Think tanks and the free society
Management of Think Tanks
Fundraising in Difficult Environments
Atlas Economic Research Foundation
Key Biscayne, Florida
Transcription and draft edition of Spanish version by
Eneas Biglione and Alejandro Chafuen
Alejandro Chafuen: The idea for organizing this seminar originated in an event which we organized in Costa Rica together with the Mackinac Institute in August 1999. In that opportunity all who participated, both Latin Americans and North Americans, learned much.
Mackinac Institute receives in its offices twice a year people from different institutes of the world interested in learning firsthand how Mackinac works and to pay such a visit would be a very good complement to this seminar. At this seminar you will not have the opportunity of seeing how a computer department works in a foundation or how an institute deals with its mail and many of these things work in a different way in each country, even more so if compared to the Unites States. For example, in the United States almost all nonprofit organizations, even the smaller ones, have their own mailing machines, something which allows them to post an enormous amount of letters from their own offices. Most of them are located a few blocks away from enterprises that render other services, like printing, graphic design, and others, sometimes at a much lower price than the internal one at the office. I frequently say, by ways of joking, that the best place to start a business in the United States is next to Kinko’s. Kinko’s is one of those chains which hire all kind of services to offices, from computers to photocopies or mailing machines. The more one can delegate and subcontract, the more one can be dedicated to the essential work of the foundation.
Which will be the methodology of this seminar? It is the first time that we do something of this type so I am going to try to be the coordinator. There are many issues to discuss and you can all contribute very much.
I would like to start by analyzing the management pyramid of a generic enterprise. Most important of all is ‘WHAT’, later comes ‘HOW’.
With regard to the question ‘What are we going to do?’ you should always keep in mind the function that your enterprise will be having, the necessities which you will try to satisfy, the market niche, and that you have many competitors such as universities, colleges, and others.
With regard to the question ‘How are we going to do it?’ you should describe the type of activities that the institute proposes to develop and the programs and methods which will allow it to attain its objectives.
With regard to the question ‘Who is going to do these activities and to whom will they be aimed at?’ you should be able to determine who you are in this market, who your consumers are and who your clients are. Once you know who your clients are, you do not have to forget about the importance of knowing how to choose the proper language to communicate with a journalist or with a professor.
What, how and who are related to the mission of the institute and this, in turn, with its vision. For example, the vision which guides Atlas Economic Research Foundation is the same one that guides many of you: “to help create a society based on the respect for the liberties of the human being within the context of a limited government, with private property and rule of law”. We share this vision with many other institutes but what differentiates us as an institute is our mission, how we put this vision into practice. In our case we do so by helping to create new institutes and trying to discover what we call intellectual entrepreneurs, willing to support the creation of educational programs in favor of a free society. After defining the mission one has to determine the aims of the organization, its objectives and finally the specific activities it will carry out.
I remember that in 1991, when I had just assumed as President of Atlas, Heritage Foundation, one of the most generous organizations in the United States, invited me to a seminar for presidents of foundations which they called “Fundraising for Presidents of Nonprofit Organizations”. The seminar went on for one whole day and almost nothing was said about fundraising. All type of issues related to management were discussed and analyzed, in the same style as the seminar we organized in Costa Rica. As soon as I had the chance I asked Edwin Feulner, President of Heritage, ‘This workshop has been fantastic, but why did you name it fundraising when everything was about management?’ and he answered, ‘Because if we say it is about management nobody would have come but if we say it is about fundraising instead, everyone does’.
The vision is, therefore, the great idea of a better world, the key philosophical idea for building a better society. The definitions of the vision and mission are less specific than the specific objectives for each of the programs you will be putting into practice.
The mission of the institute is the what, how and who, about which we talked before. It is a very short sentence about what you are going to do, how and who you are going to offer the services to. You do not need to place the three of them in one same sentence.
One more point before asking Cristián Larroulet to start his presentation: it is convenient to differentiate the objectives of each of the activities that an institute carries out. Some of the experts in management suggest measurable objectives. At Fundación Libertad, for example, Gerardo Bongiovanni and Fabiana Suárez have television and radio programs. An example of a measurable objective would be to determine a level of audience to reach and compare it to the one actually reached or count how many times your institutes are mentioned in the media. In the United States there is great competition between the larger institutes to see which one is mentioned more times in TV or in newspapers. Heritage Foundation and Cato Institute, which are the largest institutes, are obviously mentioned most.
These are the essential steps to begin to have products and then sell them. To know what we want to do. It is very difficult to be able to sell, however good one may be, all kind of works or propose as the mission of the institute ‘anything which may favor liberty’. Someone who is very dear to me, a director of an institute who has done very good things, has been giving us too general answers about the mission of his/her institute and we have therefore decided to cutback our financial support. This person may go from one friend to another always obtaining some money, but that institute will never grow. One may also make the mistake of being too specific, so much so that growth can be very difficult. Another acquaintance of ours, who is a businessman in New York, started a foundation in order to translate books into Spanish, but only books on market economy, and only on Austrian economics, especially by Ludwig von Mises. What happened with this foundation? It produced a new edition of ‘Socialism’ by Mises and then disappeared. Von Mises was a great economist but not one who many knew or admired, even less by the donors interested in spreading free-market writings in Spanish.
Today we are privileged to have as speakers two of our great friends. It was not easy to find people who could pass the test to be speakers today. When we started to build up the program I said that I would like to have people who had doubled the incomes of their institutes in the last five years and who had worked in difficult environments for fundraising, in countries without a strong philanthropic tradition as the one that exists in the United States. Gerardo Bongiovanni and Cristián Larroulet are two of those people. Something very interesting also is that both of them started in a very different way. Gerardo Bongiovanni started, as many American big enterprises did, in the garage or some room of their house and perhaps many of you started this way too. Bongiovanni ended up with a building which is the envy of many. Very few institutes in the world have a building comparable to the one of Fundación Libertad. Cristián Larroulet comes from a different world. He was one of the important members of the economic and technical team that helped to change Latin America through his role in several ministries in Chile. A few months before leaving his duties in government we met in Washington. Cristián considered that he had built a very special group of people and that the idea of a foundation was mandatory. Due to their excellent relations they did not seek or need money from Atlas; they also had an excellent relation with the Centro de Estudios Públicos, an institute in Santiago, with which Atlas was collaborating. They knew about the work of Atlas Economic Research Foundation with institutes and explained to us what they wanted to achieve. This is how they created an institute with many of the economic and social experts who were leaving the Pinochet administration. The task of creating an institute, backed up by an entire economical team, may sound very easy to many of you, but I ask you to question Cristián in this respect. Very often, when governments have left office, very valuable groups of people have ended dismembered and the general rule has been the dissolution of this type of teams; Libertad y Desarrollo has been the successful exception. In Argentina, every minister who finishes his mandate creates his own foundation. Some have become ministers due to their experience in foundations but we have not had many successful cases. I think that Jack Sweeney, present here today, knows people in the Ministry of Economy of El Salvador who have the same idea of creating an institute when their term of office is over [shortly after this seminar was over the people of El Salvador in question discarded the idea. Another former president, started another institute in 2005, also seeking advice from Atlas].
Cristián Larroulet had an enormous prestige and the recognition of the community and that was an important asset for launching his institute. I thank both him and Gerardo Bongiovanni for being here with us today and will hand over the stage to them; my role will simply be to try to facilitate the exchange of opinions.
Cristián Larroulet: First of all I would like to thank Alejandro Chafuen for his invitation. Here we will have the opportunity of learning all together how to obtain more resources and improve our work.
I think that it will be convenient to begin with a global presentation of the institution I direct with the final objective of showing you which strategy we follow for raising funds. I will give a quick look at the general issue from the perspective of Libertad y Desarrollo and then I will ask Gerardo Bongiovanni to address you. At the end we will answer one by one all the questions that may arise.
If there is one key to this issue it is that here we may learn about instruments, practices and policies, but we always must keep in mind that that the realities each foundation faces are different.
As Alejandro Chafuen was saying, we are a study center which was born in 1990 and was basically organized by a group of people directed by Hernán Büchi, a very successful Minister of Economy during the Pinochet administration from 1985 to 1989 and who later ran as presidential candidate for the center-right. We questioned ourselves about the reforms implemented and we realized that we had to continue fighting for these reforms in democracy. We were a small group: Luis Larraín, Hernán Büchi, Denise Couyoumdjian, and me. Today it has become a rather large institution concentrated on the study of public policies. We are very focused on this issue and this is perhaps our most important asset. What do we do? We are divided by programs and we try to give each program as much decentralization as possible, as Alejandro Chafuen was saying yesterday, and we support each and every initiative of our researchers.
We have a political program (about which I will leave printed material) and a legislative program about which I would like to give you some details. There are many other institutions working in the area, CIEN (Centro de Investigaciones Económicas Nacionales) for example, in Guatemala. We started by achieving great recognition with two well branded programs, which became like seals of the think tank. We were strong in the area of economic public policies and in legislative studies. The opportunity was unique since when we were just beginning, the military government was coming to an end and Congress was becoming established, so we detected a niche of opportunities because Congress did not have, and still does not have, a good working team, something which happens in the vast majority of our countries. We then made a legislative program and dedicated our first endeavors to analyze laws and monitor legislative formalities, in a similar way as what James Madison Institute has done for some time here in Florida. We also have an environmental program, which is the newest, a program of communications and, of course, also a program for fundraising.
Who are our clients? This is very important. First of all, people involved in politics, in the broader sense of the term such as public officers, ministers, secretaries and technicians; opinion leaders like businessmen and managers; legislators, press media, academics, students and obviously, donors and subscribers. We are always reviewing who our clients are and try to define our products according to them.
An important point to keep in mind is that in our countries there is no significant tax-deduction benefit for our institutions.
On the other hand, we always try to be somewhat independent from our donors and therefore try to keep a portfolio of donors as diversified as possible, which may help us not only to guarantee the stability of our institution, but also our reliability and our prestige. In some specific cases I have rejected a donor or I have ceased rendering them corresponding services to avoid any possible risk that someone could accuse us of a biased discussion in case of a juncture debate on some important matter. We do not accept public financing or do private consulting. Due to the comparative advantages of our human team we originally did consulting in other countries mainly because they provided us with a great amount of resources, and also valuable experience. But as time went by we have concentrated in our sector and accept consulting studies only if they were consistent with our pre-determined public policy agenda. It is very probable, for example, that, in the next coming days, Chile may sign a free trade treaty with the United States, something which would make a strong impact on financial legislation. If one or two banks would come asking for a study of such impact I would accept to do the study only if this would help in the definition of policies. But if a certain bank asks me to analyze the risk situation of a certain company, which means an independent study, I do not do it. I would rather divert it to consultants friendly with our foundation.
Here is another very important point. We have always said that the key to what we do is to produce two types of goods: public and private goods. Which is the public good? Basically it is to spread and promote good public policies. Good public policies are those which allow a limited government, contribute to transparency and support democratic values. On the other hand, what is a private good? Private goods are a detailed economic analysis, a detailed analysis of a bill, a detailed analysis of a legislation or regulation.
This definition matters because when we sell a public good it is very difficult to have it completely financed by the private sector. What should we do? What I do is to differentiate prices in the products we sell. How do I differentiate prices in a packet of products? We charge a higher price to the larger enterprises which are those that are more interested in financing a public credit. For example, as the size of the enterprise to which we sell our services decreases we charge them less. For example, there are small and medium size enterprises to which we cannot sell a legislative report about the free trade treaty and its effect on the American economy but we can sell them a report on the Chilean economic situation. Therefore, we always do this discrimination in prices and in our products. In order to do this we must always keep in mind that we have two different types of clients according to their size.
We have the supply contract as a financial instrument. Therefore, what we sell to enterprises is a packet of services and what we sell to individual people is publications, counseling, seminars and roundtables. Another important point is to have, as Alejandro Chafuen said, several fixed goals. Think Tanks and universities are places, as many people say, that are only useful for thinking, but in this world we have to think and produce. If we believe in the market and in competition we have to be efficient, offering a set of very specific products. This is, for example, why we publish two weekly reports and six monthly reports. We, therefore, have our specific products very standardized. In this way the institution works permanently thinking about these obligations. The immediate effect of this is that our donors and subscribers are impressed by the efficiency of our institution, not only by the standard of our products but also by the seminars we organize and our constant presence in the press.
We divide our donors in categories:
Donations of U$D 32,000/year or more
They receive a very exclusive product:
- Invitations to private meetings with important authorities and personalities
- Regular dispatches of our weekly and monthly reports
- Invitations to all our activities and open meetings
- Updated information about new legislation in Congress
- Access to all our technical information
This category of donors is the one that actually finances public goods.
I always remember what a businessman once told me: “Look, Cristián, what I like is that I know you are worried about the problem and that I perceive it, with more clarity, one month later”. That is what they value.
Donations from U$D 9000 to 32,000/year
- Invitations to monthly meetings with high level executives
- Invitations to all our activities and to open meetings
- Updated information about new legislation in Congress
- Unlimited access to all our technical information
Donations from U$D 3000 to 9000/year
- Specific publications according to the market to which they belong
- Updated information about new legislation in Congress
- Invitations to two private seminars about economical juncture issues in Chile
Donations from U$D 40 to 3000/year
- Subscriptions to different publications
- Invitations (for some of them) to two private seminars about the economic situation in Chile
To begin with we try to make our subscription contracts a monthly source of income, simplifying cash flow, instead of using resources from donors which we receive on an annual basis.
Another powerful financial tool would be some special project similar to the one Gerardo Bongiovanni’s team has for the headquarters of Fundación Libertad. What happens is that when after some reasonable time one shows that the work one does is well done and that one is ultimately involved in the projects, and dedicates all possible energy to them, one may use these specific projects as a new source of financing. I would like to give you some examples: one would be the organization of a large meeting (like the one held by Mont Pèlerin Society in 2000 in Santiago); another one would be working out a great research program like the one done by CEP that together with Atlas Economic Research Foundation last year organized a project for State modernization; and finally, moving to new headquarters can give us an opportunity. We are about to buy a new house since the headquarters we have today is too small to carry out our activities.
It is fundamental that our clients be aware that we are worried today about an issue that will worry them three months later. This, plus the existence of a professional team systematically dedicated to these issues, has an enormous value for donors. This is the reason why they are willing to finance the growth of our buildings and the modernization of our computers. They are very good products to sell to our subscribers every now and then. Something very curious happened to us in our first meeting with a group of businessmen with the possibility of buying a new house for the institute. About sixty days ago I was very concerned because today the economic situation of the country is not as good as it used to be and to ask for money for new headquarters did not seem an easy task. While we were telling them about the contribution we were going to ask to each one of them one businessman, and good friend of mine, remained silent. The rest of them were saying yes, that they found the idea interesting, but he said nothing, and this situation made us feel a little bit uncomfortable. The president of our board, who is very good at obtaining resources, met him at the end of the meeting and after asking him he received an immediate approval. This person owns an insurance company and by means of it he would support us with a subsidized rent contract, which means that we would have to pay for the interests of the payments for the house and the insurance company would give us the capital. Once again, we must always create new ways of increasing the natural flow of our resources.
In our countries there are no capitalists of the size of the ones found in the United States. Therefore, we would never be able to live on the interests of a fund as it happens many times in that country. What have we done? What I call ‘the butcher’s bill [ledger]’: as from the first day we stated that we were going to have a determined amount of incomes and a determined, but smaller, amount of withdrawals and that we were going to save the difference, but for what purpose? For one that I learnt from Michael Walker of the Fraser Institute (Vancouver, Canada) called reserve funds. Now we can live three months without incomes and each year we plan to extend the period during which we can survive without incomes.
Who we are
How do you start from scratch? In our case the start from scratch was simplified due to the prestige of the people in our working team. This is an asset that some have and some do not. Our Think Tank, in contrast to CEP, does not have on its board very powerful businessmen. We have prestigious world personalities in public policies instead, like Hernán Büchi, founder member and one of the top authorities in economic issues in Chile. We have Hernán Felipe Herrázuriz, an authority in international relations, since he was ambassador to the United States, Foreign Minister, etc. We have Lucía Santa Cruz, a historian of great prestige. We have Patricia Matte, one of the top authorities in Chile on educational issues.
Our principal asset was that as from the very beginning we could reach organizations, explain to them who we were, what we wanted to do and we received immediate support. Now, as time went by, what we did was to change the strategy, in the sense of improving each day and showing the effectiveness of our work. If we would have maintained the original project of only having personalities time would have gone by, gratefulness would have depreciated and at some point it would have disappeared. What we did was to create a great team with the people who were in the institute and then put great emphasis in the quality, the persistence and the systematization of our works.
