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Pooling resources through Hometown Associations

Some say that the origins of Chicago’s Mexican community can be traced down to the city block, with Michoacanos living on one and Zacatecanos on another nearby. Whether this is an accurate depiction of Mexican migrant settlement patterns or not, the idea of maintaining a strong connection with one’s roots is an important part of the lives of many migrants, and is also the driving force behind the formation of transnational migrant organizations, or Hometown Associations (HTAs).

HTAs form not only in response to the social and cultural challenges faced by new immigrants in adjusting to life in a foreign country, but also to address the very conditions that caused migrants to leave in the first place, funding small-scale development projects in their home communities through collective remittances.

Donations sent by Mexican HTAs are overwhelmingly channeled back to the country’s poorest rural areas with high levels of out-migration, and consequently have a direct role in fostering economic and social development in these locales.

Funds to finance projects in Mexico are raised through organizing soccer games, dances and other social events, with HTA members earmarking part of their hard-earned salaries to put towards improvements in their home community, in addition to sending individual family remittances in most cases.

Of course, the vast majority of remittances being sent to Mexico—over $20 billion in 2005 alone—go towards basic household consumption, but nonetheless, the role of collective HTA donations should not be overlooked.

Growth of Mexican HTAs

While some HTAs have a solid foundation in the United States, such as those belonging to the Federación de Clubes Zacatecanos del Sur de California founded in 1965, most have cropped up within the last decade.

This upsurge is reflective of both the steady influx of Mexican migration to the United States since the advent of the North American Free Trade Agreement in 1994, and the increased Mexican government outreach efforts to promote the formation and consolidation of migrant associations.

Take Chicago for example, which has the second largest Mexican immigrant community in the country, following Los Angeles, with an estimated population between 800,000 and 1,000,000. The ranks of HTAs in Chicago greatly increased from about 20 to over 100 from 1994 to 2002.

Additionally, while there are currently over 700 Mexican HTAs officially registered with the Mexican consulate in the United States, it is generally believed that real numbers are in the thousands.

HTA financed projects and development

According to remittance expert Manuel Orozco of the Inter-American Dialogue, HTA financed projects generally fall into four main categories: charity, infrastructure, human development and investment.

When first starting out, many HTAs focus on fundraising for charitable purposes or to finance social or religious activities in their hometowns—even if they lack basic public services, many rural communities at least have a well-kept or freshly painted church.

However, as HTAs become more organized, they have increasingly put funding towards desperately needed public infrastructure projects, such as road construction and paving and the provision of water, sewerage and electricity. By fostering the creation and/or improvement of basic infrastructure, migrant organizations can directly help to set the stage for future investments in these communities.

Additionally, HTAs can help to fill in the gaps in social service provision by providing communities with scholarships, library books, health centers and medicine.

Government attempts to leverage remittances

Programa 3x1 is a government matching program managed by the Department of Social Development (SEDESOL), aimed at recruiting collective remittances from HTAs in the United States for local development projects by having municipal, state, and federal governments each contribute one peso for every peso donated by the HTA, thus increasing the pool of money available for the project.

Because of the level of organization of its HTAs, the state of Zacatecas pioneered the 3x1 program in 1997, stemming from the 1x1 and 2x1 programs in effect in that state since 1992.

Programa 3x1 expanded nationwide in 2002 and currently operates in every state, working with over 600 migrant clubs. Since 2002 it has supported nearly 4,000 social investment projects such as street paving, public squares improvement, school repairs and the construction of drinking water systems, with only four percent of ventures intended to generate income.

Projects totaled US$43.5 million in 2002, a quarter of which was from HTAs. Considering that total remittances to Mexico in 2002 were over US$10 billion, this seems like a drop in the bucket, but with most of the projects being implemented in small, rural communities—over two-thirds of the projects carried out in 2002 took place in communities with populations under 3,000 and half were in towns of less than 1,000—the numbers are quite significant.

In fact, HTA donations through Programa 3x1 rival annual budget allocations for public works in many small towns, with funds sometimes representing over 20% of these annual budgets.

Clearly, with these sorts of financial inflows, the development capacity of local communities is significantly enhanced and projects previously impossible can come to life.

Challenges and Limitations

While Programa 3x1 can have a significant impact at the local level in terms of improved infrastructure and public services, the larger scale effects are limited so far because the program is largely focusing on historically neglected communities that are playing “catch-up”.

Also, besides the fact that HTAs generally raise less than $10,000 annually for community projects, the percentage of migrants who actually join HTAs is also low, at about 2% of all Mexican migrants that regularly send remittances to relatives.

While the number of HTAs has been increasing as the 3x1 program matures, many still don’t participate in the matching program, despite its potential for increasing their investment. This may be in part due to their small size, lack of organizational capacity or the general sense among migrants that they would be doing the work that should be the government's responsibility, thus encouraging further state disregard for rural areas.

HTA donations through Programa 3x1 are also limited when municipal governments can't match the migrants’ contributions due to budget restrictions.

Another challenge confronting this partnership program is project management and implementation, which not only includes collaboration between the HTA and the home community, but also with the three levels of government. The reach of HTAs is also inherently  limited by the fact that they are volunteer-based organizations, dependent on the free time and dedication of their members.

Of course, HTAs and collective remittances are not a panacea for underdevelopment in rural Mexico, as their continuation depends on continued patterns of emigration and migrant donations should not be seen as a substitute for effective government development efforts.

The role of the IDB

A recently approved $7 million IDB loan to Mexico will help finance a pilot project to foster social and productive investments in poor rural communities through the 3x1 matching program.

The project will be carried out in the country’s poorest states, where HTAs have experience with the 3x1 program and governments have met their co-investment commitments. It will also provide resources for productive projects proposed by groups of small-scale farmers, cooperatives or small businesses in the states of Oaxaca, Michoacan and Jalisco.