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Thursday January 26th, 2017

Interview with André Degenszajn


André Degenszajn can speak from experience.  He has been with GIFE (Grupo de Estudos Fundações e Empresas) since 2009, became executive secretary of the organization in 2013 and has since worked to strengthen the importance of private social investment in Brazil. In this exclusive interview to iCS, André describes the strategic planning for the coming years, reflects on the main objectives for 2017 and evaluates the importance, in Brazil, of predominantly grantmaking institutions, such as the iCS.

Check out the full interview below.

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iCS: What are the priority GIFE actions for 2017?

André: GIFE built, back in 2014, a new strategic plan that defined a set of strategic medium/long  term agendas, initially defined to cover five years – but that are actually basic agendas that should be, if not perpetual, at least long-term ones. There are, in all, five agendas: alignment of social investment with public policies; alignment of social investment with the business; strengthening of the grantmaking culture in the country; strengthening of civil society organizations; and social impact businesses. We also have three other structuring agendas, which are governance and transparency; evaluation; and communications.

The year 2017, specifically, has an important, although not unique, highlight, which is related to our actions in the advocacy area. During the year 2016, we carried out an internal structuring of this area and got the support of the European Union via tender to finance the work over the next three years. The central issue is to strengthen the economic sustainability of civil society entities in the country, through regulatory changes that make the civil society environment more receptive to the work of such entities. And by looking at this regulatory area, we are aware of both the public resources allocated to such entities, and (mainly) of the private resources.

One of the GIFE agendas relating to private resources is the amendment of ITDMC. The ITCMD is the state tax levied on inheritance and donations, on any conveyance of assets, whether through inheritance, private or philanthropic donations, and on donations via public property. The main problem is that this tax does not make any distinction between the taxation of inheritances and private donations from donations with public purposes. So if one donates or bequeaths assets to one’s own children, this person is subject to taxation at the same intensity as someone who contributes his assets to a non-profit organization, to be used for public-interest purposes. This creates a disincentive, even an obstacle against the contribution of assets to institutions with public purposes. Our objective is to change that.

The other two advocacy agendas are: the creation of tax incentives for individuals making direct donations to organizations, and the regulation of equity funds. This set of regulatory agendas have the potential to affect the capabilities of the organizations and to improve their economic sustainability.

Other GIFE actions that will unfold in 2017 relate to governance, transparency, communications and assessment.

iCS: The 2014 GIFE Census, which is the primary survey on social investment in Brazil, showed that most respondents (all associated with GIFE) execute their own projects. Predominantly grantmaking institutions, such as the iCS, for example, account for only 18% of the total volume. How can you explain this number?

André: We have been thinking about this matter for a long time, and I think there is no single, straightforward answer. One important factor is the predominant fact that institutes and foundations are usually linked to companies. Their operational nature has to do with a direct approach, and they do not necessarily see support for civil society organizations as the most strategic way to operate.

Moreover, many of these organizations see themselves as actors in a given area and they want to lend a clearer meaning to these investments – and, therefore, they do not wish to give up a certain level of control in the steering of such programs. In other words, if they can generate results by hiring a company, operating directly and supporting a social-impact business, then that’s what they will do.

The idea of forming strong organizations, regardless of the specific result that they can generate, is very difficult to be assimilated, since this is a process that matures over the long term and requires a certain sophistication in the development of the vision of civil society – which, in many cases, does not match the logic of operation of these large organizations.

iCS: How is GIFE acting directly to further understand this issue?

André: This is a challenge that we have been facing and we have made some assumptions that do not always prove to be true. For example, in 2010 we built a ten-year plan for private social investment. One important dimension of this vision was the expansion of diversity in social investment. And this diversity is very present in two areas: one is the diversity of investors, not only business, but also families, independent investors, the community. We used to believe that with the expansion of investment profiles and new family investors we would naturally have more donations, more grantmaking, more support to less consensual causes. However, when we analyze the behavior of these family institutions, we perceive that they tend to reproduce a pattern that is very similar to the one adopted by businesses, investing mainly in the area of ​​education and directly operating their own programs, in a much larger proportion than that of grants – with exceptions, of course. So this is really a challenge that we have been addressing carefully.

iCS: Given this framework and the profiles of respondents to the GIFE Census, how do you see the importance of a grantmaking institution like the iCS?

André: I think iCS plays a very unique role in this field. There are other organizations with similar characteristics, but not many. There is an important question: if this sector does not see itself as a funder of civil society, who will fund it? One possible alternative is the government, but it clearly – and today more than ever –  has little financing capacity – and its logic is mostly that of hiring a service. International cooperation, which in recent years had been an important source of funding, has clearly been declining. Another option is financing via individuals, still incipient in Brazil, but with growth expectations.