We permanently monitor the list of our subscribers to find out who is doing well and we visit them to ask for the renovation of their contributions.
We permanently try to improve the quality of our services. A good example, which we learnt from Heritage Foundation (after some time one realizes that there is nothing to invent but everything to copy) was the organization of our President’s Club for larger donors. We review all the time what is going on in the companies, their changes of managers and presidents, the new directors. One must know very well the map of what is going on in the companies and who are their leaders. A fundraising campaign should be done every year; that is fundamental. It is important to seek the stability of the institution turning it into a permanent reality.
Gerardo Bongiovanni: To be consistent with the title of the workshop “Fundraising in Difficult Environments” I must remind you of my Argentine condition, since my country today is in the middle of a terrible crisis.
I am proud of sharing this stage with Cristián Larroulet, who leads what is, in my opinion, the most important institute in Latin America. I liked very much what Alejandro Chafuen said at the beginning about how to manage our institutes. What happened in Argentina is worrisome: in the 80’s there were at least ten liberal institutes of certain significance and today they have all disappeared. When one speaks with the leaders of these institutes and asks them what happened the answers are mere excuses: that times have changed, that businessmen are not liberal and they do not support these concerns, etc. In my opinion they have had an enormous management problem. We start the institutes with great enthusiasm and we strive to get the support of some people who are friendly with the ideas but, when one has to take the leap, real management abilities are needed; it is here where many in Argentina, and in many other countries, hold back.
Another worrisome case is the one of the institutes generated with international contributions and which survive only with this support. This is something that may seem very convenient at the beginning but results unsustainable in the medium or long run. In Argentina there were a couple of projects, some financed by CIPE, very generous economically, which intended to generate a series of institutes throughout Argentina. They invested U$D 1,000,000 between 1985 and 1987 without setting management rules or benchmarks. At that time the dollar had great purchasing power. Nevertheless, except for the memory of a three year project that has disappeared, nothing remains.
Our experience in fundraising has very peculiar characteristics. We started Fundación Libertad 15 years ago with a group of young people, at that time students. Fundación Libertad is located in Rosario, the second most important city in Argentina but, in spite of this, has led the creation of a network of ten related foundations in different cities in Argentina.
We were able to involve some intellectuals of relevance from the beginning and we started to look for funds. We started asking for a monthly fee of 100 dollars and ended the year with ten institutions paying for them. All of us working in the foundation were volunteers, we all worked for free. Now we have 250 associated institutions and a budget of U$D 1,200,000. The consolidated budget of Red Libertad of Argentina is U$D 4,500,000. We have five main activities, one of which is the Centro de Estudios y Capacitación Empresaria (CeyCe), and now we can tease our friends from Cato Institute that our building is more impressive than theirs.
We have a very active area of public activities. One of the areas is the one of Courses and Conferences, where we offer more than 120 conferences, courses and seminars each year with the participation of about 200 speakers (25% of them from abroad). We have a research department with eight full-time researchers. We have a quite active area of publications with “Perspectivas”, a journal of economic junction, other two publications, “Lecturas” and “Temas Públicos”, somewhat more conceptual, and a series of light publications that help us keep close contact with our business members and supporters. Today we have four programs in radio and TV of our own (one in open TV, one by cable, one in AM radio and one in FM radio). Eight of the people of the foundation are permanent columnists in the main newspapers, radio and TV programs of the city.
We have a very active area of services for the associated enterprises closely related to fundraising. We have a set of special programs: the Instituto de Medioambiente (Environmental Institute), the Foro del Consumidor (Consumer Forum), a sector of Gestión PyMes (SME’s Administration) and the Instituto de Estudios Económicos (Institute of Economic Studies), a self-financed unit dedicated to study main economic indicators.
Which criteria have we used to be able to retain 250 business members during these years?
What leads someone to contribute money to us?
b) Services the donor receives
c) What we call the ‘American Express Effect’: the idea of associating because ‘membership has its privileges’.
A central point in fundraising is what you offer in exchange: nobody will support you unless they feel they are receiving something in exchange, especially in difficult cultures. In case a), seeking a better future for the country, for themselves and for their family; in case b), to accede to a specific study or interviewing an outstanding economist.
Another point which Fundación Libertad stressed was to generate a model with a diversified business member’s base. At first it was not easy, but this model has a good number of advantages:
- It gives the institute much more independence: one thing is to have U$D 1,000,000 provided by 200 enterprises and a very different one is if the same amount were provided by five supporters. If one of the five suspends the contribution the negative impact is enormous.
- It does not endanger too much the finances of the donor.
- It is very easy to sell other projects or programs to enterprises which provide the basic fee (in our case 200 dollars a month).
All the staff should be involved in fundraising regardless of their rank. The ability of all the staff for offering additional material all the time or for answering questions gives very good results. 20% of our associated enterprises have asked to become associated after attending some of our important conferences, mainly those given by Nobel Prize laureates in Economics. Fundraising is a permanent task. Having gathered the budget for the year means nothing, we must always go further. We have meetings every week to deal with this issue. It is a key point in order to add new donors and maintain the ones we already have. We have a permanent team, of about 20 people, who maintain personalized relations with all our sponsors.
Fundación Libertad, contrary to what happens in other cultures, avoids having important businessmen on its Administration Board. The possibility always exists of being pressured by too influential businessmen. We only have frequent relations with those who we are certain will put principle and ideas over their personal interests.
Income Structure of the Foundation:
Argentina is in a crisis which has worsened every day during the past four years, with a 15% decrease in the growth of economic activity throughout this period. While many important institutions in Argentina, like the Fundación de Investigaciones Latinoamericanas (FIEL) directed by Ricardo López Murphy (a well-known liberal Argentine economist) are having financial difficulties, we ended the year with a 15% increase of our budget for 2002 compared to the previous year. Perhaps the creation of the fundraising department has influenced this. In this department there are no full-time members, but its creation enabled us to associate about 40 new enterprises in the last six months. On the other hand, we could take advantage of our new building which attracts positive attention of potential donors.
Finally, some special projects launched this year, like the Proyecto privado de plan estratégico para la región centro (Private project of a strategic plan for the central region), which tries to take the monopoly of the strategic plan of the city, proposing new public infrastructure and great increases in costs, away from the politicians. We, on the other hand, propose the constant reduction of taxes and tax exemptions, and consider the needs of cities and provinces.
About 40% of the budget of the foundation is provided for by the monthly fees of our associates, an amount which has been increasing but, at the same time, decreasing in proportion to the total budget. The other 60% is provided for by incomes generated by the Instituto de Estudios Económicos, by the programs in the media and by the annual courses, seminars and conferences.
The Unidades Especiales (Special Units) of Fundación Libertad are:
· Instituto de Estudios Económicos (Institute of Economic Studies)
· Plan Estratégico Privado (Strategic Private Plan)
· Instituto de Desarrollo Ambiental (Institute of Environmental Development)
· Gestón PyMe (SME’s Management)
· Instituto Tecnológico (Technological Institute)
Questions and Answers:
1) Alejandro Chafuen for Cristián Larroulet: Which are the different stages that a recently born institute must go through?
Cristián Larroulet: The most important thing is to always maintain certain flexibility. For example, when Libertad y Desarrollo started its activities it did not discard offering some services of international consulting in the short term. As I said before, we then dropped it. The key concept, therefore, is flexibility in the presence of changes. At first Libertad y Desarrollo wanted to be able to afford the best consultants but these had a very high opportunity cost, so we decided that the best of us would work part-time and do consulting during the rest of the day.
Which is our permanent task? What do we want to do? Public policies promoting free market ideas and nothing else. That is why whenever possible, we have generated resources to concentrate ourselves on that and we have hired a full-time person. Today most of the team, about 20 professionals, works full-time for the foundation.
This year our incomes have decreased and our projection is that the same thing will happen in 2002; basically the month cash flow, independently of the budget of the new offices, which was prepared separately. That is why we are reducing the working hours to those who have requested it.
2) Alejandro Chafuen for Gerardo Bongiovanni: I would like you to tell us how the first years were and when was it that Fundación Libertad made a great jump forward?. Tell us about your professional development. How did you acquire the ability for management?
Gerardo Bongiovanni: I started very young on this, when I was twenty. Fundación Libertad really started in 1983 although it was formalized in 1988. Our initial team had much professional experience and we tried to work with seriousness. If you look at our annual budgets and the amount of activities carried out you will notice that we have had a regular and sustained growth, which means that no great leap exists. As Cristián Larroulet was saying, you have to formalize the programs gradually. I am member of the board of five of the foundations of the network of Argentine foundations and that is what we are trying to do there, to formalize activities little by little, but keeping the pace.
On the other hand yes, I can say that there has been an internal leap, during 1992 and 1993, when we started to tie bonds with international entities like Atlas Economic Research Foundation and when we brought Gary Becker, Nobel Prize laureate in Economics, to Argentina (afterwards we brought other eight Nobel Prize laureates to the country). These events opened us to the world and we gave a very important qualitative leap. After those eight Nobel Prize laureates we had Mario Vargas Llosa three times, Paul Johnson, Jean Francois Revel and other outstanding people.
3) Jack Sweeney: When you decided to invite outstanding people from abroad, how did you organize it? How did you reach them?
Gerardo Bongiovanni: That is a very good question. One is surprised by the confidence one can generate after some time. These people get paid about U$D 25,000 in fees and expenses. However, they have never asked for advanced payment to come to Argentina.
The first time we did this we were lucky because Gary Becker was about to visit Argentina invited by a bank which went bankrupt before his visit, so we paid the costs of his visit. I remember that this was the first time that our Administration Board opposed a decision of mine in spite of the excellent friendship I have with all its members. At that time it meant a lot of money, about U$D 20,000 and they said no. We did it anyway and collected U$D 40,000. We charged U$D 70 for the inscription fee and 400 people paid for it. It was a success. Atlas Economic Research Foundation continued to help us with more contacts.
Today we have a standard invitation letter which we use each time a new pro-free-market Nobel Prize is elected. The purpose is to have it sent the day after the Nobel prize is announced, inviting him to our country, with the antecedent of the eight Nobel Prize laureates we had invited before. In this way the process is somewhat simplified. As a proof of how much they trust our think tank, many who have visited us have even paid for their tickets and then we have paid them back.
Atlas Economic Research Foundation, Cato Institute and Mario Vargas Llosa have, of course, helped us very much in this activity.
One of the serious problems that some institutes have, and perhaps that makes the difference between Libertad y Desarrollo and us, is that they began being a team of people with a very high opportunity cost while we had no opportunity cost. We were students and worked ad honorem because we were twenty four years old.
Cristián Larroulet: Libertad y Desarrollo and Fundación Libertad are very different from one another. Gerardo Bongiovanni, for example, organizes workshops about ideas on freedom, just as the Institute for Economic Affairs (IEA) does in London. It is a very important niche to win. Today, if someone wants to do the same and compete with them, they would not find it easy.
4) Juan Carlos Nariño: When in the beginning there is more heart than specific projects, how do you do the marketing? What can be shown?
Cristián Larroulet: Our first product was the “Informe Legislativo” (Legislative Report). We analyzed the different bills in depth with all our team and handed over our conclusions to congressmen with kindred ideas. It was a real failure. The few congressmen who took us into consideration valued our work and said that it was very well done but as months went by we were every time taken less into consideration. What did we do about this? Instead of sending them a report once a month we started to appear in the press creating important debates. In this way we truly called the attention of Congress. Today we have a product called “Reseña Legislativa” (Legislative Report) which comes out every week, where we consider a bill, make a summary and analyze it. A good number of congressmen consult this report every week.
Alejandro Chafuen: Both Libertad y Desarrollo and Fundación Libertad have people of great prestige in their councils and in their boards of directors. One of the phrases often repeated in philanthropic environments is that “people give money to people”, not to organizations. In Latin America, following this principle blindly, leads many times to absurd extremes. Many are convinced that cultivating friendships and having good ideas is enough, as though there were no need of having good programs and a good organization or convey the notion that the effort is permanent and that it is not an adventure to help launch a future political career or just a hobby. When we go out fundraising we need solid proofs of the seriousness of what we are doing. This must be accompanied by the effort of not neglecting our personal relation with the donors. This is the most precious secret of a successful organization.
5) Alejandro Chafuen: Do people in your board or trustees help to raise funds? In Latin America, does the U.S. tradition of directly asking people or institutions for U$D 5000 or U$D 10,000, after having studied their tradition, exist?
Gerardo Bongiovanni: Argentina is somewhat special in this respect. Each member of the board or the council plays a very important role. There are people who are better disposed than others to collaborate in this task. Anyway, most part of the task of fundraising is centered on the front line of my working team. We decided to include businessmen in the conduction of the foundation through a Business Advisory Council made up by 25 businessmen representing the most important enterprises. Some of them are very active at fundraising. For example, in the project Plan estratégico de la región centro (Strategic Plan for the Central Region), two businessmen in particular involved all the rest of the participants. In my opinion in Argentina, and in Latin America in general, the American culture of collaboration or commitment regarding the management of funds does not exist. Very often we receive a check and that is the end of their contributions. They are not interested in forging a bond. Perhaps we failed in originality at the time of incorporating businessmen in such activities.
Cristián Larroulet: In our board there are members involved in fundraising but at different levels. As I said before, the president of our board is a very well-known person, a former minister, former president of the Central Bank and current member of the board of several private companies. He is a professional with a very good reputation in multinational companies and has a great ability for raising funds. Every year we make a work plan and he is directly involved in its making-up. We can therefore say that our basic team is made up by the president of the board of directors, the executive director, and the general manager of the institute. They identify products and donors and then elaborate a process for requesting those resources. This receives the support of other members of the board, who may not be that good at this task, but whose prestige and quality of contacts help us to make our requests more specific.
In relation to what Alejandro Chafuen says, we prefer to make specific requests. We study possible donors, see the possible products we can offer and the amount to ask for. International enterprises coming to Chile are, for example, the most difficult to capture because they are afraid of helping causes with some political bias and Libertad y Desarrollo, due to its origins, is many times seen as an institution very close to politics. Therefore, when we visit them, we propose programs specifically related to economic issues such as a program which promotes a vision more in accordance with market economy, economic deregulation or balanced macroeconomic solutions. We then state the amount to be paid and the services we will offer in exchange (monthly information, meetings or seminars). When we organized the meeting of Mont Pèlerin Society we identified two categories of enterprises, told them we needed U$D 80,000 and gave them the chance of paying it in installments. When one receives a negative answer one should not leave the enterprise aside but insist with new products instead.
Gerardo Bongiovanni: In contrast with the first years, today there is more involvement of businessmen in this activity. We also are careful of not having a businessman with an excessively preponderant role in the foundation. Today we have enough prestige to keep the balance that we so much longed for.
When we received the new building we were very worried about the way in which we were going to present it to society. We were afraid that it would think that there was some sort of fishy agreement between the foundation and the owner of the building, but we established an adequate communication and there was no difficulty whatsoever.
6) Jorge Salaverry: These two experiences are very different in its origins. Cristián Larroulet, did you hire a working team at the beginning or were personalities such as Hernán Büchi those who conceived the products?
Cristián Larroulet: We were very few when we started. We did everything by ourselves, as in the case of Fundación Libertad. We were obviously nothing compared to what we are today. The key point is to have a daily presence in the circles of influence. For example, at the beginning I went to Congress all the time but now other people replace me there, since they have obtained enough prestige, knowledge and the necessary tools for doing so.
Gerardo Bongiovanni: When the foundation started its activities I was doing 90% of the fundraising; today I only do 30% of it because my working team has taken over.
An interesting issue which several have asked about is the issue regarding information or listings from where we obtain our potential donors. Today Fundación Libertad is seeking financing for four new projects: for the publication in Spanish, together with Heritage Foundation, of the Index of Economic Freedom; for the Instituto de Estudios Económicos (Institute of Economic Studies); auspices for the annual dinner which we hold at the end of the year and finally, for new members for the following year. This requires the “oiling” of our information system and we therefore have a list of potential donors for each project.
Sometimes one has to be creative. We have received U$D 50,000 in auspices for the Index of Economic Freedom, a project for which we only paid for the transcript of the books and some events that cost about U$D 5000.
These listings are obtained from most diverse sources such as donors of other foundations or sponsors of events, with the purpose of finding out which enterprises tend to support and who is the person we should address. What happened to us with John Deere is a curious case. I spent three years trying to make an association with them but went the wrong way. We always invited the General Manager, who used to come to our dinners but never associated his enterprise. After some time I realized that the right person to be invited was the Finance Manager, a professional with important intellectual anxieties who immediately agreed to associate the enterprise. The listings of donors and potential donors should be updated daily.
