Based on an interview with Shaun Paul, CEO of Ejido Verde, a Mexican regenerative forestry initiative and former IFIP Board.
Relationships and Reciprocity – two of 4 Rs (alongside respect, and responsibility) are foundational values of indigenous philanthropy embraced by IFIP. It is not often associated with impact investing or social enterprise. But according to Shaun Paul, CEO of Ejido Verde, they are vital ingredients in their investing with indigenous communities. In this article, Ejido Verde showcases how social enterprise and impact investment can advance long-term initiatives while bolstering the economic and cultural self-determination of Indigenous communities relying on decision-making guided by valuing relationships and reciprocity.
The Purépecha people of Patamban, Michoacán Mexico have a millennial tradition of tapping resin from their native pine trees without harming the trees. Deforestation, however, has resulted in a decline of pine resin supply crippling the livelihoods of thousands of families and the Mexican pine resin industry despite a strong global demand. Ejido Verde is a response with an aim of restoring communally owned degraded lands by growing 12,000 hectares of native pine forests; now planting more than one million trees annually. Ejido Verde is built from a partnership between forest communities and the resin industry moving forward an 89-year heritage trade relationship.
Since 2014, Ejido Verde has been lending money to the indigenous community of Patamban and many other communities like them to restore degraded communally owned lands by planting native trees to establish ‘pine resin orchards’. The resin tapped by landholders is purchased by local industry and processed into ingredients sold globally for diverse uses including carbonated beverages, adhesives and inks. Communities gradually repay their 0%-interest solidarity loans, not with cash but rather with 10% of the resin they ultimately harvest over a 20-year commitment period. Ejido Verde expects to triple Mexico’s resin production creating thousands of new jobs, and propel entire communities into the middle class.
As a result of Mexico’s land tenure laws and Indigenous People’s defense of their land rights, the land and the trees planted are collectively owned by the Patamban community. Individual landholders can use parcels only with community consent. “Solidarity loans” provided by Ejido Verde to communities require affirming a compact between, investors, landholders, elected community leaders and their general assembly. The process of reaching and honoring investment agreements strengthens community governance. Good governance assures community wealth creation. For example, some communities agree that landholders contribute a portion of their income from resin tapping to support community projects that affirm the preservation of their cultural heritage and forest stewardship.
Communities and industry in Michoacán Mexico that form Ejido Verde share a long-term vision to revitalize their industry, reinvigorate their cultural practices and restore their environment. The partnership is anchored by long-term commitments to plant and tend trees that take 10 years to begin producing pine resin and income. Trees planted today can provide a source of income and livelihoods for 80 years. Thus, relationships today between industry and forest communities are the culmination of three generations engaged in a heritage trade relationship. Relationships today now lean into providing the basis for growing opportunity and prosperity over the next 3 generations.
Reciprocity is another one of IFIPs 4s. Ejido Verde embraces reciprocity by considering the exchange of value adding processes between the earth, resin tappers, their families, their communities, and industry. Reciprocity informs the rights and obligations affirmed in community investment agreements. Reciprocity seeks to replace paternalistic and transactional behavior. Reciprocity guides active financial and non-financial investments into healthy relationships. Ultimately, Ejido Verde’s relationships built with reciprocity reduce costs and supply chain risks while also improving profitability, especially for resin tappers.
In social investment partnerships with Indigenous communities, philanthropy can play an important role. Shaun Paul explains that practices in philanthropy can be transactional and do not lend themselves to the long-term relationships required for transformational change. One-year project grants, for example, too often unintentionally divert attention to short-term outputs instead of what matters most.
Quite often, ‘change makers’, both grantmakers and grantees, adapt the transactional nature of grantmaking to better support transformational change. For example, blended finance strategies used by Ejido Verde and other purpose-driven revenue generating companies rely on philanthropic and governmental funding to reduce risks, build local capacity and sometimes even improve financial returns to attract much larger sums of investment capital. Some examples of the role philanthropy plays at Ejido Verde:
Donations to the US non-profit crowdfunder Kiva are lent to Ejido Verde to administer 0%-interest community loans. When communities repay their loans, the donor can give the same money again, and again.
At Ejido Verde, a philanthropic loan guarantor will repay Kiva for any loan not repaid by communities; this has contributed to attracting 7000 lenders worldwide.
Establishing a loan loss reserve will allow Ejido Verde to use $5 philanthropic dollars to attract $100 investment dollars.
Philanthropy also pays for community training in governance, financial literacy, and environmental education that greatly contribute to ensuring trees planted today offer a source of equitable prosperity over their full life of 80 years or more.