of their parent companies are more inclined to fund nonprofits that are able to fulfill grant requirements in English and online (proposal and reporting). The vast majority of maquilas will only grant to nonprofits that are registered as authorized public charities (donatarios authorizadas) under the Mexican tax code. This limits funding to only the larger Mexican border area nonprofits, increasing the gap between “have” and “have not” among nonprofits.
• Impediments to corporate giving exist, such as: maquilas being cost centers not profit centers; fiscal disincentives in the Mexican tax code that discriminate against those maquila operations that want to give; regulatory controls in the U.S. resulting from the U.S. Patriot Act that have had a chilling effect on U.S. corporate giving to overseas nonprofits including those in Mexico; and weak communication channels between maquila plant managers and their corporate-giving programs or foundations.
• Strategic positioning on the border is a factor: U.S. companies and multinationals with the intent to remain in the border region, because of its unique competitive advantages (proximity to U.S. market, relative labor cost, productivity) are more inclined to give charitably in the communities where they operate (to promote employee retention and good community relations) than those companies and/or industrial sectors facing pressures to relocate offshore.
• Size of community matters. The level of corporate giving varies from community to community along the U.S.-Mexico border. Border corporate giving represents a larger share of charitable gifts among nonprofits located in major maquiladora centers (e.g.Tijuana and Juarez).
• Some maquilas are collaborating to have a bigger social impact. Given the limited resources currently available by many maquiladoras for charitable giving, companies are partnering through their active involvement with local Rotary Club chapters, Fondo Unido (United Way) and maquila associations.

Recommendations

Border-based companies could do more to make a difference in the communities where they operate. Yet, the responsibility for increasing the level of corporate giving does not lie solely with the individual companies operating along the border. The Mexican government could play a more prominent role by streamlining its tax code; border area community foundations and United Ways could take a stronger leadership role in encouraging and enabling maquilas to give. These charitable institutions could also assist in strengthening the overall institutional capacity of border area non-governmental organizations (NGOs) to better position nonprofits to receive corporate funding. What has become clear is that through a more cohesive and collaborative joint effort among corporations, government and civil society, more could be done to significantly increase corporate philanthropy along the border thereby improving the living conditions of the growing number of under-served people now living in the region. Without such collective action maquila oriented corporate giving along Mexico’s northern border will remain inconsequential.

To expand corporate giving by maquiladoras in the border region, the following is recommended:

• Mexico’s tax code must be reformed so maquilas can have the same tax incentives to give as other Mexican national companies.
• Procedures must also be streamlined to facilitate charitable tax deductibility for Mexican NGOs. Right now those registered that have tax-deductibility status are very limited---a mere 172 in the border area (See Appendix 5).
• Corporations can do more to take a leadership role at the corporate and plant manager level. Here, parent companies and their corresponding corporate foundations and/or corporate giving programs need to do a better job of working with their maqiladora plant managers to become more engaged in the border communities where they operate. In this age of expanding globalization and greater accountability for a company’s corporate social responsibility (CSR), maquila plant managers need to be empowered to act more like community based “corporate ambassadors,” becoming more directly involved and empowered to get involved in their own company’s philanthropic endeavors in the places where they live and do business including the U.S.- Mexico border region. Here it should be noted that companies need to expand the level of authority granted to plant managers for charitable giving at the community level as presently that discretionary spending authority is quite limited.
• Intermediary charitable organizations (e.g. border area community foundations and the United Way) and service organizations (e.g. Rotary Club, Kiwanis, Optimists) should increase their outreach to corporations in order to expand their options for giving across the border as well as to serve as a clearinghouse for less well known nonprofits, thereby reducing the risk to corporate funders. Right now, there are few doing that job--El Paso Community Foundation, ICF, la Fundacion Internacional de la Comunidad in Baja California & FECHAC are exceptions. BPP has an obvious leadership role to play.
• Nonprofits could do more to build strategic alliances/partnerships with companies forging long term, win-win relationships. This includes more active participation of senior level maquila management (Mexican national and expatriates) on nonprofit boards. Here, FEMAP in Cd. Juarez and Hospital Infantil de las Californias in Tijuana are showing the way for other nonprofits.