We receive contributions by means of monthly fees and extraordinary contributions. A monthly contribution may last forever if one makes enough efforts while annual contributions have some disadvantages.
7) María del Cármen Aceña (CIEN, Guatemala): You two come from countries which have made a qualitative leap in their development but, as some leftist in Guatemala was telling me, ‘many times underdevelopment is integral’. Problems may arise if research centers become professionalized and society is not. We still have the same businessmen that we had ten years ago, the same political parties that we had ten years ago and it is due to this that problems arise. This is why we sometimes seek financing abroad. We used to produce what society needed at a low cost but today we have very high costs and only international organizations appreciate the quality of our products. We sometimes try to cover the costs of our projects by doing consulting, but in our market consultants have a much lower fee than in others.
Cristián Larroulet: I do not agree with you. Products are not valued at a lower price because a country has a lower per capita income than Chile. We must apply a good strategy consistent with the principles we stand out for. You always stress that CIEN is completely involved in public policies as Libertad y Desarrollo is. We have a strong tendency to consider ourselves experts and we do not tolerate the short-sightedness of businessmen when we ourselves should recognize that we are the ones who know. In Chile, just like you, we compete with our consultants who, very often, are our friends and could become our enemies if we tried to take the job away from them. Therefore, the key is the systematization and perseverance at the time of asking for resources.
Gerardo Bongiovanni: A fundamental thing is to have a positive attitude and spirit and to leave all pessimism aside. The United States is one thing, Europe is another one, and Latin America is yet another one. In Spain, for example, there are many interesting groups to work with but sometimes they complain about of how hard it is for them to obtain funds.
In Argentina there have been interesting examples in cities of the interior. As you know, Argentina has a very uneven geographical distribution of incomes. Buenos Aires City has an annual gross product similar to the one of France, about U$D 25,000 per capita, while in some Argentine provinces it is only U$D 2000 per capita. Obviously, everyone adapts to the reality in which they live and in some provinces we have achieved remarkable successes.
I would obviously like to receive more international contributions but this sometimes generates certain problems like when one has to write and present a well developed proposal in English. At Fundación Libertad we absolutely lack this knowledge.
Alejandro Chafuen: María del Carmen, you are very young and maybe you do not remember that it was precisely in Guatemala where the first institute started, the CEES, which later created ESEADE (later copied in Argentina) and this one in turn created Universidad Francisco Marroquín.
Professional surveys carried out by Latinobarómetro, and published by relevant media like the Wall Street Journal state that Guatemala is the Latin American country where market economy has the largest popular support. [The survey results changed dramatically in future years]
8) Rocío Guijarro: In regard to the politicization of institutes, in Venezuela we are considered to be the ‘savage neoliberals’, so criticized by Hugo Chávez. That is why many enterprises are afraid of giving us money so we are at the permanent search of self-financing and manage ourselves with an enterprise criterion of unity of businesses. An interesting issue for us is the one of philanthropy versus social corporate responsibility. As from last year, with our president and our treasurer, we have incorporated young people, mainly sons and daughters of well-known families in Venezuela.
Cristián Larroulet: The issue that we are ‘savage neoliberals’ is a label we must forget. I would be proud of being called a savage neoliberal. In the case of Libertad y Desarrollo many of our figures have been associated to political processes, like Hernán Büchi who was presidential candidate in 1989 for the center-right. At one time I was personally involved in the presidential campaign of Joaquín Lavín. How do you overcome this type of problems? , being serious and systematic. They can tell us that we are neoliberals and that we have worked with the center-right but no one can tell us that our studies are not serious and reliable.
We must find allies which will allow us to overcome criticism. We even make programs with serious study centers with a social-democratic vision. We sometimes make programs with government officials of a leftist approach so long as they have some prestige.
In this seminar we watched a video which shows how nonprofit organizations influence society and its quality of life. If we are open and we host a high quality seminar with leaders from different ideologies, social-Christian or social-democrats for example, people will immediately think ‘these are very influent people because they are capable of summoning the best’. For example, on our third year we organized a dinner to invite our donors and researchers paying for all the costs. As time went by, State Ministers have started to attend this dinner, in spite of our think-tank’s neoliberal or rightist label. The Vice-president of our country attended Mont Pèlerin Society’s dinner at Santiago. Pascal Salin, the French economist, attended our annual dinner, as the Finance Minister and other important ministers did. Salin was impressed because this would have been impossible to achieve in France.
Rocío Guijarro: There are multinational enterprises that donate money to Libertad y Desarrollo in Chile which also work in Venezuela. We have asked them for collaboration mentioning to them that our foundation was friendly with yours but we were unable to convince them.
Cristián Larroulet: I would like to answer this with an anecdote. We once met with a businessman who has one of the two largest fortunes in Chile. We held the meeting because we found out that he was the owner of a house with the optimum characteristics to be our headquarters: it was located four blocks away from where we were, in a wonderful neighborhood. Our objective was to ask him to donate us the house or at least sell it to us at a low price. I went with Carlos Cáceres, the president of our board of directors and a very important person. This businessman was very kind to us as from the first moment. Carlos explained him the project, the importance of the work Libertad y Desarrollo was carrying out and asked him for the house as a donation. This businessman looked at Carlos and told him ‘Please, Carlos, don´t go on, the word donation doesn´t exist in my vocabulary”. For some reason these multimillionaires have become what they are.
Gerardo Bongiovanni: There are two key words in the development of an institute: seriousness and influence. The small open mindedness of some liberals has many times called my attention. In Argentina, for example, the Mont Pèlerin Society meeting could never be organized because the two or three people who could have promoted it were frightened by the idea of having to visit high political personalities in order to invite them. In one opportunity when Mario Vargas Llosa visited us, the President invited us to a meeting. One member of our team opposed to the idea with the argument that we, as liberals, should have no contact with the public sector or with the political power. My opinion is on the opposite direction; if one brings in a personality and shows him next to the President, or to the ministers, or to the governors, one shows evidence of having an open mind and becomes more influential. Today, the governor of Santa Fe (our province) and the mayor of Rosario (the city where we are located in) come to all the events of Fundación Libertad. The matter of the mayor is very interesting because he is a socialist mayor. Perhaps I should not be saying this since it may show that the success of Fundación Libertad is rather relative. I must also admit that he is a very calm socialist. However, due to our criticism, which was spread by the media, he was somewhat annoyed with us. During the following two years, when we took personalities such as Lech Walesa and Paul Johnson to Argentina, they were received by the President of the country and by the governor of the province, but the mayor of the city refused to participate. Many friends told me that it was not a good idea to become enemies of the mayor of the city. Apparently he was told the same thing since, even though he avoided me every time we coincided at some social event, one day he telephoned me. Such was my surprise that I thought someone was playing a joke on me. However, he finally invited me to dinner and we started an excellent relation. In this sense Fundación Libertad is more open minded than other liberal groups.
Alejandro Chafuen: In our webpage there is a link to a paper written by the successful John von Kannon, the person in charge of fundraising for Heritage Foundation. This work shows that sometimes we become our own enemy. We not only need to know our clients, but we also need to know ourselves. There are two characteristics of human personality that enable us to be good salesmen of our products: 1) Having a great ego and 2) Having a great sense of empathy. Most of all of our good friends in Latin America have the first one but not the second, and it is a key issue in order to face a negative for a donation and not lowering the guard later on. This is not related to economics or to how to manage or administer, but it is psychology and very important in this matter.
9) Question: Many times we want to receive acknowledgement for our task of spreading ideas. In this case, should the information be delivered to everybody or do we have to worry about the author´s copyright?
Gerardo Bongiovanni: We have different types of publications, three different reports:
- One rather philosophical with many quotations of Hayek and von Mises
- Two of economic indicators and current trends
In Fundación Libertad we became aware that people in business dedicate great part of the day selecting what they are not going to read. That is why we try to generate two or three very simple products (about 15 lines) and send them by e-mail. These reports are very valued by businessmen. If one would send them a publication of twenty pages none would read it. This is why we publish brief reports of what an outstanding personality who visited us or participated in some of our radio programs said.
We have no problems with copyrights because we produce much material of our own and whenever it is necessary we ask for permission. Besides, many people are very generous with their rights. Mario Vargas Llosa, as you know, lives on this and charges high fees (about U$D 10,000 for a long essay) and yet has handed over to us the rights to reproduce his conferences.
Cristián Larroulet: Your question touches a point of conflict. It is difficult to determine which product should be launched massively to generate welfare in society and which product to launch to maximize incomes. In Libertad y Desarrollo this is a constant source of discussion. Our general criterion is the following: when the product is a short-term economic topic we use it to generate income, while if it deals with social issues such as poverty or education it is more widespread and it is possible that it will only generate enough revenues to cover part of the costs and nothing else.
On the other hand, we also depend on the timing: a macroeconomic report that has just been released is exclusive to those who paid for it, and includes a private meeting, although maybe two weeks later it will be spread massively.
Internet is a wonderful tool to this effect. One of the products for our subscribers is an analysis of the international economic situation. At Libertad y Desarrollo we have a center of international economics. Like all these types of things, one person works part-time, and we call it Centro de Economía Internacional. We used to make a report but as time went by the subscribers decreased so we decided to discontinue it. If you ask me if I consider this to be something strategically reasonable I will tell you I do not, because precisely now there is a strong demand for information due to the turbulent economic reality in counties like Argentina and Brazil. So we will replace it with a product we launched in 2001: instead of making a report of twenty pages, filled with charts which nobody reads, we will replace it with a series of short e-mails called Coyuntura internacional al instante. When something happens in Argentina we write a report of about two pages and immediately send it by e-mail to our subscribers.
10) Question: What would you advise young people who are starting an institute? If in a group 90% of its members are between 20 and 29 years old and only directors are older than 30, how does the reliability factor fit in with the lack of experience?
Gerardo Bongiovanni: In such a case they should surprise the market by the originality of their products. They should also have a minimum program of activities: a monthly conference and report. One important objective is to reach a good number of members starting with those friendly with the ideas. One has to overcome the “no”; not only not to be disillusioned but also to be ‘vaccinated’ against negative replies. Youth is not an impediment and, in our personal case, people view with sympathy the involvement of young people. Besides, if any of you were to start something in your countries you have an extraordinary advantage since you count with the network of think tanks of the Atlas Economic Research Foundation. How many institutes in your countries can offer you contacts with kindred entities all over the world as this network can?
I always tell an anecdote in order to illustrate how Atlas works. In 1992 a group of businessmen told me they were interested in learning more about the experience of Hong Kong. I started wondering what I could do with this request and got in touch with Alejandro Chafuen, asking him for help. A few hours later I received a call from Richard Wong, an important economist and director of the Hong Kong Centre for Economic Research. In one month we had Wong with us in Argentina. This help is not small help for getting started.
This is going further than mere aspects of organization, like the setting up of a minimum program or fundraising, with the clear objective of building up what with time will be a critical mass which will enable us to become successful. I think that we count with some very valuable elements.
Question by Ricardo X: We had an interesting experience. We focused more on what in the United States is called grassroots activities. We went to the interior of the country and asked the people, door-to-door, to write a short postcard to congressmen. In this way we filled Congress with so much mail that the institutional prestige of our group started growing up. A few years ago it was the managerial élite the one which called us asking for collaboration in an activity for decentralization. This activity of young people, that we as adults do not do, of visiting door-to-door, of asking people in the squares to join our movement, is what helped us to gain prestige.
Comment (XXX): The conflict of interests between our institutions and advising and consulting enterprises is a difficulty. I think that when a think tank releases products of higher quality and relevance before the public opinion, it ends up predominating over consulting companies. In our country, our key competitors are the legislators.
For example, when someone wants to push a bill in front of Congress, sometimes businessmen avoid institutes and solve the problem bribing legislators. I don’t know if this has happened in Guatemala but it does happen in our country. The question is to prove the quality of our work and our influence. For example, some time ago a friend of mine, who is the director of an institute, called me and told me that a group of businessmen needed his support to obtain the approval of some changes in certain piece of legislation. The businessmen interested in the change got in touch with my friend and he came up with a sum of money for the intellectual work and for launching of the strategy to pressure for its approval and implementation. I was invited to form part of the team of people who would do all this. We were all very enthusiastic with the project but when the businessmen realized how much it would cost their leader told us: ‘I would rather go to speak straight with the legislators because I solve all this with less money, period.’ We were very surprised with this comment but twenty days after that meeting the leader of the group of businessmen contacted us again. What had happened was that the legislators had accepted their proposal but had told them that, since they had to present the project formally, they had to fake to have a research to support it. So, what had been an embarrassment turned out to be a sample of the quality of our products. We have permanent participation in the media and many directors of press media have asked for our advisory services.
11) Dora de Ampuero: Cristián and Gerardo, what you have achieved during these years is fantastic, but what happens in the case of smaller institutes, those ‘lone rangers’ who were not lucky enough to receive much support? When I had the chance to be a fellow at the Atlas Economic Research Foundation and then returned to Ecuador with great enthusiasm to work for these ideas, I found myself with the same panorama that Rocío Guijarro described: people gave little support. The ideas of Friedrich von Hayek and Ludwig von Mises were unknown, few cared about them. However, one only gains prestige with the gradual systematization of work, with continuity and with discipline; one moves forward step by step, even though one may feel otherwise. Many people call me, from radio stations and from the media in general. One should try not to wear away going everywhere. Issues like dollarization, which were successfully implemented, have helped us very much.
Every time I leave meetings like this one I do so full of ideas, convinced that nobody will be able to stop me, but then I find myself faced to the realities of my country. We have a group of young people who are training themselves, a very capable group, very enthusiastic, wishful of entering universities and to teach. I was also fortunate enough to receive the support of the Freedom Project of Atlas and Templeton which allowed me to finance part of this. One has to try to open ways, things will improve, and after 10 years they will bear fruit.
12) Alejandro Chafuen: Returning to the field of psychology and to what Gerardo Bongiovanni refers to when he talks about studying and reviewing list of donors and supporters: many of us have a professional deformation. What most people are interested in is in creating a better world where one can produce better products with fewer obstacles. It is not necessary to mention Hayek or Mises to defend these ideals. Some of us are obsessed with a few champions of liberty.
Making up lists and studying them is terribly boring for many of us. We prefer to use our time improving our arguments on different matters. We need to learn to hire people from outside our market. At Atlas we sometimes obtained better results with people who arrived without intellectual concerns, ready to learn but without predetermined ideas of their own, than with people who pretended to rediscover the great liberal solution. Who do you hire for this task, people who already come identified with your ideas or people who come from different sectors?
Gerardo Bongiovanni: We do not hire anybody because of their ideas. We have people that specifically work in the philosophical field, but even those who come with a very pronounced philosophical profile know that in some of theses issues they have to put limits to themselves. We are a means, a means to reach most people as possible with certain ideas. It is true that sometimes the dedication to this activity keeps us from focusing on tasks of formation and on matters that are very attractive to us, but each person has the right to choose his own ideas.
Every morning we gather to speak about the problem that Alejandro Chafuen has just set. One of the great problems which Latin American liberal institutes have had is the lack of open-mindedness. To be successful an institute must sometimes do things which are not related to the spreading of its philosophy. This does not mean going against the ideas that are the backbone of our vision, but it does mean to have a larger open-mindedness on issues not so intimately related to these ideas. When Libertad y Desarrollo makes reports on the monetary base or on the level of bank deposits in Chile, or when we make reports on investments in Argentina, we do them from a liberal point of view. However, these reports are not just for spreading the philosophy of liberty. They should also be done to attract the attention and the funds which will, at the same time, help us finance courses of Austrian economics for students or similar activities. Many institutes, even in Argentina, thought that they could generate a model of institute strictly dedicated to philosophical formation. In my opinion, this is impossible from the financial point of view. I do not know anyone with these characteristics who has ever been successful. The closer to this in Argentina is the Escuela Superior de Economía y Administración de Empresas (ESEADE) of Buenos Aires, but it is a faculty that is financed in great part by the fees their students pay. I have discussed this many times with its founder, Alberto Benegas Lynch (Jr.), an intellectual father to me and in part responsible for what I am doing today. He sometimes questioned the pragmatism of Fundación Libertad and asked me about the reasons for taking a certain course of action in non-ideological fields. I used to answer him that the university he founded, also taught Mathematics and Accounting which have little to do with the philosophy of liberty.
Therefore, we need to recognize that we should generate more pragmatic products in order to finance what is the core of our institutes, at least in Latin America. Perhaps this could be done in the United States or in other countries without having to be involved in studies for short term policy battles, or economic studies about the current challenges.
