Social Investment and Impact: Case Studies and Trends in Latin America
Nature Pays
Strengthening Community Enterprises through Venture Philanthropy
Nature Pays
Strengthening Community Enterprises through Venture Philanthropy
Mexico / Foundation
Collaboration among local actors is essential to making social and environmental interventions sustainable. In Mexico, the World Wide Fund for Nature (WWF) has played that role in Oaxaca for water conservation alongside Fundación Gonzalo Río Arronte (FGRA). With the implementation of the Nature Pays program, WWF has aimed to promote nature conservation through local community enterprises (LCEs), prioritizing non-financial support for early-stage enterprises, followed by financial support using blended finance. In addition, through Nature Pays, WWF Mexico has participated in the venture philanthropy ecosystem beyond traditional philanthropy.
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Overview
The UN Sustainable Development Goals (SDG) are setting the national and international agenda for all sectors. Based on the SDGs, prioritizing the environment in numerous initiatives has allowed to integrate the social dimension of protecting ecosystems and natural resources. This has demonstrated, in turn, the need to invest financial capital in initiatives addressing environmental conservation, particularly in regions like Latin America, which has the most significant number of megadiverse countries2 in the world and, at the same time, has become a region with high agricultural productivity.
WWF, the leading nature conservation organization in the world, was established in Mexico in 1990 with the mission of protecting biodiversity by producing local solutions with global impact and mobilizing national and international resources to promote a prosperous future in this country.3 This organization found that Mexico will face different threats related to freshwater, climate change, energy, and the conservation of terrestrial and marine ecosystems in the coming decade. Having identified those risks, WWF decided to focus on developing initiatives in several landscapes—including Oaxaca, the most biodiverse state in Mexico, where it works with local leaders and partners to protect its forests. WWF Mexico carries out its actions based on four axes, described in their theory of change (Figure 1).
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The implementation of Nature Pays4 began in 2019 to bolster WWF Mexico initiatives. Nature Pays is a global program to strengthen community enterprises that promote nature conservation. The WWF works on five axes:
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Community organization: Laying the foundations for legal formalization and the consolidation of governance structures for decision-making.
Product design: Helping communities develop sustainable products to generate long-term income to support livelihoods.
Operational capabilities: Supporting the development of capabilities needed for business planning, sales, marketing, and financial management.
Environmental monitoring: Ensuring that business models contribute to conservation by defining monitoring tools and environmental standards.
Investment: Funding community enterprises directly or connecting them with potential funders.
Market access: Helping communities ensure that products are reaching customers in the markets.
To run this three-year program in Oaxaca, specifically in the Copalita-Zimatán-Huatulco landscape, WWF Mexico partnered with Ikea Social Entrepreneurship5 to train 13 community enterprises, 6 of which are women’s cooperatives comprised of 285 members (152 women and 133 men). These enterprises focus mainly on agriculture and the cultivation of plants for reforestation. In addition, they also promote the use of agroecological systems that restore the land and implement sustainable agricultural production practices.
While community enterprises are in different development stages, broad objectives have been set for the program regarding governance, operating structures, business plans, marketing, monitoring, and evaluation capacities. Additionally, a key part of the program focuses on promoting the inclusion of women and youth as decision makers with the capacity to mobilize their communities and bring about positive changes.
2 Brazil, Colombia, Ecuador, Mexico, and Peru.
4 Nature Pays supports more than 200 community enterprises in over 50 countries, from cocoa farming in Bolivia to gorilla conservation in Uganda and bamboo harvesting in the Mekong Delta. These businesses are engaged primarily in six key product types: timber, non-timber forest products, local food crops, fish and meat, handicrafts, and ecotourism.
5 Ikea Social Entrepreneurship directly supports social entrepreneurs and provides financial assistance to intermediaries that support social entrepreneurs. For more information.
Innovated aspects
The Nature Pays program in Mexico stands out for its environmental and social intervention model that has a local approach, that builds on a previous program. This has facilitated financing to community enterprises.6 In that previous intervention, WWF Mexico’s role was to bring Fundación Gonzalo Río Arronte (FGRA) and the local community together. It also worked as a partner in the technical assistance provided to local communities to develop sustainable environmental practices on water conservation and water quality. Thus, WWF Mexico played an active role in promoting water conservation alongside the community, focusing on the social dimension of the problem.
Through this intervention, sustainable production allowed communities to cover self-consumption while opening up the possibility of profitably trading products. Additionally, local communities began organizing for decision making, which facilitated the governance development of community enterprises and allowed for a more active role of women and youth. WWF Mexico saw this scenario as an opportunity. It considered that the previous intervention favored the contextual conditions that enabled the implementation of Nature Pays, adding the technical assistance, research and financing component to the program.
