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Carlos Slim's Giving Side: The Billionaire Is Ramping Up Philanthropy
The Mexican magnate is getting serious about giving away a big chunk of his fortune, with health and education among his top priorities.
Antonia, a housecleaner and mother of three, describes her recent predicament as hell. Falsely accused of theft by an employer, the 39-year-old woman was arrested earlier this year and thrown into a dark cell at the Santa Martha Acatitla penitentiary, on the eastern outskirts of Mexico City. Her husband, a construction worker, couldnt take time to visit for fear of losing his job. Her oldest daughter, a teenager, had to take care of her young siblings. I had given up all hope, recalls Antonia, a sturdy, moon-faced woman.
Then, after 15 days, Antonia was suddenly released. Bail was posted by a lawyer she had never met, and the charges against her were later dropped. Who provided the bail bond and legal aid? None other than Carlos Slim Helú.
Slims fierce commercial instincts built Mexicos largest business empire, spanning telecommunications, finance, mining, real estate and retailing, and have made him the worlds second-richest person, just behind Microsoft Corp. co-founder and chairman Bill Gates. In the process hes become seen as almost a national scourge, reviled by many Mexicans for his vast wealth and targeted by regulators who seek to reduce his dominance of the telephone market.
That outsize role makes Slims latest act perhaps his most intriguing one. Today he is fast developing a new identity as one of the foremost philanthropists outside the U.S. The 73-year-old magnate seems determined to give away a large chunk of his estimated $70 billion fortune. Over the past five years, he has more than doubled the endowment of his two main charitable vehicles the Carlos Slim Foundation and the Telmex Foundation to some $8 billion, and disbursed an additional $600 million to combat blight in Mexico City. These sums will swell in the next few years, according to Slims relatives, though in keeping with the tycoons practice, he has not announced any giving schedule.
Without doubt, he is already the greatest philanthropist in Latin America, says Jorge Villalobos, executive president of the Mexican Center for Philanthropy, an entity that keeps track of charitable foundations in Mexico.
Slims philanthropic interests are as varied as his business interests. His foundations claim to have donated more than 300,000 bicycles to help children in remote rural areas get to school, given eyeglasses to more than 130,000 poor children, provided maternity care to nearly half a million women and their babies, and carried out more than 800,000 free surgical operations. They provide free access to computers and digital education to more than 2.5 million Mexicans. They have spent more than $100 million to support conservation efforts from the Gulf of California to the reefs off the Yucatán Peninsula. And the foundations have posted bail bonds for nearly 100,000 first-time criminal suspects, like Antonia.
This tsunami of charitable contributions has generated its share of skepticism and controversy. The sheer size and impact of Slims business empire make him one of the least popular figures in Mexico. Thanks to his near-monopoly control of Mexicos telecom market his biggest company, América Móvil, has 70 percent of the cellular market, and his Teléfonos de México, or Telmex, has 80 percent of the landline market Mexicans pay some of the highest phone and Internet charges in the world, according to a 2012 report by the Organization for Economic Cooperation and Development. (Read more: How Multilatinas Are Taking Over the World)
As a result, some suspect Slim is raising his philanthropic profile in a bid to shield his enterprises from regulatory and political pressure. In May the Mexican Congress passed a reform bill opening up the telecom sector to more competition, including foreign companies a key plank in President Enrique Peña Nietos program to revitalize the economy. Given Slims huge lead, however, the bills impact remains in doubt. The mogul insists that his companys telecom charges arent onerous and that the OECD report exaggerated their impact on the Mexican economy.
Right now there is a lot of pressure in Mexico to break up monopolies, says Richard Kiy, president of the International Community Foundation, a San Diegobased group that encourages philanthropy in Latin America. Slim wants to show that Telmex is a responsible corporate citizen.