Gerardo Bongiovanni: In our work in the media we support ourselves by sponsorships and have a very particular way of financing. Television programs are traditionally financed with ads that last a certain amount of seconds. In our opinion this method is excessively commercial for a think tank. What we do then is to find businesses which sponsor the program institutionally. [Like PBS in the US] Then during the program we mention: ‘In the program ‘A Fondo’, Fundación Libertad is accompanied by the following enterprises’ and we name them one by one. These sponsorships are sustainable in time using measurements of audience and of the impact of our work.
Selling theses sponsorships is a major problem. In our case we hire an advertising agency which makes things easier and, at the same time, gives us a more professional image..
We are also careful with what we offer in exchange for the invitations to a program. We would never ask a sponsorship on a Friday to a businessman whom we invited to our program the previous Thursday. This type of guest usually offers his support and in many cases we accept them. One problem which we had to face was that during election campaigns politicians have wanted to participate in our program trying to buy their invitation giving us sponsorships. Our foundation has not accepted this type of proposals with the consequent discussion with the television channel which always tends to maximize its incomes for publicity.
At first it was not easy to sell the idea of the TV program. Most of the enterprises which supported us did so due to the affection for the foundation. Today our product is completely established and our ratings are excellent. Our television program ‘A Fondo’ has a rating of 8 points which in a scale of 1 point for every 20,000 people means to say that about 160,000 people watch it.
1) Alejandro Chafuen: Does this TV program only cover costs or does it go further?
Gerardo Bongiovanni: In 1999 we earned U$D 50,000 and the advertising agency earned a similar amount. At that time we went on air at an excellent time, at 11:00 p.m. In the year 2000 we earned U$D 11,000. This year, 2001, we just broke even, and we even had to meet with the authorities of the channel and ask for an adjustment of prices. The agency that works with us buys the television space and sells it to different enterprises. We continue to improve in our ratings. By 2001 we even hired an artistic director for the first time which greatly improved the program.
In 2000 our Think Tank TV program was a typical program of interviews. We were three people: myself as conductor and the other two accompanied me taking turns in each block. Now I conduct the program as usual but there is also a table with three people from the foundation and a professional journalist. The program is very dynamic. In each program we have two guests and the interviews are no longer than five minutes each; there is a lot of visual material for support. The five people work with open microphones, which is not easy but it allow us to interrupt each other.
Unfortunately the economic crisis in Argentina has not allowed us to obtain direct economic benefits with this program.
2) Alejandro Chafuen: Which public policy issues have enough market to sell?
Gerardo Bongiovanni: We come out live on TV every Wednesday. We make use of Wednesdays to synchronize all the heavy activity of the foundation. We invite some important economist and that has great repercussion. If there is a personality especially attractive we sometimes ask for extra sponsorships for that particular program. In 1995 we did very well with a special broadcast with Mario Vargas Llosa.
3) Gabriel Salvia (Fundación Atlas del Sur, Argentina): I would like to ask about a problem we are facing in our foundation with events, conferences, seminars, etc. What can you offer to corporations in exchange for their sponsorship?
Fabiana Suárez: Sometimes I am the one who has to write the letters to corporate executives to seek support. It is very important to keep in mind that entrepreneurs are not interested in losing or spending time in things not related to the sales of their products or services. This means that everything has to be given to them in a simple language, offering, for example: the possibility of including their logo in the programs of the event; sending promoters the day of the event; to include an insert in the invitation that the foundation sends. We send them everything thought about, mere solutions???. We go and pick up the posters, we explain to them where the promoters can place themselves, etc. This is a task that has nothing to with the research or the work of the foundation, but sometimes we have to play the role of a marketing agency also, being creative.
It is also important to work with exchange and reciprocity: foundations use many air tickets, bedrooms in hotels for visiting speakers and restaurants. A short time ago we closed an exchange operation for U$D 700 per month with a local airline. In the letter we offer them the possibility of exchange of their logotypes in the invitations, etc.
Gerardo Bongiovanni: We make about fifteen events each month. Obviously, we don´t ask for money for every event, but for about three per month. Every time we have a big international event we finance it by means of big international companies. Gabriel Salvia’s question is very important. We had problems to systematize what we offered the sponsors. We even still have problems trying to show them what we have given them. Fabiana makes an excellent job with the Instituto del Consumidor, because she takes many pictures and rescues details that are important for the continuity of the auspice. This way is how we give the details of what we offer them: the presence of the enterprise in all the publicities of the event, in radio, TV and newspapers; seats free of charges in the corresponding seminar (proportional to the magnitude of the event), some private meal, the possibility of distributing some material or place posters in the auditorium. Many of these enterprises are interested in the data base of the people who attended the event. It is then of vital importance to give them, within a few days, a file with everything that was published in the newspapers, the leaflets, the video of the event, things of no significant cost for the institute in comparison to the money contributed by the sponsor.
4) Question: Regarding the study of the modernization of the State about which you spoke this morning, what characteristics does it have? How did you carry it out?
Cristián Larroulet: I will take advantage of your question to show a little bit our perspective. We, opposite to what Fundación Libertad does, do few additional products. We do many written documents and much work related to them. We finance the institution with the concept of discrimination of prices according to the size of the company. In the case of fundraising there are products that can be separated and charged for additionally – all the economic products: our report about the economic juncture and the talks specifically directed for few enterprises. It is fundraising by programs. We sell these products to medium-sized enterprises through the director of our economic program who, after having received a fellowship by us to be trained in the United States, acquired much prestige and his function with us is consulting. He delivers his program and has already about 50 clients, some of whom receive talks apart from the rest.
The other thing that we do is the legislative work which we sell separately. We have a document called Reseña Legislativa that is acquired by groups of lawyers. It is useful to them for having a good tracking of what happens in Congress and, at the same time, it makes it easier for them to prepare the legislative reports they do for enterprises once the law has been approved. In this sense they also support themselves on our experts. Consider that Chile has recently passed the Ley de Reforma Laboral (Labor Reform Law) that was discussed in Congress during two years. I had a lawyer following the evolution of this law during two years. I remember a very interesting anecdote: In Chile the House of Commons and Senators have a channel that transmits by cable and I remember that one night I was at home looking at the channel of the House of Commons. At that moment the Labor Committee was in discussion and both the president of the committee and the representative of the Executive Power were present. I then showed it to my family and asked them who that deputy was. At home nobody recognized him. It was the person we had in the committee. It was 11:00 p.m. in Congress. This person is an enormous asset for us and could be invited to participate in television panels or give conferences on the matter. Another example: one of the most important things that we do is the tracking of the national budget in detail. In the Committee of Congress that follows the issue we have five people that go to Congress during one month and compensate Finance officials. These people know everything in detail and can perfectly be sold.
I believe that all these endeavors could be reproduced and, in fact, we are thinking in doing so.
Another thing that we often do is to make use of our figures. We organize meals at the house of the president of our board and we organize breakfasts with Hernán Büchi once a month with our bigger donors. This means that we not only sell our products but that we also do so with our potential figures. Finally, we have other programs, not so profitable, which are those related to social issues: education, poverty, etc. In these cases we associate with others in order to finance workshops and debates in this area, like universities, unions, foreign institutions, etc.
You have asked about the case of the Centro de Estudios Públicos, which is the oldest institute in Chile. It was born in 1980 and has an excellent webpage (www.cepchile.cl). It is far more academic than we are and sells a specific research project. It is a proposal of modernization of the State. This proposal is made up of two parts: one related to productive issues and the financing of politics, and the second part related to the top public directors and their professionalization. They thus made up a commission of 20 personalities of different political parties and named an Executive Director as researcher. They offered it to some 30 companies with fees between U$D 5000 and 10,000 and based on this they started the research, which was taken to press and introduced into the public agenda which gave the institute an excellent spreding.
In general terms we could think of a proposal supporting the concept of e-government, for example. Then the question is to identify companies which may be interested in supporting it: Microsoft Corporation, IBM, AT&T and other companies specialized in technology. If we deal with a matter such as corruption, we could propose the design of institutions which may help combat the corrupt. One has to be creative and in this case we could link it to the Ministerio de Obras Públicas (Ministry of Public Works) or to the Ministerio de la Vivienda (Ministry of Housing). Then multiple companies would be interested in elevating the level of integrity. Construction companies could contribute good funds to this cause.
Alejandro Chafuen: Regarding what Fabiana said in the case of exchange for products and services; take for example, a family that manages a wine cellar. It is more feasible that they will contribute money after a certain time of sending us wine bottles for free for our events. This is very convenient even if we have to pay part of the costs (uncorking). In the long run many relatives end up being donors of the foundation.
Rocío Guijarro: I would like to contribute with the experience of CEDICE. Our institution is divided into three areas: extension, formation and information. Each area has its own products. We started the institute with the popularization of books of Unión Editorial of Madrid. At that time it was the only place where books of the Austrian School were available in Spanish. After that we decided that we should put somewhat more dedication to formation and information. As publications of our own we have editions of monographs and the collection Venezuela Hoy (Venezuela Today). We have one or two series more, Cuadernos de Reflexión (Notebooks of Reflections) where we disclose a lot of material from our kindred institutes and Temas a Debatir (Issues to Debate) where we install important issues in public debate. We also make translations of relevant material produced by brother institutes like Manhattan Institute, and the course of economics for journalists, which has been a real success and has a “permanent” donor of the foundation. The last matter on which we have worked is the one of the local management of municipalities where we worked with a good quantity of mayors that would perhaps reach the level of national government.
We have tried to systematize everything. If we publish the book on local management or the books that we do together with Atlas network, like the project of the war against tobacco companies, then we organize an event with which we obtain money for formation in workshops at CEDICE.
We make big events with issues like the Gestión Local de Municipios (Local Management of Municipalities). Enterprises support us because they need to have mayors and town councilors as allies. We have achieved an enterprise such as Price Waterhouse to certify our balance sheet annually for free. We have a lawyer´s office that gives us legal advice and they have also authorized us to distribute free of charge the analysis of public issues that they produce.
We have special projects with foreign institutions like the Centro Internacional para la Empresa Privada (CIPE, International Center for Private Enterprise) with which we produce the bulletin Tendencias Legislativas (Legislative Tendencies) where we do a cost-benefit analysis of the new laws. Today we are concentrated in the new Ley de Tierras (Land Law) which our President has decided to modify in only one day with its consequent drastic results: assault of private property rights. Together with Manhattan Institute we have an educational program through which we disclose the creation of charter schools and have received the support of Tinker Foundation.
Other foundations help us as a guides as to how these projects should be carried out. We do not need to invent anything. Foundation Center has a great amount of material about this.
For example, Liberty Fund has given us the possibility of meeting very valuable people and this opened the doors for us to very important donors. Freedom Project, administered by Atlas, is also a good means of forming people and spreading our ideas. We permanently exchange speakers with other institutes like the ones of Chile and Argentina.
Alejandro Chafuen: The way Liberty Fund operates is interesting. They are an operative foundation, that is, they don´t give donations but organize events with fifteen people and they pay the organizer very well. They cover all the costs of a two day debating event on philosophical issues related to the idea of freedom. The secret to be able to present proposals to them is having participated in some of their events. It would be convenient for you to be included in Liberty Fund listings. Their Vice-President and main academic figure is Emilio Pacheco, a Hispano-American who may invite you to some of his events. The idea is to go to them, participate and present proposals one year in advance. Liberty Fund also controls a foundation called Goodrich Foundation that makes donations but only now are they starting to consider foreign institutes.
Does anyone of you have a systematized way to decide the overhead operative expenses these projects are going to generate before putting them into practice?
Rocío Guijarro: We try to make an annual plan, something that is not very easy to do in Venezuela due to its instability. For example, after the terrorist attacks of September 11 we knew that many enterprises would be anxious to know what the reaction of the economy would be. We organized a breakfast for institutional members and potential donors and entitled it “Terrorismo e Impacto Económico” (Terrorism and Economic Impact). It was a private event, without the presence of the press, and we invited three experts: in petroleum, in political analysis and in economics, to talk to us about their views. These events cannot be planned with too much anticipation and they start appearing as public debate evolves.
Gerardo Bongiovanni: Foundations with a great variety of programs and activities find it very difficult to calculate these costs, but it is something absolutely important. In the past two years we have been trying to individualize the costs in each program. To set an example: what our telephone cost in researches is, what it is in the field of courses and conferences, etc. We have a standardized budget for each type of seminar, but it´s not easy because sometimes one carries out projects showing a deficit in matters that are not of vital importance.
The same building that helped us so much with our image complicated the financing of the different activities.
Cristián Larroulet: We have a centralized budget but as time went by we have been putting in detail the costs of each program. We know which program we have shows a deficit.
It is very important to define aims for each researcher and not only at the level of programs in order to be able to compare the costs of the activities between themselves and allocate our resources efficiently. This allows us to evaluate at the end of the year the percentage of fulfillment of each one in our team. For example, the person we have in charge for the disclosure to the press of the economic part of one work manages one third of the communications with the media.
Rocío Guijarro: We have our budget clearly separated, 15% of the incomes we obtain is assigned to operative expenses.
Comment: We obtained a free space in an open channel. It was not at a very popular time, but it was useful. At first we obtained annually U$D 5000 - 6000 in auspices. Today our incomes from auspices have decreased to U$D 2000. The TV channel has offered to become associates, including some of their researchers and to help us in the search of new auspices. We are considering the proposal because, although we know that it is convenient for us from the financial point of view, we run the risk of ending up communicating different ideas.
Question: Journalists take us very much into account but even though we outstand every day more in the media we have a smaller influence in the government. This means that our good times coincide with our least spreading in the media. Therefore, sometimes everything depends on how well communication with public officers is managed and avoiding straight forward criticism by them in the press. Guatemala is a country where people do not watch a TV program of one hour but where many people listen to the radio. I would like you to share with us your experiences in radio.
Cristián Larroulet: Our initial idea was to be not so public people, but as time went by we realized that if an issue was not in the public agenda of congressmen we were not taken into account. This does not mean that you are in competition with congressmen. Very seldom do we go out to give out details; we usually talk about the general issue. We try to associate with congressmen, to support them in silence. This is different in the case of the Executive Power. If one believes one can have an influence on him and perceives certain level of receptiveness, one should try to conspire with him, making a private association with him. I am convinced, for example, that we are very helpful to the Ministro de Hacienda (Minister of Finance) of Chile. He might argue, sometimes even protest, but in the end we are his partners, because we are the ones who make him notice permanently that public expenses are increasing too much. This happens because in his environment they are telling him all the time that the expenses are not enough. Then a tacit agreement is made to work together.
If in a certain area there are no options other than to directly criticize, it should be done. This means that sometimes spaces for collaboration come up, but sometimes they do not, but in both cases we are fulfilling our role adequately.
Gerardo Bongiovanni: Radio is an important instrument in our countries and it is, obviously, much more simple than television. We were so much involved in radio that when we moved on to television we had trouble to adapt to it. In radio, it is easy to create some sort of economic or political weekly account and it has the advantage that one can have a telephone conversation with outstanding national and international personalities. I have encouraged the institutes of our network of foundations to start their journalistic work in the radio and many of them have done so successfully.
Question and Comment by Elías Santana: Is it better to have a program of our own or to influence the most successful communicators? Once a program has a very marked ideological sign, what possibilities does it have of influencing the audience? My professional experience is as a member of CEDICE since the 90´s and form part of a civil association that goes further. At lunch we were making comments about the different tools we have to influence citizens, who can defeat journalists, academics, sponsors and decision makers. Since electors are those who place the rulers in our governments, I believe that citizen movements are very important. Nonprofit organizations could be more than mere groups that think differently, they should move on to be institutes more related with the people on the street.
I make a professional program and people listen to a conductor who has activities in civil associations. That means that people do not listen to a program sponsored by an institute and that allows us to aim at fundraising activities. Rocío sends us all her material and we use it very frequently in our program, but the program is not CEDICE’s but an autonomous and objective one.
Our country is not a country in a normal situation. Our strategy for fundraising cannot be the same as the one of Fundación Libertad located in a country which is consolidating reforms. We defend freedom of choice but we do not work in an academic forum, we collect signatures instead.
Alejandro Chafuen: 95% of the work of Fundación Libertad is marketable at any time.
Fabiana Suárez: Radio and TV programs produced by different institutes depend on their individual strategy. In the case of Fundación Libertad, Gerardo Bongiovanni became a journalist; people know him well and perhaps do not remember much the foundation. His personality has given him prestige and his is been taken very seriously into account. In the case of smaller institutes it is more important to become a columnist in certain programs and to have certain open-mindedness to be able to enter any medium and try to influence.
