US embassy cable - 04BOGOTA12953

UNCLAS SECTION 01 OF 02 BOGOTA 012953 
 
SIPDIS 
 
STATE FOR EB/TPP 
STATE PLEASE PASS TO USTR 
USAID FOR LAC/SAM DJOHNSON 
 
E.O. 12958: N/A 
TAGS: EAID, ELAB, PGOV, CO 
SUBJECT: CORPORATE SOCIAL RESPONSIBILITY IN COLOMBIA 
 
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Summary 
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1. Leading companies are implementing strategically-focused 
corporate social responsibility programs in Colombia.  Each year, 
private companies donate millions of dollars to fund education, 
health, and recreational initiatives throughout the country.  The 
private sector is also providing management consultancy services 
to civil-society organizations and is leading efforts to raise 
and channel international donations to support Colombian 
development organizations.  Many Colombian companies also provide 
a variety of employee benefits and social services -- including 
housing subsidies -- through innovative cost-sharing programs. 
Although the long-term impact of such programs in Colombia has 
not been rigorously analyzed, top Colombian companies are 
demonstrating significant potential to promote and support the 
country's most critical development needs.  End summary. 
 
2. The Catholic Church has greatly influenced the development of 
philanthropy in Colombia. Corporate foundations support social, 
economic, and humanitarian assistance efforts nationwide. 
Prominent young Colombian professionals and entrepreneurs are 
spearheading creative and high-impact initiatives.  This new 
generation of business and social leaders is developing a culture 
of corporate social responsibility within Colombia's private 
sector and involving their own companies. 
 
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Profile of Corporate Foundations 
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3. Over the past three years, the Colombian private sector has 
increasingly realized its stake in improving socio-economic 
conditions. In 2002, Colombian companies donated at least 140 
billion Colombian pesos (CPS) (approximately USD 52 million) to 
various social development initiatives. The most recent records 
indicate that in 1997 there were 94 corporate foundations 
formally operating in Colombia, with assets approximating one 
billion dollars, equivalent to 1 percent of Colombia's GDP and 5 
percent of total public sector expenditures.  Since then, several 
new corporate foundations have been created and we expect this 
trend to continue. 
 
4. Some foundations leverage third party resources, mostly using 
donations and matching grants from international foundations 
(primarily from the U.S.).  Several prominent corporate 
foundations, such as Corona and Carvajal, are actively involved 
in supporting institutional development and strengthening through 
management consulting and other services.  This type of 
assistance is provided directly through specialized NGOs such as 
"Corporacin Calidad,"  "Corpoeducacion," "Gestion Hospitalaria," 
and "Compartamos Con Colombia," among others. 
 
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CSR Investment Mechanisms and Targets 
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5. According to a recent study of the top fifty companies in 
Colombia carried out by Compartamos Con Colombia (CCC), 52 
percent of the companies it surveyed make direct donations, 28 
percent contribute to corporate foundations, and a small number 
have grant programs.  The CCC study demonstrates a focus on 
education, employment generation, and health, followed by sports, 
cultural activities, and other forms of recreation.  Smaller 
contributions are earmarked to promote civic values. 
Additionally, the private sector is supporting micro-businesses 
and small enterprises in Colombia through micro-credit and direct 
investments.  Twenty-six companies in CCC's sample include micro- 
enterprise development as part of their CSR strategies, and most 
support small business ventures in marginal and underserved 
areas.   Companies that operate production facilities, however, 
generally concentrate their activities in nearby communities. 
 
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"Cajas de Compensacion Familiar" 
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6. Many Colombian companies make sizeable contributions to social 
programs through family subsidy and benefit compensation 
entities, or "Cajas de Compensacion Familiar" (CCFs).  Unique to 
Colombia, the 54 Cajas are key players in the implementation of 
wide-ranging social programs that directly benefit almost 10 
million Colombians, or 23 percent of Colombia's total population. 
Obligatory employee payroll contributions channeled through 
affiliated private sector companies fund the Cajas.  This 
"forced" contribution by employees through CCFs constitutes a 
critical delivery channel for a broad range of social programs. 
 
7. The number of affiliated companies has grown 18 percent since 
1994, helping to increase the resources available to undertake 
critical social programs.  As a result, there is a sizeable 
increase in the number of affiliated workers and family members 
eligible for the social services that CCFs provide.  The total 
number of affiliated persons increased from 8,641,384 in 1994 to 
9,846,031 in 2003. 
 
8. Taken as a whole, 83,676 private sector companies are 
currently affiliated with the 54 Cajas, which are financed by 
means of a 4 percent payroll tax and paid by these companies. As 
a result, the CCFs enjoy a sizeable budget which they invest in a 
variety of social programs.  In 2003, CCF expenditures reached 
CPS 1.4 trillion (approximately USD 519 million), and for 2004 
the proposed budget is CPS 1.5 trillion (approximately USD 555 
million).  CCF programs cover education, health, housing, 
tourism, and recreation, as well as unemployment and housing 
loans.  The subsidies provided through the CCFs are divided into 
two main categories: 
-- Monetary subsidies, in which the CCFs typically spend CPS 
511.4 billion (approximately USD 189 million) benefiting an 
estimated three million members; and 
 
-- Housing subsidies, in which the CCFs typically spend CPS 158.2 
billion pesos (approximately USD 59 million), benefiting some 
25,000 member families annually. 
 
In 2004, housing subsidies are expected to increase to CPS 170 
billion (approximately USD 62 million), and will benefit 34,200 
members. 
 
9. The CCFs operate 31 percent of Colombia's health system. In 
2003, these entities operated 224 health centers, including basic 
health clinics, hospitals, dental centers, and comprehensive 
medical service units. 
 
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Leading Companies 
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10. According to CCC, the 20 leading private sector Colombian 
companies with advanced social responsibility practices are: 
Bellsouth (now owned by Telefnica of Spain), El Tiempo, Bavaria, 
Corona, Carvajal, Hocol (a petroleum producer), Promigas, 
Almacenes Exito, Sociedad Portuaria De Buenaventura, Ingenio 
Riopaila, Emgesa, Grupo Mac, Smurfit Carton De Colombia, Noel, 
Empresa De Energia De Bogota, Carbones Del Cerrejon, Isa, 
Coomeva, Colsubsidio, and Indupalma. 
 
11. Leading Colombian companies increasingly create local 
development organizations in which a large number of national and 
international companies unite to support a specific social cause 
or goal, in contrast with more traditional models in which 
companies work independently and in an oftentimes paternalistic 
manner.  For example, the recently created "Empresarios por la 
Educacion" (Entrepreneurs for Education) foundation resulted from 
the combined efforts of more than 60 companies working in 
alliance to improve educational standards in Colombia. 
Regionally focused activities include marketing, internet-based 
fundraising and business consulting services focused on NGOs and 
foundations. 
 
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General Conclusions 
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12. Colombia has a long tradition of corporate giving and is a 
leader in this area in the Andean region.  While they are not yet 
a common business practice and not widely integrated into 
corporate strategies and values, more companies are beginning to 
develop community-oriented policies and programs.  Additionally, 
very few companies currently measure the results and impact of 
their strategic and targeted social and economic investments as 
well as charitable contributions, making evaluation difficult and 
inadequate information systems often limit the efficacy of the 
evaluations that are undertaken. 
 
WOOD