Indeed, although the Carlos Slim Foundation has a larger endowment, of $5.5 billion, the $2.5 billion Telmex Foundation has more staff and programs. It draws on the personnel and resources of Telmex, says Michael Layton, who directs a research and teaching project on philanthropy at the Autonomous Technological Institute of Mexico, in Mexico City. When something has to be delivered to the countryside, there is a fleet of Telmex trucks that can do that.
Some of the polemics surrounding Slims philanthropies have been stoked by his own comments. In 2007 he seemed to disparage Gatess giving efforts by declaring in a press conference that he had no intention of being Santa Claus. He insisted that only education and jobs could make a real dent in poverty. More recently, though, Slim has lauded Gates and teamed up with the Bill & Melinda Gates Foundation along with the Spanish government and the Inter-American Development Bank in a $150 million project to improve health in southern Mexico and Central America.
Slim has also contributed at least $200 million to Latin American antipoverty projects cosponsored by the Bill, Hillary & Chelsea Clinton Foundation. Carlos Slim is one of the worlds most important philanthropists, and most people havent heard about his humanitarian activities, former president Clinton said last year in presenting a Clinton Global Citizen Award to Slim in New York.
Yet Slim and his family express a jaundiced view of traditional charity. We dont like the word philanthropy applied to our activities, says Arturo Elías Ayub, 45, a Slim son-in-law who serves as CEO of the Telmex Foundation and is also a senior executive at the phone company. The tall, gruff chain-smoker is Slims main business spokesman. Like Slim, he is of Lebanese extraction; his grandfather, like Slims father, ran a general store in the center of Mexico City.
Slims middle son, Marco Antonio Slim Domit, 45, the family member most involved in the Carlos Slim Foundation, insists that his fathers business empire has contributed far more to the welfare of Mexicans than his foundations have. Slims businesses employ more than 200,000 people and account for more than one third of the market capitalization of the Mexican stock exchange.
Slim, who declined requests for an interview for this article, wants his foundations to be managed much like his businesses. We aim to create and support organizations that cut down their costs in order to increase spending on their programs, says Marco Antonio, who oversees Slims financial empire as chairman of Grupo Financiero Inbursa. His brothers, Carlos Slim Domit, 47, and Patrick Slim Domit, 43, have taken turns overseeing the familys many retail, mining and industrial enterprises. (Slim also has three daughters, who have been active in the foundations but not the family businesses.) Another son-in-law, Daniel Hajj Aboumrad, is CEO of América Móvil.
The idea of conducting philanthropy according to business principles is hardly a new one. Self-styled social entrepreneurs tout impact investing as a way to drive real change with measurable returns; Warren Buffetts grandson Howard Buffett is a big proponent. Slims foundations give the concept much more than lip service, though, and insist that their charitable activities are managed as tightly as their patrons for-profit enterprises.
Rather than simply making grants to existing health, educational and other entities, Slim prefers to create and fund institutes that then partner with other organizations typically, government agencies to deliver goods and services. We look for government-backed health programs that are already in place and staffed with personnel that has already been trained, says Ricardo Mújica, executive director of the Carlos Slim Institute of Health, an arm of the Slim Foundation. Then we will offer these hospitals new, advanced technology for their patients. We dont want to build our own hospitals, but we dont want to simply give away money, either.
The foundations are notably silent, however, on one key business principle: transparency. Their annual reports provide plenty of statistics on the number of bicycles and eyeglasses given away, the surgical operations financed and the computers donated, but no hard numbers on spending or staffing. Thats a stark contrast to the meticulous financial disclosures that Slim and his shareholders demand from their myriad companies. They are not known for transparency, says ITAM professor Layton. They are very light on financial figures in their annual reports.
The lack of transparency has hindered wider recognition of Slims growing charitable efforts and served as fodder for his bitter business rivals. Some Slim family members darkly suggest a plot against their business and foundation activities by other magnates, such as Emilio Azcárraga, owner of Grupo Televisa, and Ricardo Salinas Pliego, majority shareholder of TV Azteca, who between them have a virtual duopoly on broadcast television. The problem is that our competitors I would call them enemies control a lot of the media and have created a very negative image of us, says Slim son-in-law Elías. The only way to counter this is by our accomplishments over time.