Regarding the civic movements, it always depends of the size of the institutes. At Fundación Libertad we relate with people who in turn are related with the citizens. In my particular case, there is an entity called Ejercicio Ciudadano (Citizen Exercise) that performs a very interesting task. Months before any election they publish a booklet with the background of each candidate: those with a vocation for service, what their wealth is and how it varied in time, etc. Many times we lend them our channel for them to spread their work.
Comment: As from some time ago our institutes are faced with different situations. There are specific programs which we consider to be really important for the juncture, for establishing a clear difference with the guerrilla in Colombia, the San Pablo Forum or Hugo Chávez. When one tries to communicate these ideas there is fear to contribute funds for these endeavors. The fact is that there is an enormous polarization of ideas in the country.
Alejandro Chafuen: In the United States, all the endeavors for having TV programs managed by institutes have failed. The successful programs ended up with their directors making their own programs. Rush Limbaugh worked during many years in programs of small audience and he suddenly became a millionaire as the main spokesman of market economy in the United States. A few years ago he created an ideological TV channel called Empower Network which was a failure because he used the rules of institutes instead of those of the entertainment market. Today only Hoover Institution of Stanford University has a program in the public chain of TV where they acquire half an hour. During many years the National Center for Policy Analysis produced debates on issues of public policies. Francisco de Santibáñez has recently made a research on the opinion journals of the United States. Some of them began with an institute, like Reason Magazine of Reason Foundation. Almost all of them give losses, but what most institutes do, like Cato Institute, is to work in different issues of public policies and spread them in the boring journals of the economists, in radio programs when they are invited, in a collection of cassettes, etc. This is how they sell the same product in different markets. One needs to have seals for this, that is, programs that one improves year after year.
Cristián Larroulet: In the only experience that Libertad y Desarrollo had in radio and television we lost a lot of money, so I would like to ratify what Alejandro Chafuen says. A great ability is needed in this field and I do not believe that most of us have it. I do not believe us to be a very good Don Francisco (a famous TV conductor). The matter of packets is very important. We can often pack the same product in different instruments. Many people think that they need to have a team of an enormous amount of people to do the work that we do and this is not so. The key issue is to put the same product in different places. We have journals that aim at about a thousand people, who like to feel as part of the club. In these journals we only choose material from the one we published during the month and we publish it again there.
Jorge Salaverry (Nicaragua): Rocío Guijarro always asks me if I have already given a name to the institute, and I still have not done so. The idea of starting an institute arose when Diario La Prensa in Nicaragua asked me to become a member of its editorial council and to write for them half of their editorials every month. I remember that Carlos Ball told me that it was an excellent idea and that perhaps it would have more impact than an institute. I accepted the proposal of La Prensa but asked them to be able to also write one weekly column signed with my first and last name. I had the previous experience of writing the daily editorials of Diario La Tribuna; everybody said how well written they were but nobody knew who I was. In La Prensa I will have the possibility of signing everything that is mine and this has opened more opportunities for me: moving into radio and TV. In TV I have a program where I come out at least twice a week. During these elections, where Enrique Bolaños fortunately finally won, I had many struggles. Some channels have asked me stay with them making weekly commentaries. This makes it easier for me to link these activities in the format of an institute. Today I am known as the one who presents liberal and market ideas and that is because there is no institute. The only NGO’s that exist today introduce themselves as organizations which will solve the issue of poverty but which, in fact, perpetuate it.
Therefore, I do nott know if it is always reasonable to have a radio or TV program of our own, but what is fundamental is for somebody of the institute to have presence in radio and TV, since these are the media that most reach the people. In Nicaragua, at least, people tend to read very little but they listen to the radio and watch TV very much. (Shortly after, Jorge Salaverry was appointed ambassador in Spain and the institute did not prosper).
Question: All these reports always renew our energies to keep on fighting for ideas. An issue which worries me, due to the poor economic situation that most of our countries are enduring, is that the media is blaming the economic opening of our countries for the disaster and thus spread little our points of view on these matters. On the contrary, they try to convince our societies of the opposite. Press is very biased in these aspects. The small spreading of our thoughts also contributes to the fact that society is considering that this is a sign of the failure of market economy. Unfortunately, businessmen themselves are partly responsible for not having the adequate means for spreading ideas since, when a sensationalist medium comes out, that is where they place more publicity, thus enlivening it. On the other hand, almost all serious media which spread our thoughts have little success in our countries, and newspapers like El Mundo in Bolivia, end up being those of smaller copy edition even though it is the most reliable one, spreading principles and not interests. What do you think about this situation in our countries?
Gerardo Bongiovanni: In Argentina and maybe in other countries too, several things happen with the media. The first one, as Jack Sweeney was telling us today at midday, is that journalists are usually left-wing people. In Argentina in 1995, when former President Menem was re-elected, Foundation Konrad Adenauer made a survey among them a few days before the elections. You can imagine the amount of people that this endeavor required. 80% of them had the intention of voting for the Radical Party and only 5% had the intention of voting for Carlos Menem. Menem finally obtained 52% of the votes in this election, showing the difference between the general line of thought and the one of the fourth power in Argentina, something that I believe also happens in other countries. The second thing is the enormous difference that exists between the thinking and the acting of the owners of the media and the journalists that work in them. There are many cases of owners of media who share our ideas but when one analyses the editorial line of this medium one realizes that it has absolutely no coincidence whatsoever. In countries such as Argentina there is a third problem which refers to how a medium and its journalists are linked economically. I had to explain to David Asman, former Chief of the column of The Americas of Wall Street Journal in a seminar in Indianapolis where I was invited by Atlas Economic Research Foundation, that in Argentina almost all journalists market their own publicity. For Asman (today a conductor of a program in Fox Chain), this was unacceptable.
So there are various things with which we have to live together. In Argentina there are some media which are closer to our ideas, specially the newspapers on the economy.
Alejandro Chafuen: It is sometimes a juncture issue. In the United States and in England sensationalist analysts, of sometimes smaller media, tend to be more conservative. In Argentina, Radio Colonia (which transmitted from that small Uruguayan city) had a high rating and was a medium, at that time, which was the only one that gave liberal news against Peronism. There is no general rule. We could only say that in our countries the majority of formal journalists who studied in universities tend to be more left-wing than the rest. On the other hand, in the United States, the opposite thing happens, since the most traditional media do not like the most sensationalist programs, which tend to be more liberal. In television, O´Reilly has become number one in the night segment, beating Larry King. In radio, Rush Limbaugh is number one. Many times we create radio or TV programs which are somewhat boring but ideal for hermits, people who enjoy reading in solitude. The famous newspaper La Prensa in Argentina, which was the great champion of freedom, began to quickly lose market and ended up losing the leadership, and almost disappearing. Therefore, I do not know if a general rule for these matters exists.
Gerardo Bongiovanni: In Argentina something very strange happened lately. A new group appeared headed by a center-right journalist with a rather dubious background. This is the case of Daniel Haddad, who bought a broadcasting radio station in an also rather showy way. The fact is that he is a very intelligent person, of liberal ideas in economics and he started to make a style of radio broadcasting very different from the usual ones. The average journalist in Argentina tries to use a language politically correct but Haddad started by having a very different discourse. From the very first moment he was little flexible with delinquents, very conservative from the social point of view, clearly intolerant with the indigent who occupied abandoned houses, calling them thieves without contemplation whatsoever. In a few months it became the first radio station in Argentina, surpassing the great radio stations of multimedia like Radio Mitre of the Clarín group and Radio Continental which belongs to Telefónica of Spain. Sometimes, when products are prepared beyond any precedent, one satisfies what people expect. Haddad recently launched a TV program at midnight with an incredible rating.
Cristián Larroulet: As a different antecedent of what we are talking about, last year we started a different program fruit of the experience of Fraser Institute and a seminar that Atlas Economic Research Foundation had organized about the media. We began a program where we criticized the news of the state channel. Our endeavor culminated with a report called Agenda Periodística (Journalist Agenda). We have found some partisan bias against market economy. It is a new product to which we give little publicity but known to the channel. As a result we have achieved some moderation on their part and that they exchange information with us. At some point we will move on to a more public and systematic stage.
As Alejandro Chafuen said, we also make our opinion polls. In Chile, the Centro de Estudios Públicos (CEP, Center for Public Studies) has gained much prestige in this field and has national and international financing for this. It is a new product for us, certainly a very expensive one, but we look for those groups of businessmen interested in somebody reliable and systematic to make a permanent follow-up of public opinion. We do a lot of follow-up on economic and political issues: expectations, consumer confidence, unemployment, and others.
Alejandro Chafuen: It is an idea that we may all use. Pollsters sometimes sell specific questions within great surveys. Many donors cannot appear paying for surveys because they would lose credibility. To give some examples: Pfizer Inc. would not sponsor surveys on health issues nor would Exxon pay for surveys on environmental issues. Institutes may be able to sell to these enterprises partial results of their surveys, results of surveys financed by you something that would, at the same time, place you in the agendas of the media. Journalists are very much attracted by whatever is new and easy to report. That 30% of Chileans may think that economy is going to improve or to worsen is news. It is no news speaking about Ludwing von Mises, Friedrich von Hayek, or about other names they cannot even pronounce. When the name of Libertad and Desarrollo is linked to a survey, more credibility is given to its data and donors also see this.
Cristián Larroulet: Something which is also important is to provide our subscribers with better services. They value enormously this information. Our surveys are private ones and that gives the donors the feeling of belonging to the club, as Gerardo Bongiovanni was telling us earlier.
Gerardo Bongiovanni: We also make surveys and about two years ago something very interesting came up to our mind which shows how to sell this product. We were preparing a study on the three provinces that make up the central region of Argentina because we were interested in the issue of jurisdictional policies. We knew that some cities did not fulfill the requirement of having at least 10,000 inhabitants, which is what Argentine legislation requires in order to have some political representation. The benefit of faking these minor populations as cities was that they would thus count with an enormous political infrastructure generating a consequent public expense. We then started to study the demographic structure of the region through a permanent study of homes. When we started to spread this information among enterprises there was a remarkable repercussion and most of them asked us for some further development of the results, offering us much money for them. Everything originated from a work in public policies that we were carrying out. For example, we detected that Rosario city, which has 1,500,000 inhabitants, was losing some inhabitants in some areas and increasing them in others. This information is enormously valuable for some enterprises, like the case of supermarket chains.
Gabriel Salvia: Two comments about the work with journalists. Our principal program is aimed to journalism students and to communication experts. Based on excellent surveys performed by Fundación Konrad Adenauer and other institutes we knew that journalists were the ones studying ideas and those who would be spreading principles in the future. Following the famous principle that ‘we should not always invent, but copy instead’, we replicated the idea of a seminar which the Institute for Humane Studies (IHS, George Mason University) organizes every year. To that idea of teaching the theory of economic politics we added the idea of teaching economic journalism. Today many people enter our webpage introducing the phrase ‘economic journalism’ in the searchers. This is useful for subscribers, for them to have the certainty that it is not a matter of brainwashing. We offer a course where important economic journalists participate and we grant scholarships in the United States. It is our most successful program and we see how our former students help us today in the spreading of ideas in the media. Talking with José Luis Tapia from Perú, he mentioned the case of a young journalist who interviewed Rocío Guijarro and Dora de Ampuero, and who later continued promoting the work of kindred foundations. Another idea is to spread more the idea of economic journalism. Until recently, New York Times had about twenty people working in economic journalism, now it has a hundred and twenty doing so. In Argentina there are today specialized media, like Revista Negocios, but until recently, these options did not exist. In the case of television we considered the following: in Buenos Aires we saw that many people had access to TV by cable so we decided to have a channel ourselves. We analyzed the costs and saw that we needed about U$D 5000 per month, with which the possibilities were somewhat limited since we were such a small foundation. We then thought about including videos in our conferences which makes them more entertaining and dynamic. We made a strategic alliance with a trustworthy journalist and we now make specials for television. These productions are occasional and within our possibilities. It implies nothing more than getting hold of a camera and making a good edition of each TV emission. This journalist travels a lot, about two weeks each month, so we make use of those spaces to emit our material. We obviously also send the material to our principal donors. It is also important for us to introduce our economists to the media so that they may be invited to other programs and thus compete with other foundations of a larger size in Buenos Aires.
Alejandro Chafuen: Many of those who have done these courses with journalists, like you, Gabriel, or Rocío Guijarro, have already transformed them into what is known as a seal. The things that we do circumstantially are not easy to sell. Nobody has been able to structure the production of liberal ideas through videos or television with the exception of John Stossel in ABC television chain.
Comment: These two projects which you have described are innovations but represent the great temptation of trying to center our fundraising in them. These products work in the case of the ‘lone rangers’, where 90% of the work of the foundation is carried out by only one person. I could mention country by country who does that. I am not saying that it is not valid.
Question: Something that we also do is to recycle studies, packing them in a different manner and into something which has great acceptance. I would like Cristián Larroulet to tell us something about the fundraising strategy for his new building.
Cristián Larroulet: The point which you mentioned before is very valuable, especially for new institutes, since the issues of debate in our countries are always the same ones and they are absolutely cyclical. For example, in Chile we are now starting to debate about the indigenous issue, because it is Summer-time, and people travel to the South, where this issue is very troublesome and the meeting of the United Nations starts at this time of the year. Environmental issues start in April, when Santiago is covered by smog and everybody pays attention to this matter. There is nothing new so we refer our new researchers to things we have published years before and tell them to update the graphics.
Alejandro Chafuen: The physical development of an organization, as is the case of buying a new building, is a fundamental issue of debate in the boards of institutes throughout the world. You could perhaps put it together with the question which refers to the beneficiaries of legacies and inheritances. In Argentina there are today two well-known businessmen who are over 70 years old, Gregorio Pérez Companc and Norberto Priú. We have all learnt from Heritage Foundation, which now has a club more important than President´s Club and which many of us are going to copy, called Legacy Club. When one donates more than U$D 1000 to Heritage, one is invited to become a member of the club and is invited to all the meetings with those who donate more than U$D 1000. When someone donates in honor of their children or grandchildren, or leaves a legacy, he becomes a member of Legacy Club. It is important to have members in the board of directors dedicated to this activity of creating and leading these clubs. In one of these meetings the grand-daughter of one of these elderly people, who donated part of a building, was asked to speak. In this way one consolidates the relation with an entire family. The question about whether it is better spending the money in new studies or in a new building is always reason for a strong debate and I would like you to develop the issue somewhat more.
Cristián Larroulet: This is similar to the discussion of a married couple, where men are more in favor of renting a house, because all economic analyses show that is not convenient to acquire one, but where the ladies, instead, are always in favor of buying them. If the institute commits itself to make good fundraising for the house it is showing the market a powerful sign of commitment. This may then convince those donors who have marginal doubts as to where to place their money. They see this commitment as a clear signal that the people directing the institute are thinking in the long run.
We started in a rented office and two years later we moved into the house we have today, which is a house bought after a strong financing campaign. Today it is too small for us so we decided to buy a bigger one and in a better location. We also have the resources to pay for an important amount of the house and take a credit for the rest of it. We were in this process when we met a donor who offered us a new house, which had the characteristics we wanted and which we would pay for with the money we had and with a leasing at an interest of 3.5% for the rest of it. This is a good way of obtaining new resources and of showing the commitment of the institution.
Gerardo Bongiovanni: Until October 1999 we were in a 170 square meters office and we were looking for a 300 square meters one. We ended up moving into a building of 2700 square meters. It was a rare case. The owner called me and showed me the building and told me that he wanted to do something with it, something to give it content. I went to the foundation, proposed the idea and everybody considered it a lunacy. At that time I was not at all convinced about the issue and we spent six months in negotiations. We already had in mind the idea of creating a business school, but the idea of moving to the building did not fully convince us. Finally, after six months, this person called me and asked me for a reply. I organized a dinner in a very stylish place in the city where we sat to talk and I had to inform him that we would not do the transaction, something which annoyed this businessman very much and he cut his relation with us. To all this, we launched a Bachelor’s Degree in Business Administration by means of the Universidad Católica, and a person who is now the director of the Centro de Estudios y Capacitación Empresaria (CeyCe). Our school of business gathered 40 students for the Bachelor’s Degree in two weeks, only through a telephone campaign. This made a great impact on us and we started to think about the possibilities it gave us. At that time there was no Bachelor’s Degree in Economy and Business Administration in Rosario. In February 1999 we reassumed the negotiations and we told the owner of the building that as it was then it was not useful for our purposes and that some improvements had to be made. We told him about the need for a new elevator and this person invested U$D 300,000 in improvements. He modified the building very much and even paid for the equipment. We signed an agreement for ten years with an option to five years more, where we pay a symbolic rent which is a small percentage of the net result of what our school of business generates. That means that the rental is variable and that it depends on the success of CeyCe. I believe that in about two years from now it will be an important amount of money, but at the beginning we did not want to assume an elevated cost.
