Making Migrant Dollars Go Far
Advocates Leery of Western Union's Plan to Give Back
http://www.washingtonpost.com/wp-dyn/co ... s-col-blog
By Marcela Sanchez
Special to washingtonpost.com
Friday, September 21, 2007; 12:01 AM

WASHINGTON -- Once every month, the average immigrant in the United States steps into a money-transfer facility and wires approximately $250 overseas. Minutes later somewhere around the world, a relative or friend can step into a similar facility and receive the cash -- minus fees and other transfer expenses. This transnational economic activity, repeating itself millions of times every month, added up to about $274 billion worldwide last year -- a lifeline for millions in some of the poorest corners of the planet and an amount at least double all official foreign aid combined.

For years, immigrant organizations, governments and international financial institutions have focused energy and resources on figuring how they might leverage those billions to help improve the conditions that make people become immigrants in the first place. Largely absent from this effort -- and in fact a frequent target of criticism -- has been the middleman: the money transmitter.

Last week, some might say, things changed. Western Union, the largest money transmitter with more than 17 percent of the global market, announced a $50 million, five-year philanthropic initiative to help migrant families. The Colorado-based company said it would underwrite educational grants, offer free wire transfers during humanitarian relief efforts and enlist some of its 312,000 agents and representatives as financial mentors to businesses and individuals.

This program would build on Western Union's contributions to specific economic development projects in Mexico, the largest recipient of remittances in the world ($23 billion last year). The new contributions would bolster programs such as "Tres por Uno" (three for one) that match every dollar invested in Mexico by U.S.-based immigrant associations for projects such as paving roads or opening factories with a dollar each from Mexican federal, state and local governments.

A federation of hometown immigrant associations in Southern California received $120,000 from Western Union last year to conduct such work in Mexico. According to Efrain Jimenez, the group's vice president, the donation wasn't huge, but it was significant as a demonstration that "the private sector can and should exercise its social responsibility" and as a symbol of solidarity with immigrants at a time when that can be politically costly.

Some immigrant advocate groups, however, are not impressed by Western Union's altruism. Last week the Transnational Institute for Grassroots Research and Action (TIGRA), which claims to represent more than 150 immigrant organizations in the United States, called for a boycott of Western Union, arguing that its new campaign is a "marketing gimmick" that will do little to benefit immigrants here or their families abroad.

TIGRA is particularly concerned that initiatives such as Western Union's give immigrants little say on where the money is spent. Rather, TIGRA would have Western Union and other money transmitters donate directly to a fund managed by TIGRA.

While that might raise an eyebrow of suspicion, TIGRA has reason to be skeptical. Money transmitters have profited for years from the poor. And, TIGRA argues, even with this initiative Western Union's philanthropic activity will represent less than 50 cents per $100 profit. (Western Union's spokesman Dan Diaz disputed TIGRA's claim and cited the Consulting Network, which found Western Union's giving at just below the average for U.S. corporations.)

Money transmitters cannot be blamed for the poverty of their customers. Indeed, Manuel Orozco, remittance expert at the Inter-American Dialogue, said that Western Union should be given credit for connecting "some of the world's poorest to the global economy." Still, Orozco added, Western Union is far from a beacon of corporate giving.

In the past, it has been governments and organizations such as TIGRA that have successfully pushed money transmitters to lower their fees and become more altruistic. Ten years ago, it cost on average $30 to send $300 to Mexico; today it costs $10. During the 1990s, Western Union was sued for not disclosing extra profits from favorable foreign currency exchange rates, resulting in a settlement that included the establishment of the Western Union Foundation.

As Francis Calpotura, TIGRA's executive director, put it, remittances are "one of the very few tools" immigrants have to wield power in their world. This is especially true in today's political environment, where they have seen little success in influencing the immigration debate in Washington. One might hope that TIGRA and Western Union can find a way to see themselves as partners on the same side of that struggle.

Marcela Sanchez's e-mail address is desdewash@washpost.com.