Slim and his family can look to Gates for an example of the healing powers of time and money. Once attacked as a monopolist because of Microsofts software hegemony, Gates, who stepped down as CEO in 2000, draws attention these days primarily for his foundations efforts to combat disease and poverty in the developing world and reform the U.S. education system.
SLIM HAS ATTRIBUTED HIS late start in large-scale philanthropy to the fact that he was too busy making money to think about giving it away. The son of a Lebanese immigrant who opened a general store in Mexico City during the 191021 revolution, Slim began his own businesses while still a civil-engineering student at the National Autonomous University of Mexico in the early 1960s. By the time he graduated, he had established a small construction company and started his own stock brokerage. These formed the core of his family conglomerate, Grupo Carso (a contraction of his first name and that of his late wife, Soumaya Domit Gemayel).
Slims business fortunes took a giant leap forward in the 1980s. Mexico triggered the Latin debt crisis when it was unable to meet its obligations in 1982. The peso plunged as investors withdrew billions of dollars from the country, and the government nationalized the banks to avert an economic collapse. But Slim remembered that his father had expanded his own business in the midst of the Mexican Revolution. My father taught me that no matter how bad a crisis, Mexico isnt going to disappear, and that if I have confidence in the country, any sound investment will grow, Slim told Institutional Investor in a 1995 interview.
Between 1982 and 1984, Slim acquired controlling positions in a leading cigarette company, a department store and restaurant chain, an auto-parts maker, a tire manufacturer and a top insurance firm. By 1994 the market value of these companies had appreciated by an average of 3,000 percent in dollar terms.
In 1990, when then-president Carlos Salinas de Gortari launched a program to privatize state-owned companies, Slim arranged backing from two foreign partners, Southwestern Bell Corp. and France Télécom, and made a successful, $1.76 billion bid to buy Telmex, the state-owned telephone monopoly. A decade later Telmex spun off its wireless subsidiary, América Móvil, which accounts for the bulk of Slims fortune today.
Nowadays Slim spends roughly two thirds of his time looking after his foundations, according to his relatives and associates. In July, América Móvil received wide press coverage for its $40 million purchase of a 10.8 percent stake in London-based Shazam, a music recognition app maker, but according to Elías, Slim entrusts these kinds of deals to his senior executives. He found out about the Shazam investment only after I told him we had made it, says Elías, who flew to London to close the deal. But Slim has been very much in charge of the current 7.2 billion ($9.7 billion) bid to purchase the 70 percent of Dutch telecom operator KPN that he doesnt already own, Elías adds.
Slim began his philanthropic activities on a small scale in the 1980s, when he and his wife, who suffered from renal disease, started a charity that financed kidney transplants. It became the kernel of the future Carlos Slim Institute of Health. In 1986 a score of small charities financed by Slim were grouped together under the Carlos Slim Foundation, whose broad mission is to serve Mexican society by contributing to the development of human capital through ongoing high-impact and wide-ranging programs.
In 1995, Telmex launched its foundation with an equally expansive mandate to contribute to Mexico through education, health, nutrition, justice, culture, personal development, environmental conservation, sports and disaster relief.
Although Slim contends that he has no emotional attachments to his businesses, he readily admits that personal motivations have inspired some of his most important philanthropic ventures, according to relatives and written testimonials.
This was the case with his crusade to restore the historic center of Mexico City, a roughly 100-square-block area that was the heart of both the Aztec capital and the city built upon its ruins by the Spanish conquistadores. The area had been in decline since the 1960s as businesses and residents moved to more-modern districts. This exodus accelerated after the devastating earthquake of 1985, which killed 10,000 people and destroyed scores of buildings. Slim took part in that move, transferring the headquarters of his financial services group, Inbursa, to safer ground several miles away.