I honestly hope this to be successful both for him and for us. He is obviously a millionaire who is looking for enjoyable activities to carry out. Today he is very much related to our foundation and is giving us much support in our work.
This man is in the oil business and when we used to pass by the building we considered it a strange place. I remember that when we moved in we organized an inaugural cocktail and delivered 1100 invitations. We could fit 600 standing people, only in the living room of this building. I remember feeling somewhat desperate and to start calling people who usually organize huge events like the Stock Exchange of Rosario. They told me to estimate an attendance of 50% of those who had received the invitation. It was a complete success, 950 people attended and I consider that many of them did so because they wanted to see the building. Many walked round and watched it and the impact was very great. We hope that, with time, this building will become a legacy. In Argentina there have recently been three important legacies: the first one, of U$D 80 millions to Universidad Austral by Pérez Companc, the second one is the case of a donation of U$D 11 million by a banker to Universidad Di Tella, with a small conditioning which has made the family to finally take it away and, finally, U$D 5 millions to Alberto Benegas Lynch (Jr.) to create Fundación von Hayek. I hope that with these antecedents more cases will come up and that some may benefit us.
Alejandro Chafuen: In the video you showed you promote the building as ‘a small building as a tool to reach your potential’. A perfect model for those of you who decide to leave your homes, enlarge your offices or have a building of your own. A very good argument to be used with your donors is that it is impossible for you to reach the 100% potential of the institute due to the physical restrictions of your offices. In Washington DC some historic houses have been donated to institutes. These gifts usually come with some restrictions regarding reforms, but donors sometimes prefer to make this type of legacy in perpetuity or for a period of years. You could perhaps get opportunities such as these in your cities.
Another mechanism for raising funds is by auctions. Junior Achievement in Argentina is directed by Eduardo Marty, a former fellow of Atlas Economic Research Foundation. They ask people to donate pieces of art or ask models, sportsmen or celebrities to accept to go out once with somebody. This is auctioned in their annual dinner. Fraser Institute of Canada has already started to do this with a variable success. At the end of the annual dinner a silent auction takes place and they obtain money in a very creative way.
The issue in this section is how to sell all these products we have been talking about. If you look at our webpage you will notice that each time there are more links to management tools. We are going to put some more in Spanish and one which we are going to include in the next days is a work done by one of our great donors about how to keep our clients always in mind. Due to professional deformations, because we are so fond of ideas, we often structure our products thinking that our clients are all intellectuals who think as we do about how to fight for our ideas in this world.
In some cases we have to differentiate our clients from our consumers. These terms are very often wrongly used as synonyms. I think that our clients are our donors, the wealthy people. In the United States there is the myth that people donate because they obtain tax-deductions. Statistics show that before tax deductions were put into practice, people in the United States and in England used to make more donations in proportion to their salaries than they do today. At the same time, more than half of the donations in the United States are made by people who are so poor that they cannot even take advantage of these tax-deductions. More than half of the U$D 161 million that are donated each year in the United States (2001) is donated by people of lower incomes. I am talking about wealthy people or millionaires, but many times it is actually about generous individuals who feel they need to do something to improve their country. Other typical donors are other foundations and nonprofit organizations. At Atlas we have organized seminars focused on the raising of funds in enterprises. This is an issue that in its own, would take us only one day to develop. On the other hand, we have the consumers of our products, those who Friedrich von Hayek called the ‘second hand dealers in ideas’, such as researchers, journalists, students, legislators, unionists, etc.
I would like to stress an issue very much related to psychology. We are all very different from one another. This morning we heard John von Kannon mentioning the word empathy. It is a strange word to liberals, as the word compassion is. One of these people who know very much about administration and marketing says that there are certain people who like to have their emotions touched and that we could define them as social or emotional people. Other people are colder, others are hermits and finally, we have the greedy ones, those in search of power. One should try to design different presentations of the products for each type of psychological profile. For example, the social and emotional ones are attracted by the idea of living in society, of talking with people and interacting with them. The hermit likes to read and study at his computer. The case of a typical university teacher of economics fits into the hermit profile. A 75 year old person, who is already thinking about his grandchildren and their growth, would generally fit into the social and emotional profile.
The typical liberal material is usually absolutely boring. Here I have a paper on management. If we analyze it, we will see that it has no pictures, no spaces in blank and is full of text. This is the typical work of our institutes. It is not a question of giving names, but most of our institutes have publications with excellent texts but where their covers are not attractive at all. This shows that they have no marketing advisors and that they are not interested in the design of their publications. Let us suppose that, because you run an institute focused on health economics, you define that your market is the one of doctors in Medicine. From the psychological point of view doctors are a very special type of people. Let us compare a cardiologist and a radiologist from the point of view of how they furnish their offices. Cardiologists tend to choose the red color to decorate their offices and radiologists tend to choose the blue color instead. This exercise can be done with many things. People feel attracted in a different manner by symbols such as shapes, words, looks, etc. One of the reasons for organizing this seminar was to stress the importance of establishing a personal relation with each person that is going to help us, and there is nothing that depends more on the culture of each one of us than the development of a personal relation, from spoken to non spoken language.
We are a very young industry; the average institute is about 13 years old. This is why we need to keep learning permanently. We can learn very much from cases like Fundación Libertad and Libertad y Desarrollo which have already surpassed the first 10 years of their life very successfully.
Cristián Larroulet: Once we have defined which enterprise we want to approach, we identify the person in the enterprise to be approached and then analyze how to make the approach. Sometimes we do it by means of a personal visit which many times has a high cost because usually we deal with very busy people and at other times we send a letter signed by the President of the Board of Directors. This last method may have a cost, which is a reduction of the amount received, but with time one may ask for an updating of higher amounts.
As Alejandro Chafuen well said, in these conversations one can define the profile of each person. For example, if the person who we are meeting with tells us that he is overburdened with paperwork we are not going to offer to send him about ten documents. If this person belongs to the social profile, one may offer him the possibility of a monthly meeting with a personality in economic matters or some seminar at the end of the year where the President of the Republic will be present.
The gratefulness by means of personal letters is fundamental. As Gerardo Bongiovanni was saying before, all the staff should be instructed. When subscribers call one should take note of what they are asking for, and we must make sure that they receive all the material and invitations we sent them.
Another important point: We are sometimes acquainted with the president of a company, and with nobody else in it. Since it often happens that the president leaves his job one should not depend on only one person. Therefore, once one has made contact with a company, one should analyze who are the second and third level executives and start inviting these people, building up in this way a long run relationship; otherwise, these changes of directors could weaken our relations. It is important to analyze what these people are interested in and send them relevant material. It is fundamental to personalize the relations with our clients. At the end of the year we send a personal letter to each of our donors signed by the president of our board of directors and by our CEO. In this letter we make a summary of the work of the institute, including private material which is not delivered to the press, such as an agreement with the Minister of Finance, about the incorporation of an issue in the new legislation on a certain matter. This is a type of more intimate gratefulness that we give for the support we received.
The presence in press is fundamental. As the success of a company is seen because its balance sheets are in blue, the success of an institute of public policies is measured by the frequency with which it is named in the most reliable media. In the case of Chile, to have an editorial of El Mercurio state “The study of Libertad y Desarrollo says…” is of fundamental importance.
We spread our studies very much. We have a data base of the 3000 most influential people in Chile and every week we send a report about our work to each one of them. We have another data base of 300 people related to specific issues to whom we send monthly material focused on those issues.
Something which we have lately put into practice is workshops. We became aware that we were somewhat self-centered, so we invited experts with broader views in different areas of public policies to these workshops. We obviously do not invite to these workshops a leader of a socialist party, but an academic person really involved in public discussion, could be invited although he may not completely share our ideas. Thus we have, for example, workshops on macroeconomics, on politics, on juridical or environmental issues and on energy regulations. In this way we have gathered about 120 academics who are all the time debating on these issues, we have managed to increase our area of influence and have shown our capacity of influencing. Last week, for example, we had a workshop on regulations and we presented a work on deregulation to enterprises which are suppliers of drinking water. The representative of the top main regulatory entity and all the managers of enterprises related to the sector attended the workshop. It could take these people a month to try to meet with this authority but in our workshop they had the chance of sharing a coffee with him and to sit and debate face to face.
Question: What will happen to the institute when the conservatives in Chile win the elections?
I consider that you do not only have an important academic potential but that you also have an important political potential. All these personalities of Libertad y Desarrollo have shown in the past a great ability to formulate effective policies. If conservatives win the elections many of them could become interested in going back to their activities with government.
Cristián Larroulet: From the very first day we defined our institute as a long-term project. The other day I was telling you about our endowment and the building as a way of showing our commitment to the donors. Each year we send people abroad for training, whereby we show great commitment. Obviously, if some conservative government would win the elections it would certainly capture great part of our staff. However, I feel optimistic about this, since our foundation has a team of many people who have been working with us since the very beginning. They all come from the times of the military model era, and many of them will not be willing to return to what working for the government implies. They may perhaps move on to the private sector or to consulting agencies, for example. But working for the government implies to work 16 hours a day earning a salary equivalent to one third of what they are earning today. That is why I do not think they would be willing to do so although there is a generation of younger people which may feel attracted to work with the government. It is also our total responsibility to make sure that our institution will sustain itself in time. In Chile we have a good experience in these issues because the present government had various foundations making a strong economical opposition during the military period. When they won the elections they made what to me was a great mistake: they dismantled these institutes which depended 100% on foreign financing. This was a great lesson for us because today they are having enormous difficulties trying to reassemble these institutes.
Heritage Foundation is a clear example of this. Many of its researchers leave to go to work with the government, but the institute maintains its structures and its fundamental teams in action.
In Chile many people believe that once a party of a similar sign as ours comes into government we will disappear but I think that in that case we would have the possibility of growing more instead. Heritage Foundation was much more successful during republican governments because it had sold its influence to that administration.
Jorge Salaverry: In my country, where we have had eleven post-Sandinistas years whatever we said had to sound very different. There have been radical changes in this matter. It was said that in the past elections there could have been changes towards the left, but this was not so. These are good news not only for Nicaragua but for all Latin America. The fact is that people already had the opportunity of tasting the evils of radical leftist governments.
To the effects of creating a new institute in Nicaragua I believe that today we have a superb opportunity, especially to convince those who have the possibility of supporting us with resources. What we are facing is a true window of opportunities. Having avoided the candidate Daniel Ortega we have five years ahead of us of a liberal government. If we do nothing to try to improve the quality of life of our people then yes, we will run the risk of losing the next election and I believe this is a good argument to present to our potential donors. I would like to know what you think about this.
Cristián Larroulet: The support enterprises provide to foundations is decreasing in Chile today, but in the case of Libertad y Desarrollo this decrease is much smaller than the average one because the expectations about our institute are higher. Everyone knows that our institution would be very influential if a new conservative government were to come into power.
Alejandro Chafuen: Atlas Economic Research Foundation found it very difficult to work in countries where there were wars and violence. Today, in the United States, institutes are living something similar after the terrorist attacks of September 11. There are many study centers which have no products related to international defense issues and which sometimes try to get into a sector where they have no experience, running the risk of trying to become what they are not.
For those who manage foundations the temptation to begin projects which would attract funds for issues that are in fashion but which, perhaps, may not be in tune with the tradition of the institute, and which could ruin its reputation. The opposite situation is to be little sensitive to the changes that take place in a country. My recommendation under these circumstances is that some members of the boards, perhaps together with some members of the staff, create a new organization, as what was done in Venezuela in order to protect civil society. This will be acknowledged in the long run. One of the reasons why we are working so much on the issue of the rule of law and the issue of security is because without them it is impossible to spread the benefits of market economy. In this task we must be very creative and find new methods for spreading our arguments.
Question: On the basis of these years of experience, what have you learnt from your competitors? What is it that you do and what is it that you do not do after having seen them as successes or failures in institutes with similar or different ideas to yours?
Cristián Larroulet: I think that there is nothing better than competition, so my reply is that everything has been useful. I will tell you an anecdote with respect to this. When we were starting the institute I received an invitation from the State Department of the United States. I asked to come to this country to go through foundations and I spent one month doing so, which helped me to learn about the differences and levels of competence that exist between them. Heritage Foundation is not the same as Cato Institute, nor to Brookings Institute or to American Enterprise Institute. In the end one always learns from observation and from trial and error. In the specific case of Chile an important lesson which we learnt from these institutes which have ideas opposite to ours is that they only depended on foreign financing and that this was the reason why they finally disappeared.
Something else which we learnt was the idea of training people. If one wants to have a good institute one must attract the best students and have a program for them, a space for them. There is no better incentive for this than the promise of some financing to be trained abroad, if they show enough commitment in exchange.
Gerardo Bongiovanni: Competition and copying are fundamental to us, even ephemeral competition, because when a foundation like ours acquires enough reliability it is because enough time has passed by. One learns from how other foundations present their programs and the details of their events and must pay much attention to the successes and the failures of others. There are even liberal entities in Argentina which were absolutely self-centered, projects nucleated around only one person; others were 100% doctrinaire and spent the time blaming businessmen, when instead one should learn how to explain to them what one wants to achieve. One has to learn to show persistence in what one does. I did not think that this was so important until a national deputy who lives in Rosario pointed it out to me, saying that he was very impressed that we were continuously keeping up our efforts. The fact is in Latin America many times foundations respond to specific projects, or to political or personal ones. International experience is very enriching; meetings like this one or the complementation with other foundations around the world are very important for institutes in their process of learning.
Rocío Guijarro: I also had the luck of counting with the support of the Department of State of the United States to visit that country during one month and visit foundations and see their marketing and fundraising methods, as was seen in the video presented by Alejandro Chafuen. In our case, instead of competing, we made alliances. Sometime ago we organized an event with Manhattan Institute and we shared some things with the American Chamber of Commerce in Venezuela which summoned a great amount of people. Key principles, as the defense of free enterprise, obviously helped us make allies in raising funds to cover the costs for the foreigners who would visit us. We permanently set aims and review them to evaluate how we are doing at fundraising. One of our competitive advantages is our bookstore and library specialized in economic current affairs. The teachers of economy send their students to do research work on issues such as globalization, liberalism and markets, and the students acquire the books in our library. There is no bookstore o library so specialized as ours in the country and that gives us a good niche for obtaining funds.
I would like Alejandro Chafuen to tell us about his marketing experience at Atlas Economic Research Foundation. He is the key person for capturing funds, mostly for our institutions. In the case of CEDICE, I used to do it on my own, but since two months ago we have hired a full-time professional exclusively dedicated to the development of a data base of the most important enterprises in the country and to make appointments for us to visit them. Up to now the results have been very positive and we have recently had new affiliations. It is also fundamental to focus on clients, permanently sending them material, so that they will take us into account. Today, even unions are our allies in sharing the defense for the right to deposit our own savings wherever we consider it to be best, journalists are allies because they realize that the lack of freedom and rule of law generates many inconveniences. Our founders, who are wealthy people, continue giving us support, and finally, we keep on attracting students. They are a fundamental objective for us and are, finally, the potential leaders.
Alejandro Chafuen: I was unable to leave behind my Latin American baggage so I make many of the mistakes that you make. The secret, as Cristián Larroulet says, is to copy, to learn what one doesn´t know. None of us studied how to be president of a nonprofit institution. When an institution reaches certain level of growth it knows that it has to pay for generosity and favors. If you make a favor to a university or to another nonprofit entity, sooner or later they will end up helping you. There are thousands of anecdotes about how we copy each other. Let us consider the case of products for clients with an emotional profile. What I am going to tell you I copied it from Heritage Foundation and, according to them. I somewhat improved the presentation and they will surely continue improving the details.
I went with my wife to an important event al Heritage and they took us a picture with a judge, who was the keynote speaker, and with the president of the foundation, Ed Feulner. Sometime later we received an enlarged copy with the signatures of these two personalities. My wife liked this gesture so much that she became a donor of the institution and plans to be one for a long time. What I did was to copy the idea for our foundation but we added a cardboard frame with the logotype of Atlas Economic Research Foundation and the name of the foundation. So now, when we have an important event we take a picture of the main donors with the star in turn and send it to them enlarged. I don´t know if this idea would work in Argentina, Chile or Guatemala but you should give it a try. At Atlas we try to respond generously the needs of those who work in the government, to researchers, journalists and students, but our strength is not this. We do not sell research, we ‘sell’ you. We ask for funds for the institutes we try to help and that is the reason why we deal with great donors, who are very loyal. Our work is different from yours. Another example: we have a donor who is one of the great specialists in initial public offerings. This man is single, he loves to talk about philosophy, is Buddhist and a great lover of freedom. I love to spend time with him but he asks me not to send him long written material and even less so, books. For this donor our effort is to maintain dialogue and communication so that he may keep trusting our task.
