The FECHAC Model:[1]
An example of Mexican corporate social responsibility

The Fundación del Empresariado Chihuahuense, A.C. (FECHAC) is a unique and successful model of Mexican corporate social responsibility that for nearly ten years, has proven that corporate social responsibility, transparency and social progress is possible in Mexico.  To date there are a total of 38,000 local business people from Chihuahua contributing through FECHAC toward social and development projects throughout the state.  However, despite FECHAC’s success, Chihuahua remains the only state along the northern border and, for that matter the entire country, that have succeeded with such a business model of voluntary corporate giving.[2]   Here it should be noted that while Cd. Juarez’s maquiladoras accounts for the lion’s share of employment within the state of Chihuahua, the majority of companies and businesses participating through FECHAC are Mexican national companies not maquilas.   In fact, FECHAC has encountered real challenges to get maquiladoras engaged to give .  This raises two very important questions that the border area community of foundations, multilateral agencies, and corporations must resolve: 1.) Why has this model not been replicated in other northern border states of Mexico? And 2.) Why are U.S. corporations and maquiladoras now operating in Ciudad Juarez and throughout Chihuahua not giving through FECHAC?       Answers to these two seemingly perplexing questions, we believe, can, in part, be explained through some of the key findings of this report.

Organization’s profile:

The FECHAC was established in 1996 as a result of the collective efforts of local businessmen who joined forces to help rebuild the state of Chihuahua after disastrous floods hit the region in 1990.  Led by Samuel Kalisch Valdez, a group of 18 local businesses lobbied the state government to assess a voluntary payment amounting to 10% above the required  2% tax that businesses must pay for employee social security benefits.  The voluntary contribution was a modest $2 per every $1,000 of otherwise required paid employee social security benefits  but today this has amounted to over $12.8 million in annual contributions which have been targeted to a wide range of social development projects across the state of Chihuahua.  The success of this collaboration among businesses through FECHAC has demonstrated that  that effective and transparent local corporate social responsibility is possible

Organizational structure:

FECHAC has an office in each of the nine states of Chihuahua, including Ciudad Juarez.  Each branch has a local board that is made up of an average of 15 businessmen of which, two members from each state make up the statewide board of governors.  In addition to continuing to contribute the voluntary 10% tax, which supports FECHAC’s operating budget as well as local projects, these businessmen are also responsible for reviewing each proposal submitted by the nonprofits and carrying out visits to evaluate each project.  They have been involved in every organizational aspect of the foundation, from creating its vision to establishing the policies and procedures of the foundation.

In 2004, the foundation managed a total budget of approximately $16 million dollars.  Of FECHAC’s total operating budget, over 80% came from the revenue derived from the 10% voluntary tax that is paid monthly by local businesses to the state government.  Additional funds come from interest rates earned on the endowment (10.29%), the federal government (1.17%), and national Mexican corporations, international foundations, multilateral organizations and other local organizations (5.85%).[3]  Less than half of a percent (<0.5%) of their total budget comes from matching funds contributed by the maquiladora association in Chihuahua.[4]  Approximately 8% of their total budget goes toward operating, while the remaining 92% of total revenues are invested in social service and community projects throughout the state.
  
FECHAC’s Contribution to Ciudad Juarez

In a period of ten years, from 1994-2004, FECHAC has invested a total of $11.5 million dollars in social and development projects in Ciudad Juarez alone, supporting a total of 161 projects throughout the city.  Their investment in 2004 amounted to $1.5 million dollars, 10% of their total budget, which supported a total of twenty-five organizations.  In addition to funding social and development projects, the Foundation also carried out a variety of activities throughout Ciudad Juarez aimed at strengthening civil society in the region. Some of these activities included capacity building seminars aimed at increasing the professionalism of local NGOs, and creating collaborative partnerships with 8 institutions, including: the Mexican institution for social development (INDESOL), the Endowment for the Common Good (Patrimonio de la Beneficencia Publica), Fundación Murrieta, Association of Fundraising Professionals, Fundación Paso del Norte, A.C., Community Resource Center, and the General Consulate of the United States. 

FECHAC’s active role in Ciudad Juarez has positioned the Foundation to act as an “institución de Segundo piso”, or an intermediary organization between the nonprofits and the local corporations.  By doing so, the Foundation serves as a support organization for nonprofits, assisting them in increasing their professionalism, while offering accountability and legitimacy on their behalf to local, national and international corporations and maquiladoras. 

The FECHAC-IWG-AMEAC Partnership

Despite the fact that FECHAC is a successful, transparent and legitimate vehicle through which international corporations and maquiladoras could give, the Foundation has also expressed a concern in the difficulty to engage maquiladoras and international corporations philanthropically.  As with most nonprofits, FECHAC has also found that the varied interests of the maquiladoras, along with their limited funding resources pose a big challenge to secure funding from these production centers.

As a way to get around this issue, FECHAC has established strategic alliances with local organizations that work collaboratively with the association of maquiladoras and exporting companies in Chihuahua (AMEAC, Asociación de Maquiladoras y Exportadoras de Chihuahua, A.C.)[5].  One example is their alliance with the International Women’s Group (IWG), an international organization that operates locally through the collective efforts of the wives of maquiladoras plant managers.  Through this alliance, the IWG carries out a number of fundraisers in support of development and social programs that FECHAC grants to.  The amount raised by the IWG is then matched on a one-to-one basis by the AMEAC.  The funds are then contributed to FECHAC, who then matches the monies on a one-to-one basis as well.  According to FECHAC representatives, it is more efficient to partner with local organizations that are already working collaboratively with the AMEAC, then to try to procure funds from each maquiladora individually, or requesting funds from AMEAC directly. 

The alliance has been in effect since 2003; and to date, a total of about $75,000 dollars has been raised through this matching funds collaboration.  Of the total amount, one-third, or $25,000 dollars has come from the AMEAC in a period of three years.  Below is a table that illustrates the amounts raised through this alliance from 2003 to 2005.  As we can see, despite the presence of a legitimate charitable vehicle, the levels of contribution are still amazingly low.

Conclusion

The impacts of local CSR that the FECHAC model has yielded throughout the state of Chihuahua, and specifically in the border city of Ciudad Juarez, reminds us that the binational community of foundations and nonprofits needs to do more to spread this model to other parts of the country.  To date there are two states that are currently working to adopt the “10% voluntary tax contribution” model, namely the Fundacion del Empresariado Sonorense, A.C. (FESAC), and the Fundación Comunitaria de Oaxaca (FCO).  Still, more needs to be done, primarily in border cities such as Tijuana, BC, and Matamoros, Tamaulipas, to get the required buy-in from local corporations as well as state government.

Finally, there are obvious serious limitations in the levels of philanthropic contributions that maquiladoras and other international corporations are engaging in, even in the presence of legitimate and efficient charitable vehicles through which they could give.  The challenge that FECHAC faces demonstrates that while there is much work to be done on behalf of the third sector in Mexico, there are by far, other factors involved that are impeding the practice of international corporate/maquiladora social responsibility in Mexico.  As mentioned earlier in this publication, the Mexican Government has an important role to play by simplifying the rules and regulations for both nonprofits and corporations/maquiladoras to engage philanthropically.  But the corporate sector also needs to do more to reach out to the communities where they operate to become more involved in the development and well being of the communities and their people.