But Slim had fond childhood memories of the neighborhood. The historic center was very familiar and dear to me, he wrote in a 2011 catalogue celebrating his first decade of involvement in its restoration. He recalled visiting his fathers businesses in the district and eating in local taquerias. And for amusement, I attended the theaters and movie matinées, spending a peso to watch double and triple features.
After lobbying for a public-private effort to restore the capitals shattered downtown, Slim was asked to lead the Foundation of the Historic Center of Mexico City in 2001. Always concerned with not ruffling the feathers of politicians, Slim made sure the foundations board included representatives of the federal government, as well as the capitals mayors. But the funding has come almost entirely from Slim.
The historic center is a grid of narrow streets surrounding the Zócalo, the citys massive central square. Eighteenth-century mansions and cavernous churches rise amid lower-slung buildings from the 19th and early 20th centuries. Through the foundation Slim has funneled $500 million to purchase and renovate 80 decrepit buildings, and an additional $100 million for rent subsidies and other social spending to encourage students, artists and professionals to move into the neighborhood. In keeping with his passionate conviction that philanthropy should be run like a business, Slim bought nearby parking garages and uses their revenue to finance the foundations operational expenses.
This has become the hot neighborhood of Mexico City, says Adrián Pandal, director of the foundation, over a traditional Aztec meal ofgusanos de maguey (fried cactus worms) and escamoles (sautéed ant larvae) at El Cardenal, a famous old restaurant that is thriving once again. We have succeeded in keeping people here and drawing others in.
The main arteries of the neighborhood one of the few in this megalopolis of 25 million inhabitants where motor vehicle traffic is largely restricted have been turned into pedestrian malls. Cultural corridors several blocks in length group together restored theaters and concert halls with stores for music and electronic goods. Gregorian chants drift out of the larger churches.
The revitalization project underlines the novel approaches that philanthropy in Mexico requires. For centuries the Catholic Church and the government were almost entirely responsible for charity. After the revolution the church dropped out of the equation because of the strong anticlerical ideology of the long-ruling Partido Revolucionario Institucional. In modern times a lack of tax incentives discouraged private philanthropy.
As a result, Mexico has one of the lowest rates of private philanthropic donations of any country in the world: only 0.04 percent of gross domestic product, according to a 2003 study (which has not been updated) by the Johns Hopkins Institute for Policy Studies Comparative Nonprofit Sector Project. The ratio in the U.S. was 40 times higher when the findings were published. Mexico also trailed most major Latin countries, including Argentina (1.09 percent), Colombia (0.32 percent), Brazil (0.29 percent) and Peru (0.26 percent), according to the study.
THE RISE OF A POWERFUL private sector has fostered increased donations from the wealthiest Mexicans. Besides Slim, these donors include Roberto Hernández and Alfredo Harp, former majority shareholders of Grupo Financiero Banamex, now a subsidiary of Citigroup, and the Servitjes family, owners of the worlds largest bakery company, Grupo Bimbo. Entrepreneurs now feel obliged to contribute more to the public good, both as citizens and through their corporations, says Mexican Center for Philanthropy chief Villalobos.
Still, a dearth of nonprofit entities makes it difficult to create a Gates-type foundation that simply doles out grants. In the U.S. there are 80,000 such nonprofit organizations. In Mexico only about 6,500 tax-exempt philanthropic entities exist. Slims foundations have contributed funds to 1,691 of them. But Slim channels the vast majority of his giving into entities and programs that his own foundations have created, mainly in the fields of health and education. Why not just make donations to existing institutions? asks son-in-law Elías. Because we believe our own entities are more efficient.
To staff the higher rungs of his foundations, Slim has hired experienced professionals from both government and the private sector. Pandal, the 39-year-old head of the foundation to restore Mexico Citys historic center, began his career as a financial analyst at Inbursa. The Slim Institute of Healths Mújica is a 41-year-old economist who spent a decade at a government agency dealing with public health issues; he has recruited several former colleagues from that agency to join him at the institute.