The majority of the successful institutes have publications exclusively dedicated to its donors. I don´t think that the majority of you have such products. Mr. Steven Forbes, for example, donates little money to institutes, but he generously donates his time instead. He owns a castle in Normandy and he sometimes lets institutes use it. These can invite other donors to the castle and that can bring them many benefits. Another one of our friends, very young, was one of the best navy seals of the United States Marine. This friend built one of the best training centers on defense. Together with Acton Institute we organized a week-end retreat for grandparents and grandchildren, and for parents and children, to make use of this center. Inviting donors to share experiences with their children and with other donors may seem to be something unrelated to the tasks of an institute, but it helps to fortify the relation with our donors. It is all about creativity in order to strengthen friendship and, at the same time, increase the circle of people who can help us in our noble cause. The difficulty is how to make happy all four types of consumers and clients.
It is also very difficult to balance the use of time. Many new institutes find it boring to do this type of things but, as you all know, resources do not come by as an art of magic. The case of Alberto Benegas Lynch (Jr.) in Argentina is a clear enough example of this. One sees today that he received an ideal donation, several millions of dollars, for his work in studies and in spreading ideas. That was a reward for a very creative work since he was the one who introduced the Master programs in Argentina, where he had to find people to teach Mathematics and hire Accountancy teachers, something which is not amusing at all.
Finally, it is important to differentiate between programs that provide us with resources and those which do not.
Cristián Larroulet: I would like to tell you about President´s Club, which I believe is something which could easily be put into practice. In our case we realized that about a dozen of our donors were people who contributed many resources and that had been supporting us for many years. Always with the fear that they would diminish their contributions, something that would affect us very much, we organized a very exclusive dinner at the house of the president of the board of directors of Libertad y Desarrollo. We invited some personalities to this dinner, like the Minister of the Interior of the country, as we have done in the past. We do the same thing when some international personality comes. About four months ago we invited the Argentine economist Ricardo López Murphy. This is not something difficult to do and we do it with those who contribute more than U$D 2000.
Alejandro Chafuen: At Heritage Foundation you are admitted with only U$D 1000. In the last meeting which I attended great part of the public were “new” people, 70 years old, who felt attracted by the product of sharing a meal with people of important international prestige. The National Center for Public Policy Analysis, NCPA, at Dallas, has turned these meetings with donors into a product with a seal. They name it after one of their important donors, “Círculo de Charlas, Fulano de Tal”, (Circle of Lectures, by So or So); they look for a house of some wealthy or famous person, who sometimes is not a donor, and who sometimes even pays for the meal. We did this with personalities such as Hernando de Soto and other directors of institutes. NCPA usually invites personalities in politics, both national and international. If any of you have a suitable house for this, or if some of your friends do, it is very positive to have a meeting there. We cover the costs, which sometimes are higher than having a meeting in a hotel, because having one of these personalities in your own house, and that donors get to know you, and the level of friendship you have with these people is very important in order to get confidence of future donors. Another variant is to do it in a club. For example, if one of you is a member of a country club, or if one of your friends is, ask them for this favor. This is how one goes adding allies in civil society. One of the fears we have is that the institutes may lose contact with civil society. Many institutes, not only from Latin American ones, but also European ones, search for funds in the United States. It is not that we are worried about competition, but sometimes the agenda of foreign donors is imposed over the local ones. The institute which makes no efforts to receive most of its funds from its neighbors and seeks most of its funds within other frontiers instead, runs the risk of becoming disconnected from the reality of its culture.
Question for Gerardo Bongiovanni: Do you think it would be advisable for new institutions to start by inviting Nobel Prize laureates and other important personalities or to limit themselves to the production of public policies proposals?
Gerardo Bongiovanni: It somewhat depends on the type of entity but I generally much recommend to do big events that give you visibility. The advantage of this is that it allows you to summon a lot of people with an effort which is not so great. On the other hand, starting a work on public policies is not always so easy. We had the chance of attracting personalities quickly, like Hernán Büchi from Chile, with whom we launched institutes in the interior of the country. Hernán Büchi is very well received at all the meetings and private meals prior to or after the event. These meetings with businessmen are sometimes as important, or even more important, than the conference itself. After the meeting one asks for contributions and analyses the results. These events will allow you to approach enterprises. Besides, the advantage of counting on the network of Atlas allows us to count with the presence of speakers at very reasonable costs.
Question: I would like to know what experience you have had with programs for SME’s (Small and Medium Enterprises).
Gerardo Bongiovanni: We make no difference between enterprises, but Fundación Libertad was created in the city of Rosario, in the Province of Santa Fe, where most of the enterprises are SME’s. In Argentina there are two provinces of similar magnitude, Santa Fe and Córdoba. While Córdoba has three enterprises that can be considered large ones, because they bill more than U$D 1000 million a year, Santa Fe has a gross product somewhat superior to the one of Córdoba. The structure of Córdoba is based on SME’s so we had to become experts in this type of enterprises. We always had to explain to the SME’s specifically that market economy was not something that would affect them negatively. To do so we based ourselves in studies performed in our country which showed the basic concerns of a SME’s: financing, taxation policies and labor regulations, and the access to international markets. We centered ourselves on a teaching process explaining to them that the problems they had were product of state control or the strong intervention of the State. Since a year and a half ago we have a project called Gestión PyMes. A bank provides 100% of the financing for this project, which is about U$D 120,000 per year, and we provide the physical structure, the staff, some additional resources and the knowhow. The principal objective of this project is to provide a diagnosis and training in SME’s. In this way we are trying to achieve an opening of these enterprises, for them to see the world as their market and not to be only centered in the region, the city or the neighbor province. This is a project that is working very well and which now is about to become a larger product together with a Spanish foundation. This means that we started working with SME’s because it was our only option and we have managed to have a good relationship with them. We have detected their weaknesses and their strengths. Although it is true that they have a certain tendency to claim for protectionism, in practice, those which really obtain the strong regulations of the government are the big businesses.
Alejandro Chafuen: This is a very important subject for tomorrow, when we will be dealing with strategic alliances. SME’s have been very good donors since they are much less bureaucratic than large businesses.
Products and Issues for Making Strategic Alliances
Alejandro Chafuen: To have strategic alliances with organizations which have a good number of donors and generous budgets will give you excellent opportunities for obtaining more funds. Many of you are already doing so. There are some organizations very relevant in this matter.
I would like you to help me to explain how they work and, at the same time, to tell me which others we could add to the list, not only those international, but also the local ones.
Leadership and Management of NGO´s
CEDICE, for example, has associated with people of the school of Stephan Covey who gives courses on leadership and is one of the most important ones in the United States since it belongs to the Iglesia de Jesucristo y los Santos de los Últimos Días, that is, to the group of the Mormons.
We will later make some comments about the programs Atlas Economic Research Foundation will be offering during 2002. Every institute is obviously free to choose whether to collaborate or not with these programs.
This year we sold a project to the Hispanic American Center for Economic Research (www.HACER.org) which consists of a listing of the 1000 principal experts in public policies in Latin America. This is a product which is a complement to the Guide of Experts in Public Policies of Heritage Foundation. This product is very much consulted by journalists and opinion makers, but we noticed that there were very few foreigners and, among them, very few Latin American ones, and that the information was not always updated. Heritage Foundation is one of the most powerful institutes, but it does not have the strong incentives that we have in order to keep the data of these foreign experts updated. We have structured this program delegating the task to the institutes. Basically, we will give a grant to the different foundations that participate helping us to collect data by means of questionnaires.
Another subject on which we are very interested is to try to refloat the philanthropic tradition which used to exist in our countries. In the past 50 years the predominance of the State has spoilt our philanthropic tradition. Latin America and Europe had a strong philanthropic tradition. We then thought that recalling, by means of historical works, those people who contributed so much to create civil society, could help attract new donors.
You already know the issues with which we deal with. In the case of Latin America we are very worried about the respect for intellectual property since 70% of the value of enterprises today corresponds to human capital. For us, not to speak about intellectual property is like not speaking about private property. This is a matter which will be valid for the next decade because, above all, there are multiple attempts by statists and some liberals to socialize intellectual property.
Presence in Television
Gerardo is going to speak later on about the programs we have in television in order to integrate more the efforts of institutes in the media at a continental level and to give them more coverage in the United States. We believe this to be very important because it is easier to sell things that can be seen than those which can´t.
Joint Programs with Foreign Institutes
Evaluating costs and benefits
CEDICE, Libertad y Desarrollo, and Fundación Libertad are “partners” of Manhattan Institute. These two last ones often ask for our advice to find out who they should work with in each country. One of the Latin American institutes, after carrying out an event with them, claimed that it had not received any funds from Manhattan Institute. Manhattan had not promised these funds and is not obliged to do so. When someone wants to make an association with you, you should honestly tell them that you would do it for a certain amount of money.
Manhattan Institute, or some other institute abroad, will decide who it will work with. It happened to us in India, when we sent experts of Noble Prize quality, with everything paid for, a unique figure in market economy asked us what we would give him for receiving the expert. Many sectors of the culture in India are very mendicant. They had the right to ask for but at the first chance we had we changed partners in India. Two young people, Barun Mitra and Parth Shah appeared, making a revolution in the world of institutes in New Delhi. Once again, what set the difference was the ability to manage.
What for some is a cost is an opportunity for others
Representatives of Heritage Foundation, right after a meeting we organized in Mont Pelerin, North of Vevey, Switzerland, in the year 2000, decided to establish bonds with institutes in Latin America. Until then Heritage was concentrating its international work in China, Russia and Mexico, and in some countries in Asia. Today Heritage is offering Latin American foundations the co-publication of the Index of Economic Freedom. Libertad y Desarrollo and Fundación Libertad have experience in this matter.
All these products have no cost for you, but many see them as an opportunity that will bring them more costs than benefits. Fundación Libertad collected U$D 50,000 in funds and that represented a net profit of U$D 35,000 after deducting the cost for obtaining these funds.
At the same time that Atlas in the United States has structured a network of Institutes, Atlas UK has transformed into International Policy Network (IPN) where two young, very energetic people, work and who will try to increase the amount of papers published by related institutes in specific issues such as ecology, intellectual property, health regulation problems, etc. They search for funds in the same way as we do. Therefore, be realistic about the capacity you have to associate with these projects. Whenever you do some work for us of for IPN, your names reach the donor.
Liberty Fund is an organization with which it takes more time to establish a relation. You may find a link to their webpage in the webpage of our foundation. It is also an excellent way of making alliances with intellectuals and of obtaining some additional money to cover the salaries of the directors of each institute. You must remember that you should approach them as individuals, not as an institute.
Alliances with the world of religion
Acton Institute for the Study of Religion and Liberty
At Acton Institute we focus on the issue of religion and liberty. We have a new webpage in Spanish. We have centered in the Judeo-Christian world and have left aside the work with the Muslim religion. It is already eleven years that I am founder member and part of the board of directors. I try to help Acton with the international part and we have the intention of extending our programs in Spanish. We have already done a first seminar in Spanish in Mexico aimed at Episcopal authorities.
One of the few philanthropic traditions that still exist today in Latin America is the one related to the Church, so some of the contacts with Acton could be useful to you. If Gregorio Pérez Companc would have known part of our work perhaps he would have preferred to contribute to us instead of doing so with a private university in Argentina.
There is another institute run by Rabbi Daniel Lapin, Toward Tradition, which has started to become more international copying a little bit of what Acton Institute does but focusing somewhat more on the Jewish religion.
Alliances with foundations focused on Latin America
The most powerful institutes in Latin America should be your main allies. Fundación Francisco Marroquín has diminished its contributions to Latin America since its new director is more focused in working with Hispanics in the United States but anyway, there are always possibilities of having them as allies. Dora de Ampuero has lately obtained their support and they financed the participation of some speakers in their event “Ética y Capitalismo”.
The Clubs of Donors
In the United States we have a club of donors called Philanthropy Roundtable which was created ten years ago with the objective of gathering donors who support free market ideas, private property and Judeo-Christian values. In this group there is practically no foreigner. It organizes spectacular private meetings in hotels and deals with first line issues. These meetings deal much with the philanthropic culture of the United States but lately they are showing themselves more interested in international culture. My purpose is to try to get about ten big Latin American donors to become members of this club, so that those who already support our institutes may go to the meetings. Let us put the case of Eliodoro Matte, a businessman of prestige who is president of the board of directors of the Centro de Estudios Públicos in Chile. It would be ideal that people like him formed part of the club. In the United States there is a foundation, Hume Foundation, whose president is married to a Chilean woman. Although today they are only donating in the United States, little by little they have started to become interested in the possibility of having projects in Chile but they have not yet forged alliances with institutes in that country. The possibility of having the president of Hume Foundation talking with Mr. Matte, for example, could create infinite opportunities for developing activities. We can make this analysis country by country. We will try that, you who run institutes abroad recommend us candidates for this endeavor and in this way create club of donors with more international interests. These clubs slowly become more specialized. There already exists one formed by people who are going to inherit large amounts of money. In these meetings only the donors may participate but, as you can imagine, for those of us who live on donations, from these clubs many of the ones who are going to support philanthropic efforts in the area of public policies will come out. You should try that some of your donors become part of Philanthropy Roundtable.
Some of the institutes present here should also try to forge alliances with institutions and foundations that work in the social field. One of the best institutions is AVINA. Its president knows some of the institutes and has supported them, like Institituo Libertad y Democracia in Lima, and concentrates all its efforts in Latin America. The organizations which support social issues are more than those which support public policies issues, and this is another sector where fruitful alliances can be cultivated.
Creating a department of strategic alliances
Finally, I am interested in showing you what Heritage Foundation does. They have a department called Coalition Relations that usually exchanges strategic plans with us. They have a matrix where they put everything they are going to do during the year in each of the states of the United States. Then they add in it the four issues in which they are going to center their efforts that year. For example, in 1999 they worked on four main issues: education, health, social security and missile defense. Based on this matrix they search for funds by program and identify the groups with which they are going to work in each state to carry out events. They then add to the matrix the member of potential donors in the area, the number of people in government they know and the allied institutes in that state. We all win with this work that Heritage carries out. At Atlas we try to have each time more donors of the United States become interested in Latin America.
Cristián Larroulet: My experience on this matter is interesting. One very often believes that a North American donor who has dollars in excess is going to solve all our problems. And many times this is far from that. I´ll tell you an anecdote. When I once made a trip to the United States I knew that there was an institution which provided support called Lilly Endowment, and Alejandro Chafuen had told how important it was for the work of the foundation which he presides. But reaching this foundation is almost an impossible task. The only things they support in Latin America they do it through Atlas and to know this helps us not to lose our time.
It is difficult to find an ally which will finance a project completely. Alliances are sometimes helpful to finance projects at the beginning or the life of an institution, like bringing in a personality to organize an event. Private enterprises are examples of this type of allies. Last year an enterprise approached us and told us: “You have an important network of contacts and we want to celebrate our anniversary with some international personality”. We ended up inviting to Chile the former president of Argentina, Carlos Menem, and it was not cheap. Menem had been a very important person for Chile because he personally facilitated at its time the transition from the military government to the first democratic government and also because at that time he was a figure intimately related with free market ideas in Argentina. It happened that Carlos Menem was due to arrive at Santiago on a Tuesday and precisely on Monday before this the famous affair Menem - Bolocco appeared in all the media. Cecilia Bolocco had been a Chilean Miss Universe, very beautiful, and much younger than our guest. Obviously, all the market reforms and the structural reforms passed to the background and all the news in the media were related to his relation with Cecilia Bolocco. To work with very famous figures has its risks, but even so, I recommend it, and Libertad y Desarrollo has continued with this type of invitations and we have had no more problems with Misses Universe.
In the case of banks, these enterprises organize seminars in October - November where they analyze the economic perspectives of the year to come. A comparative advantage of this, which is carried out by four banks, is the possibility of associating with them to bring in an international personality, organizing a presentation together with these banks. One makes events with the institute and also lends the speaker to the bank for their event.
Other important allies are the chambers of commerce, specifically the bi-national ones. Whenever these chambers have a profile favorable with free trade one may take advantage of them and organize events with them.
None of these activities are for obtaining a day bay day financing but for spreading ideas and capture new donors more easily, apart from financing part of our programs.
Another important case is our relation with the Centro de Estudios Públicos (CEP) in Chile with which we have different agendas. They know exactly what we do and so do we about them. We only exchange information with them when it is strictly necessary. Arturo Fontaine, who runs CEP, is a very good friend of mine and, at one moment I even helped them. What we do is a lot of academic exchange.
