Wednesday, March 25, 2009

For Profit, For Purpose

We have been listening to and experiencing some pretty amazing things about business and economic life in Latin America but our visit yesterday to two Non-Governmental Organizations (NGOs) the Kallari Cooperative, and the Maquipucuna Foundation were perhaps the most emotionally moving of all of our visits. In both cases very committed people were bringing business skills to create sustainable opportunities for fragile populations and environments.

Ecuador has more than 40,000 NGOs operating within its borders, 400 concerned with issues related to environmental degradation and preservation. There are also a number of NGOs providing social and cultural support for the many indigenous and often poor rural populations of Ecuador.

One of the first Ecuadorean NGOs was started by UC Davis alumna Rebeca Justicia. According to her, “UC Davis has almost everything to do with what we do in Ecuador.” That is high praise considering that Justicia’s Fundacion Maquipucuna is a 15,000-acre, privately owned tropical reserve that protects some of the most biologically diverse land on earth. The Foundation supports scientific study, eco-tourism and provides jobs for many of the area’s rural population.

We met at Macquipucuna’s Quito office where Justicia and her staff, including her co-founder and husband Rodrigo, manage the grant-writing and outreach that sustain the cloud forest preserve about 50 miles away. Rebeca’s story, told over an hour with cups of Macquipucuna coffee, was one of naivete and pluck as well as hard work and persistence.

Rebeca was a student in the 1980s at the University Catholica in Ecuador when Rodrigo, then working as a banker, learned about a spectacular piece of land that had been defaulted on by a timber company. The two of them were concerned about the rapid deforestation of the Ecuadorean highlands and saw this as an opportunity to preserve a special piece of it. Although the bank only wanted $25,000 for the 6,000 acres they had no way to finance it. The bank refused to give it to a non-profit. There are no tax-deductions for donations in Ecuador making philanthropy difficult.

Rebeca went on to UC Davis to study for a BSc in genetics, which she completed in 1988, but she and Rodrigo continued to think about the special piece of Ecuadorian cloud forest that they wanted to preserve. By happenstance a major biological conference was held at UC Davis while Rebeca was doing her doctoral research and she was able to meet several environmental leaders at the conference, including Tom Lovejoy an eminent researcher with the Smithsonian Institution and expert on biodiversity in Brazil.

Rebeca’s story then takes on a madcap character--raising $3,000 at a fundraiser at the Blue Mango Cafe in Davis that allowed her and Rodrigo to fly to Washington to plea their case at the World Wildlife Fund and other major environmental foundations. The rental car company, all out of standard vehicles, rented them a Mercedes-Benz and they were taken seriously by the Washington NGOs.

One month later the The Nature Conservancy called to say they had a possible donor, but he wanted to see the land. Rebeca and Rodrigo, who had recently founded their NGO, begged a storage room in the Quito National Museum, remodeled it as an “office” and tried to look more established and mature when the potential donor visited.

The story goes on from there into many twists and turns, but they received the donation and leveraged it with a “debt-for-land swap,” an idea they learned about from Tom Lovejoy at the UC Davis conference. It is a strategy whereby debtor nations can swap property and cancel loans to international agencies. The exchange rates allowed the donor to greatly increase the impact of his gift.

Today their NGO is a success story that requires constant attention and maintenance. Maquipucuna Reserve hosts students, volunteers and researchers and provides 120 jobs, education and health care to the nearby population while protecting a spectacular and important region. They are constantly looking for economic support.

What is the business lesson we learned here?

Early in their venture Rebeca and Rodrigo followed the traditional Ecuadorian practice of paternalism--giving things away as the grant money came in. “But now we only give jobs or loans” because that creates a sustainable economy. In order to provide ongoing benefits to the environment and the Maquipucuna region, they have started eco-tourism, coffee plantations and a bamboo business. They practice “active capitalism.”

“We do for-profit, and for-purpose.”

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