Slims intense interest in health problems grew out of personal issues, especially the chronic kidney disease that has plagued his family: His wife died of renal failure in 1999; his sons Patrick and Marco Antonio both received kidney transplants from their siblings. Little wonder that early detection of chronic diseases has emerged as a key focus of Slims health institute. We look for government-backed health programs in this area that are already in place and staffed with personnel that has already been trained, says Mújica. We then offer new technology aimed at disease prevention.
Backed by Slim donations, the government has opened a dozen Mexico City clinics for early detection of chronic illnesses mainly obesity, diabetes and kidney disease over the past two years. If they prove successful, scores of others will be started across the country.
One such center, inaugurated in February 2012, is located in a gritty neighborhood of the capital called Tacuba, at the entrance to a subway used by a half million commuters every weekday. The avenue outside is lined with street vendors, repair shops, beauty salons and men tinkering with carburetors under the open hoods of their 20-year-old cars. Inside, however, the city-owned clinic is spick-and-span and equipped with up-to-date medical gear donated by the Carlos Slim Institute of Health.
Our institute made available the software and some of the advanced hardware for example, the module for detecting the onset of some chronic diseases, says Rodrigo Saucedo, the Slim Institute executive who handles relations with the clinics.
Sitting alongside the computerized module, Marta, 45, is undergoing several tests to measure her weight, sugar level and blood pressure. The module detects borderline obesity in Marta, a local sales clerk. According to the United Nations Food and Agriculture Organization, Mexico has surpassed the U.S. as the country with the highest level of obesity: 32.8 percent of the adult population.
The tests also find that Marta is suffering from high blood pressure and a prediabetic condition. A doctor hands her a printout of the results and advises her to go to a neighborhood hospital or clinic for treatment. This clinic is supposed to serve a purely diagnostic role, explains Saucedo. All diagnoses are free, covered by the national health insurance program.
So far, few people have taken advantage of the Tacuba clinic. On an average day only 60 visitors show up for testing, a fraction of what the ten-person medical staff can handle, notwithstanding a big publicity campaign and a promise that patients will spend no more than 30 minutes at the clinic. It will take time to develop a culture of preventive medicine, says Dr. María de la Luz Aceves, the clinics director. The hope is that patients who have good experiences here will spread the word among their friends and neighbors.
THE SLIM FOUNDATIONS extend their activities into the countryside, where health and education levels are lowest. Some of their most active projects are in communities in the state of Querétaro, a two-hour drive northwest of Mexico City.
Vineyards, mountains and granite outcrops surround Cadereyta, an agricultural center of 57,000 people where cars swerve around horse-drawn carts. At the towns Hospital General, Guadalupe, an Otomí Indian from a village an hours drive away, talks to a reporter just hours after giving birth to a son. The staff has been just great, says the tired 19-year-old with long black braids. Her husband works in the U.S., harvesting onions in Nevada, but her parents were able to get her to the hospital the day before in time for the delivery.
Under a program called Amanece (Awake), subsidized by the Slim Institute, a well-equipped medical van with a nurse on board visited Guadalupes village to test pregnant women for sighs of distress such as headaches, blurred vision, convulsions, lack of fetal movement, and hemorrhaging.
The week before, Guadalupes friend was rushed to the hospital with vaginal bleeding. Under a preventive drill taught by the Slim Institute as part of Amanece, the ambulance staff phoned ahead to the hospital, signaling the various departments to assemble the necessary personnel in the emergency room in time for the patients arrival. According to the hospital, there are a half dozen such emergencies each week. Under the preventive program there has not been a single death of an expectant mother in the past two years. Previously, the hospital averaged three maternal deaths a year.