"WWF has been seen in a completely philanthropic way. We are currently serving as finance enablers to break that ‘philanthropy-only’ cycle and thus boost scalable innovations that have a positive return on investment and social and environmental impact."
Lucía Ruíz Bustos
Biodiversity and Finance Coordinator, WWF Mexico.
Considering the finance challenges identified by Nature Pays (the lack of formal finance mechanisms, lack of capacity to attract funding, an investment horizon that may be too long, and a fundamental need for capital7), WWF envisaged financing the community enterprises that had previously participated in the FGRA intervention. Similarly, bringing actors together in the territory, WWF Mexico included two new partners in the partnership—Ikea Social Entrepreneurship and AXA Seguros—to provide finance for the 13 community conservation enterprises that since had started a strengthening process through non-financial support.
FGRA donated $235,000 USD8 to the three basins targeted in the water program, USD 83,0009 of which is allocated to consultancies in Oaxaca; USD 195,00010 to promote REMEXCU and REDMORA (networks and groups that are generators of local knowledge); and approximately USD 265,00011 for wages, travel allowances, supplies, operating costs, field expenses, staff training, etc. In addition, Ikea Social Entrepreneurship contributed USD 1 million, AXA France contributed USD 50,000, and AXA Foundation contributed USD 75,000. These donations were fully earmarked for technical assistance.
WWF Mexico currently seeks to consolidate a blended finance instrument, looking for investors who might provide seed capital for about four of the CCEs that are currently receiving assistance.
"WWF allows an investor to collaborate with local leaders, who in turn can play a role based on their interests and abilities. We bring together interventions in the territory."
Lucía Ruíz Bustos
6 WWF selected a target territory and population that had been part of a program developed by Fundación Gonzalo Río Arronte (FGRA) in Oaxaca since 2004 for the conservation and sustainable use of water. To learn more about FGRA, go to.
7 Walker, Noah (n.d.). Guide for practitioners: A ccelerating community enterprises to promote livelihoods and land/ seascape and river basin conservation. Nature Pays, WWF (p. 12). Accessed at.
8 Equivalent to MXN 41.8 M (based on a rate of 1 MXN to 0,05 USD).
9 Equivalent to MXN 1.7 M (based on a rate of 1 MXN to 0,05 USD).
10 Equivalent to MXN 4 M (based on a rate of 1 MXN to 0,05 USD).
11 Equivalent to MXN 5,3 M (based on a rate of 1 MXN to 0,05 USD).
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Lessons
Considering the impact on the region, producers from San Miguel Suchixtepec now use 64% less water for irrigation and make a more efficient use of fertilizers, bringing down costs by 33% and increasing their production.1212 Moreover, 133 people have achieved better livelihoods by implementing sustainable practices that improve their crops and possibilities of selling beyond self-consumption.
Also, four of the CCEs have broken into new markets. For instance, Unión San Pedro has succeeded in positioning and exporting coffee from San Pedro el Alto. Los Macuiles sells its plant to wind-power generation companies under social responsibility projects. Mbis Bin has expanded its consultancy services beyond Suchixtepec and reached other regions in Oaxaca—it now even provides services in the state of Puebla and to other NGOs like Conservation International and companies like Starbucks. Another example is Nayé, a cosmetic products CCE that, thanks to an angel investor, has improved its production processes, accessed new markets—including e-commerce—and even developed a website and social media. The rest of the CCEs are undergoing a capacity-building process to ensure equitable and fair market access. This shows how Nature Pays and Ikea, alongside Fundación Gonzalo Río Arronte, have had a sustainable impact by strengthening local community enterprises through positive environmental practices and better performance.
The impact achieved in the program’s first stage of execution now faces the challenge of obtaining seed capital for community enterprises as part of Nature Pays’s finance component. Similarly, another barrier to overcome is banking expansion to these communities since, despite efforts made with WWF Mexico’s support, it has proven challenging to have traditional banks approve account openings for local collectives, several of which are comprised of women. There are barriers and prejudices against end beneficiaries of the program when accessing finance by traditional means.
Lastly, to successfully connect with the formal market, WWF Mexico has identified the challenge of fighting informality in community enterprises and including insurance companies to mitigate the external risks that crops and activities carried out by producers entail, mainly owing to changing climate conditions. This is an innovative aspect that opens up the possibility of including insurance companies in the impact ecosystem, especially when it comes to projects related to farming activities in areas that are vulnerable to the effects of climate change.