Therefore, the role played by institutions such as the iCS is to strengthen organizations, which would otherwise be in a very fragile situation in terms of access to resources. There is little availability of resources to fund the work of organizations, and there is another key factor: when building a strategy based on donations or grantmaking, these institutions are based on the assumption that they may not have the best answers to face the problems they want to deal with. Such answers may lie in the diversity of experiences, not in the vision of an organization, even if it has a lot of operating capacity. So I think that what this kind of action strengthens is specifically a diversity of approaches, practices, experiences. Some will work very well, others not so much. This is part of the dynamics. To have more institutions investing in this kind of approach is important for us to have a stronger, more diverse and more plural sector and not one that is concentrated within a few very strong organizations, with hard-hitting actions.

iCS: Have you noticed an increase in the number of responding grantmaking institutions when compared to the last GIFE census?

André: It has been stable, very stable. There has been some oscillation from year to year, but this cannot be described as an actual change.

iCS: How about the scenario in other countries?

André: We have little data from other countries. It’s difficult to make that comparison. For example, in the United States, organizations operate mostly through grants. In Colombia and Argentina, like in Brazil, there is also a preponderance of direct operations. The grantmaking culture is most widespread in the Anglo-Saxon world and in some European countries but it is not a universal model. It is certainly very strong in the United States.

iCS: And in light of the group of organizations that responded to the Census, how do you describe hybrid institutions, which are both grantmakers and operators?

André: That’s interesting, we do not necessarily defend one model over the other. What we consider important is that, in the group of investors, there is a significant proportion of resources being transferred to [civil society] organizations. But we do not argue that an individual organization should cease to operate projects and, instead, make grants. Please note that this is only a problem when it becomes ubiquitous, when all or most organizations choose this model of operation.

Hybrid organizations tend to be mostly one or the other, they are seldom 50% grantmakers and 50% operators. If they are hybrid, they may be 70% operators and 30% grantmakers. Otherwise, they donate most of the funds and have a specific program they operate, but it’s usually not 50/50. We see this as very natural, there are different strategies to achieve their objectives: some are achieved through grants and others possibly by direct operation.

iCS: In all, according to the Census, R$ 760 million of the R$ 3 billion invested were allocated to grants in 2014. What does GIFE has to say about this number?

André: At some points in the past, we actually formulated goals, something like having the volume of grants reach about 30% or 40% of the total invested. But this is just an expression of our wish to have a greater availability of resources to fund other organizations. That said, in KeyFacts (a hot site that provides an overview of social investments in Brazil), we see that this volume of R$ 760 million is very significant when compared to the value transferred by US foundations.

iCS: Community or independent associations, such as the iCS, are a minority among the members of GIFE. How do you evaluate the role of this group of institutions in Brazil?

André: Community associations in Brazil are very incipient, so this is a model of organization that has yet to advance in the country. It is difficult to assign a direct cause for this fact, but I think it has to do with historical dynamics, organizational dynamics of society and even the matter of religion. In the United States and Canada, where community associations are very strong, there is a very strong sense of community, which is organized to solve its own problems. We come from a tradition that is much more centered around the state, where the state, through public investment and social policies, is expected to solve social problems.

When we talk about independent institutions, it is interesting that, in the United States, for example, there is no distinction between independent and family institutions. In our case, when we consider institutions identified as independent, there is a great diversity – ranging from international organizations operating in Brazil, such as the Ford Foundation, to organizations that are great operators and raisers of funds. There are a number of different profiles, and we see the growth of independent institutions in a very positive light because they potentially represent a great freedom of investment, as they are not tied to any corporate interest.

iCS: André, finally, you are leaving GIFE in early 2017 after four years as executive secretary. How do you assess your time in the organization?

André: It is difficult, I do not have the necessary distance to make this kind of assessment, but one thing that I think is important and that became very clear over this past year is the attention that needs to be paid to the public meaning of private social investment. When dealing with this kind of organization, we are always hanging at the intersection between private interests and public interests. And I think that this is a mark that I would like to leave behind, which is this idea that these institutions, despite managing private funds, and even though they originate from the private sector, they have a mission and a mandate that are public. They should be guided by principles of relationship with the public sphere, which impacts the way they deal with transparency guidelines and how they should be open to significant dialogue with other society groups – instead of becoming a group limited to dealing with their own dynamics, with their own goals.

And I also hope to have contributed, over the years, to a vision with which I strongly believe, which is that the strengthening and qualification of social investment in Brazil require the strengthening of civil society organizations.

To learn more about the profile of social investors in Brazil, please refer to the publications Censo GIFE, the primary survey on social investment in Brazil and Key Facts, which presents the main characteristics of such investment based on the data set of the 2014 GIFE Census, including a comparison with U.S. organizations. Both publications are available in full and free of charge at Sinapse, a free virtual social investment library promoted by GIFE.

2017. Todos os direitos reservados.