Higher in the mountains north of Cadereyta lies the village of San Juan de la Rosa, where a trio of 11-year-old girls Andrea, Cynthia and Lisbet go to school. Their farming village, El Rincón, is even deeper in the mountains, reachable only by a dirt road. It used to take the three friends 40 minutes to walk to school. Recently, however, their journey time was cut in half thanks to bicycles donated by a philanthropic arm of the Telmex Foundation. Now Im always on time, Cynthia says. Except when it rains and the road gets too muddy to bike.
To qualify for free bicycles, students must live more than a 30-minute walk from school. They also have to show high grades and good attendance, says Edna Alicia Sáenz, the municipal president, who forwards a list of deserving candidates to the local Telmex Foundation representative. Even in this remote corner of the country, Slim takes care to let local power brokers share credit for his donations.
Back in Mexico City it is another day of crowded attendance at the Museo Soumaya. Built and endowed by Slim and named after his late wife, it showcases some 3,400 of the 66,000 art objects he owns. These include old masters, 19th-century European paintings, modern art, a huge array of works from Mexicos colonial era and the worlds largest private collection of Auguste Rodin sculptures 678 are spread throughout the museums galleries and halls.
The Soumaya, whose architect is Slim son-in-law Fernando Romero, has been criticized for its unoriginal design. It has a spiraling ramp like New Yorks Guggenheim Museum and a mushroom-shaped exterior encased in gleaming aluminum. But the museum is a hit with the public. Open every day of the week, with no admission charge, it has drawn 2.2 million visitors since its inauguration in March 2011. Only the much larger National Museum of Anthropology of Mexico City pulls larger crowds.
Among Slims charitable activities there is one that sticks out. With little fanfare, a Slim foundation has been bailing first-time criminal suspects out of jail since the early 1990s.
The program is striking for a country where there is almost no public sympathy for people accused of crimes. Unquestionably, this is the most controversial program we have undertaken, says Elías. His father-in-law has never explained publicly or to his own relatives his motivation for launching the program, but it has grown prodigiously, from granting 200 bonds a year initially to some 9,000 last year. To date, the foundation has posted bail bonds for nearly 100,000 people.
To qualify, a person must have been arrested for the first time and be too poor to afford bail. The program considers only those charged with nonviolent and nonsexual crimes. It gives preference to people who are the economic mainstays of their families. In Mexico we still have a justice system that presumes you are guilty until you demonstrate your innocence, says Marco Antonio Slim. We try to find people who have every right to remain out of jail before trial but are unable to do so because they cannot make bail.
That was the case with Antonia, the maid accused of theft. She and her husband moved to Mexico City from Puebla because, as she says, we want to send our children to university. For five years she commuted daily, two hours each way, to the apartment she cleaned. But the last time she showed up, earlier this summer, she was met at the door by two policemen and her employer, a woman who demanded that she return a missing ring. Antonia denied taking the jewelry and was arrested. I was in a state of shock all I could do was cry, she recalls.
Unable to post the 20,000-peso ($1,600) bail, she was sent to the Santa Martha prison. The warden contacted a lawyer at Reintegra, a pro bono firm that works with the Telmex Foundation to identify bail candidates. Fifteen days later Antonia was out on bail. Shortly afterward the couple who had employed her got in touch: They had found the missing ring. They had the nerve to ask me to come back to work, says Antonia, who has taken a housecleaning job elsewhere.
Although Slim devotes most of his time to philanthropy these days, he and his relatives insist that charity is no substitute for the jobs created by entrepreneurs including Slim himself. Poverty is fought with health, education and, above all, employment and more employment, is the slogan repeated in the annual reports of both Slim foundations.
Do you really think that Bill Gates will be remembered more for his foundation than his business accomplishments? asks Marco Antonio Slim.
Perhaps not. But Gatess record as a high-tech pioneer captured the public imagination in a way that Slims buccaneering ways never have. The Mexicans vast wealth equivalent to an extraordinary 7 percent of the countrys GDP virtually guarantees a large measure of public scorn.
Slims burgeoning philanthropy may be the best thing yet for his reputation.
Read more about endowments and foundations.