In the case of foreign support one must not build up hopes that donors will solve all our problems. There is always an alternative project in exchange for. If I invite people of Manhattan Institute to Chile, they contribute with some speakers, as we did in the case of Bratton, former Chief of Police of New York, to teach us how to tackle the security problems which Chile faces today. We made Bratton meet with the principal security authorities of our country and we obtained this at a much lower price than if he would have come without the support of Manhattan Institute. This means that these activities help but they do not finance the day to day of our foundation.
There are two institutions abroad which finance researches: one is the CIPE which finances projects on public policies and, in our case, has financed books and part of our legislative program and the other one is Tinker Foundation of New York, which tries to promote the relations between the United States and Latin America through the financing of academic groups. However, it is not easy to achieve the support of these institutions because this requires a good network of contacts and a great academic prestige.
Those who evaluate these institutions are usually people who move around in the world of ideas. All of them promote free market economy and they would never finance a socialist proposal although some of them even count with public funds.
Gerardo Bongiovanni: We were interested in strategic alliances with different groups from the very beginning. They should be basically considered as a means for the growth of the institution since an alliance in itself is rarely a means for the search for funds. We for example, use this mechanism with important universities, something that helped us earn prestige. I remember that when we invited Robert Lucas we organized a conference in Buenos Aires together CEMA, a university that groups the Argentine Chicago Boys. This issue generated some internal discussions about whether it was convenient for us or not, because we were somewhat conceding part of the political yield of having Lucas in Argentina. We then concluded that it was convenient for us since it was a way of showing ourselves to the entire country as allies of a university of great prestige. The temptation of keeping ten units out of ten is very great but sometimes it is better to keep 50 units out of 100.
Alliances have been very useful to us, especially at the beginning when we needed to create a seal, even conceding part of the yields to other institutions. We tried to work with some important foundations in Buenos Aires like FIEL, but keeping certain distance for two main reasons: in first place, there is much jealousy between them and in second place, because we did not want to receive the “bear´s embrace”.
We work with institutions of business training, like IDEA, which organize the most important economic-business colloquy in Argentina, and the Asociación de Bancos de Buenos Aires (ABBA). Many times we sent them speakers like Mario Vargas Llosa, Paul Johnson or Robert Barro. If this is managed well and if the presence of Fundación Libertad is assured for the complete event we will have a presence before a public which we would not have achieved otherwise.
We have many strategic alliances with enterprises. I would like to tell you about several interesting cases. One of them is the organization of typical events with enterprises which want to have some well-known economist for some private event of theirs, something which is very frequent. These activities forced us to having to decide whether to do these events with all the enterprises which presented reasonable proposals, or not doing it with any of them, to avoid jealousy conflicts between enterprises. Whichever associated enterprise proposes to bring someone kindred to our ideas is accepted.
This happens to us with health enterprises which are very powerful in our region and where there are three clearly defined groups which are in permanent competition. Each time one of them offers to do something with us the other two complain, so we tell them to bring us their proposals.
We have made editorial alliances by means of which we have published some books. We have the project B-SME’s together with Banco Bisel. We are launching a technological institute where we will make alliances with eight technological enterprises to promote the concept of e-government. We always work with local and national business chambers. We work very much in health economics and that is why 15% of our associated enterprises belong to this sector. We took to Argentina for them John Goodman, from NCPA, who is brilliant.
It is fundamental to have the different important sectors identified. We therefore have a monthly activity dedicated to commercial activities, one dedicated to the construction and real-estate market and one dedicated to the health market. Therefore, we do not only receive auspices for organizing events but also for research projects to be carried out together with the Stock Exchange and the Industry Federation.
At an international level we do not expect these alliances to provide us with funds so we try to achieve them by ourselves. Our relation with Manhattan Institute does not generate any income for us but it provides us with an activity at zero cost. In our relation with Heritage Foundation, we receive free of charge the Index of Economic Freedom which allows us to organize an event where we collect about U$D 50,000. Just as Heritage Foundation produces this index together with Wall Street Journal we think that we will end up making an association with some of the most important economic newspapers in Argentina. We are still discussing which are the most convenient newspapers to work with since working with them is sometimes rather complicated. We have some events which we do each year in direct association with some newspaper. For example, Hernán Büchi has been visiting Argentina once a year during the past ten years and every time he has done so the journal Ámbito Financiero has sponsored him. Something similar happens with Ruth Richardson, former Minister of Finance of New Zealand, who visits us once a year always with the auspice of the newspaper El Cronista Comercial. This alliance with the media is fundamental.
Alejandro Chafuen: Here we can clearly see how an annual visit can be successfully turned into a product, a tradition, or a seal for you, where the relation with the ally is sustained and the administration costs are minimized.
Fabiana Suárez: I would like you to comment on the fact that the key to avoid the “bear´s embrace” in alliances with strong institutions is to manage all the relations with the press in each event, since we always have posters of both institutions in order to approach people who would otherwise be difficult to get in touch with. We must therefore take good care of the press so that they keep mentioning us.
Gerardo Bongiovanni: Fundación Libertad is an entity of the interior of the country. Argentina is a very centralized country where great part of what happens is generated in Buenos Aires. If you ask me which our main failure in the search of funds is, I would tell you that it is our difficulty for obtaining funds in Capital Federal. Today 30% of our funds, about U$D 400,000 come from Buenos Aires, and the rest come from our region. We already have enough size and prestige to search for funds in all the country. We are also absolutely sure that it is more probable that an enterprise like Citibank will donate funds to a small enterprise in Capital Federal than to a foundation of the interior of the country. We are very careful in the issue of our alliances with Buenos Aires. Very big foundations in Buenos Aires have offered us almost complete alliances but we have dealt with them with certain precaution in order to avoid problems.
Cristián Larroulet: Press, especially the most important newspapers, is financed by advertising. Therefore, if we bring a personality allied to an enterprise we often run the risk that the enterprise may not be named in the media due to their commercial policy that whoever wants to be named by them has to pay the corresponding cost. One must be conscious of this.
I did not mention the issue of universities before, but I consider them to be a good opportunity for increasing the prestige of our institutes. In the case of Libertad y Desarrollo we have a difference with Fundación Libertad and it is that from the first day we have encouraged our researchers to become teachers. Most of our staff gives classes at universities. In Chile private universities have developed enormously and it is a sector of great competition and that is why many of us are associated to different university projects. As Bongiovanni was telling us about health enterprises, when a university presents an attractive project to us we accept it if it has ideas kindred to ours.
Gerardo Bongiovanni: There is something that always happens to us in our relation with the media. Each time we invite a Nobel Prize laureate we spend about U$D 20,000 and we obtain the auspice of a newspaper which means that we can place the publicity of the event in the newspaper for free. However, other enterprises also sponsor us. Whenever we send the information to be published we are told that these enterprises cannot come out in the publication. It is at this point when we start negotiating and they usually end well but it is curious that this is a question of a never ending tension.
Rocío Guijarro: We have also put into practice the advice of Fundación Libertad and Libertad y Desarrollo: we have created alliances in order to be influential. The first time we took Bratton to Venezuela it was a success since we covered all the costs and we had money left over for our reserve funds. The event even surpassed the capacity of the auditorium since the war against crime is an issue of vital importance. We then made alliances with AmCham (American Chamber of Commerce in Venezuela) and the City Hall. To have influence meant for us the possibility of approaching mayors and of new events. Last week we even had the attendance of 50 mayors from all the country at a breakfast with Stephen Goldsmith, former Mayor of Indianapolis. We have an alliance with the embassy of the United States and they pay for the simultaneous translation of our events into English language, which saves us a lot of money. When Margalit Edelman visited us, the Embassy paid for her ticket, her lodging and even gave her funds for research. This relation asks for nothing in return and, on the contrary, it promotes us, and the Ambassadress attends all our events.
Atlas network has allowed us to invite speakers from several countries of the world. We always invite some important personality of the international community to our Annual Assembly and we sell that to some enterprise which previously organizes a private breakfast or dinner with the speaker.
With Cato Institute we also work together with its Index of Economic Freedom, together with the Círculo de Empresarios de España (Spain´s Circle of Businessmen). We receive speakers from Heritage Foundation and Cato Institute to deal with sector issues, such as social security in order to support the creation of the Association of Pension Funds. I would like to know what happened with the Latin American Forum of Fundación Francisco Marroquín.
Gerardo Bongiovanni: It is working. For example, in a few days Enrique Ghersi will be visiting Argentina financed by the Latin American Forum. The problem is that they have a rather small budget.
Alejandro Chafuen: Nobody “has” money or a "budget." A budget, or income, is earned, and the Latin American Forum has placed its incentives somewhere else. Today, Carlos Ball, who used to support the Latin American Forum more, prefers to direct AIPE, which is a network of news which sends eight articles a week to important Latin American media, thus reaching about 8.000.000 people.
On the issue of alliances with governments, at Atlas Economic Research Foundation we tend to discriminate against the institutes that do so. We understand the situation of institutes located in Africa or Russia, where the private sector is almost inexistent but we prefer not to accept a cent from the public sector. This allows us to work with fewer problems in the most complicated areas of the world, like the Muslim world or communist countries. German Foundations also receive money from the government so the only way Atlas can work with them without jeopardizing its policies is to provide them with an event but telling them that they should invite people on their own.
In Atlas Economic Research Foundation you have an inexhaustible source of information. Some of the questions you make us are not easy. For example, we have tried to contact institutes with Lilly Endowment in order for them to present proposals, but we have always failed. Tinker Foundation has such a strict process to decide about donations that foundations have spent a lot of time and money in proposals that are later not accepted. It is not enough to go to them with a recommendation of a good friend of theirs. For example, we presented to them the proposal of preparing a list of experts in public policies in Latin America in September and since then they have sent me a new question every week. Today we have a good number of people in Atlas contributing with our international relations and they might guide you in this matter.
Some ask me why I did not include Earhart Foundation in this listing and it is because, to me, they are more your donors than your partners. Atlas may sometimes share with you internal information which would be very difficult for you to obtain otherwise. One example of this type of information is to find out who has enough money available for projects which could favor your institutes. For example, in Acton we have a line of U$D 50,000 for international endeavors, but conditioned by a “matching”, which means to say that we will have the money for it only if we receive a similar amount. If any of you wants for carry out an event together with Acton, and if you have a donor who donates the money to Acton, you may duplicate the amount of funds for the endeavor. These opportunities must be analyzed one by one.
It is because of this that you should be in permanent contact with us. In our webpage we have classified announcements and directories. The more information you post there, the higher the probability of receiving help from our donors and friends.
Dora de Ampuero: The last time that Sir John Templeton was at your office he insisted that information about the activities of each one of our institutes were sent to him. Has it already been sent?
Alejandro Chafuen: We have questionnaires which we send all the time to the institutes and we have the responsibility of keeping the data updated all the time. Our working team, such as yours, is bureaucratic, since we do not have the for-benefit mentality and we are not as efficient as we would like to be. The members of my working team rarely put themselves on the side of the consumer. Their reasoning seems to be: “If they don´t send me the information it is worse for them”. So, I try to make them realize that they should fill in the data banks in such a way that people will want to consult them. I would prefer you to fill in our questionnaires with which your specialization is, and to update everything, but if you do not do it we have to do it for you. Afterwards we analyze in private the strong and weak points of each institute, but always the first step is to send questionnaires and many times we receive no answer at all.
Each donor is different and, therefore, each one has different interests. While enterprises are interested in effectiveness and presence, individual donors are more interested in prestige and in the commitment to an ideal. We sent a paragraph of the work of each institute to Sir John Templeton but keep in mind that we work with 150 institutes directly and with about another 150 indirectly. My dream is to do what investment enterprises do when they analyze investment options: to put in one page the most important indicators of each institute.
That is why I always ask you to send us information about what you are doing and about the impact you are having. At Acton Institute I believe we have half of our working team loading data and the other half searching for money.
Jorge Salaverry: I will tell you an anecdote about my country. Tom Monahan, founder of Domino´s Pizza, recently visited Nicaragua. As most of you know he has sold all his business for about U$D 1300 million. We were at a meeting with him when he confessed to us that his dream was to die poor and, of course, we immediately told him that he was in the right place for his dream to come true. He was already there to try to help to create a university.
Now I have two doubts: Is it right to approach institutes such as IRI, International Republican Institute? How do you obtain benefits from the Index of Economic Freedom of Heritage Foundation?
Alejandro Chafuen: Atlas Economic Research Foundation does not officially help to obtain money from governments, but we have a good relation with people in government in different countries around the world. We have a good friendship, as Elías Santana does, both with republican institutes and with the National Democratic Institute. Each time that endeavors are attempted in order to fortify the rule of law in a country we consider it a good cause, even though the endeavors may come from more political organizations ours. However, we would never give advice to an institute about how to obtain funds from the World Bank or from the Inter American Development Bank; we would introduce friends to them instead. For example, the State Department asked us about which experts on sustainable development of each country could be invited to an event, and our staff sent them a detailed listing.
We are conscious that Hernando de Soto, FUSADES (in El Salvador) and other institutes, receive money from governments or governmental entities. We consider that working with embassies from some countries or with governmental foundations imply certain risks. If you do so, I would recommend you to make a balance between one country and another. In Ghana, when USAID started criticizing Institute IEA, Ghana, they obtained the support of German foundations and they continued criticizing the government on duty, in spite of the displeasure of USAID at that moment.
Georges Fauriol, vice-president of the International Republican Institute, comes from our circle of friends. He is a good friend of Jack Sweeney and comes from the American Forum. Curtin Winsor, who was ambassador in Costa Rica, is member of the board of Atlas, and was one of the members of that Forum together with Otto Reich. They are friends with whom one can work with, but one must also be aware of the costs of approaching political institutions.
Gerardo Bongiovanni: Jorge Salaverry, if you take a look at the Index of Ecnonomic Freedom, you will notice that the logotype of Fundación Libertad is between those of Heritage Foundation and Wall Street Journal. This is very valuable. What we do is something very simple: we receive about 1500 copies of the publication and we do a marketing campaign which includes the distribution among the 1000 most important people in Argentina and we organize events in the most important universities, about six, of the country. Within the publication we place a leaflet which, carefully prepared, enlist the enterprises which sponsor the Index of Economic Freedom. It works just like any other event.
Elías Santana: The mission of these institutes is to produce a change in society. This has to do with the decisions of thousands of people. Institutes work creating ideas, concepts and values. They may concentrate on only one level of people who to their understanding is the one which takes decisions: members of Congress, social communicators, university professors, etc. but for the man on the street, who is part the council of a condominium, a cooperative, or an association of neighbors, and perhaps have environmental worries, it is little probable for him to become a member of a group like Libertad y Desarrollo. However, I do believe that institutes could promote endeavors of civil society, with ideas and values translated into everyday life things. From a program that was created by Jesús Eduardo Rodríguez at CEDICE we trained community leaders and we obtained good results. These leaders do not consider themselves as part of CEDICE but they do share its values and ideas and translate them into support for political parties. We have an excellent relation with the Instituto Nacional Demócrata and we are fighting together with them for democracy in Venezuela. However, what I believe will be happening in Latin America is a battle on its streets.
Alejandro Chafuen: In the United States we have an institute, Citizen for a Sound Economy, which does something similar, although it has a very different structure than your institutes have. Does anyone have a new comment to add?
Cristián Larroulet: One must understand that we are only one of the instruments of a cause. In Libertad y Desarrollo we are inclined to favor all these movements and we like to be a place where they can obtain ideas and promote them. We will likewise not allow our institution to change its nature. We were born as a study center of public policies and this is exactly what we are. We also have relations with political parties, with confederations of university students, with associations of secondary school students, movements pro-life, and environmental movements. What is ours is to apply the principle of subsidiarity, encouraging the growth of institutions which promote similar ideas.
Alejandro Chafuen: We were unable to answer all the questions. We are interested in receiving your comments and we will send you a questionnaire to know about your opinions on this seminar and whether you would like us to repeat it. We could perhaps turn this product into a “seal”. I have no doubts, after having learnt so much from them, that if freedom has a chance of succeeding in this world it is due to the enthusiasm and the ability of people like Cristián Larroulet and Gerardo Bongiovanni that have not ceased to work for the cause of freedom since they were very young, and they have shown it during these days. We are all very grateful for their job and for having shared with us the secrets of the successes they have had during these years. I ask an applause for them.
I have here a present for you. I know that you know a lot about management, but this is a matter about which we never stop learning, especially for those of us who have had few classes in reference to this at university. One must constantly think over and over again about what one is and how to improve what one does. This is a collection of books, books about management, which may be very useful to you as have been useful for us.
Once again, thank you very much, and may you all have a good trip.