Orange County Register | Migrants the new philanthropists?

Published on the Orange County Register 

By John Sanbrailo, PADF Executive Director 

Search Google News for the word “remittances” and you will find a growing trend of international money transfers. In 2012, global remittances to both developing and developed countries reached $529 billion, up from $132 billion in 2000, according to the World Bank Migration and Development Brief.

In Latin America and the Caribbean, which received as much as $64 billion in remittances in 2012, money transfers mostly come from the U.S., and are destined for Mexico and Central America where they play a critical role in driving local economies and creating social change.

Today, developing countries receive more than 70 percent of remittances. Remittances to Latin America and the Caribbean far exceed the total foreign aid to the region from bilateral and multilateral donor and development agencies. In other words, foreign aid has effectively become privatized.

Remittances do more than put food on the table. They can lower interest rates, increase liquidity in local and national economies and keep youths in school and away from forced labor, gang violence and other harmful conditions. An innovative remittances-for-development model, pioneered by the Pan American Development Foundation, brings together the private sector, government agencies, civil society organizations and U.S.-based migrant groups (called hometown associations, or HTAs) with the goal of channeling funds to priority projects.

In recent years, PADF has partnered with dozens of Salvadorian HTAs in Los Angeles, Washington D.C. and other cities to raise money for education infrastructure initiatives.

As part of its corporate social responsibility program, Banco Agrícola, the largest commercial bank in El Salvador, provided additional funding, helping to position itself as the bank of choice for Salvadorans living abroad who want to send remittances.

The Ministry of Education of El Salvador joined in as well, in accordance with its own incentive program encouraging Salvadorans in the U.S. to donate resources to local schools back home. In the process, PADF also helped these HTAs build their capacity to implement successful projects on the ground and create lasting partnerships with private donors.

More than 45,000 students benefitted through 70 education projects that expanded and remodeled classrooms, equipped science labs and computer centers, installed libraries and provided school supplies. This successful effort shows the transformative potential that billions of dollars in remittances can have, especially in areas where this kind of support remains strong.

As world economies continue to sputter, direct foreign aid investments in international development face an uncertain future. That leaves coordinated remittance-funded projects as a strong resource for empowering people around the world.