How Business Supports Guatemalan Society
In theory, increased investment in Guatemala will positively impact Guatemalan society. As the country has a free-market, abundant natural resources, emerging entrepreneurial sector and proximity to the U.S, it seems to be a great option for investors.
A central part of the Biden U.S – Guatemala strategy addresses how the business sector can address social issues in Guatemalan society. This is to reverse migration flows, combat corruption, and address inequality imbalances.
Done ethically and sustainably, investment and business can support development in Guatemala and can go beyond the private sector.
Local nonprofits in Guatemala can benefit from both foreign and local investments and business structures in their work. Pionero Philanthropy takes a look at the relationships between the private, public, and nonprofit sector and how they affect Guatemalan society today.
How Business Traditionally Support Nonprofits in Guatemala
The most traditional way that companies can support nonprofits and Guatemalan society is through funding. The corporate donor benefits through tax breaks, the nonprofit and community benefits through a lessened financial burden. Companies can also subsidize microcredit-lending programs and by extension, the communities and individuals who apply to these programs.
Some companies assist beyond fundraising. PR services, brand recognition, and other communications assistance are also typical tasks offered to nonprofits. Other donated services include lending office space, free legal services, and as outward ambassador representation roles.
Corporate Social Responsibility (CSR) is a concept that helps businesses to be socially accountable towards the public and its stakeholders. The idea is that the private sector is aware of and sensitive to the direct impact it has on society; social, economic, and environmental. Certifications are an impact measurement tool to build better businesses and are a way of holding different businesses accountable. The SDG Compass or The B-Corp certification are examples of social and environmental performance certifications for companies based on assessments.
New Business Models for Sustainable Development
Stronger development, civil society, and non-governmental organizations go hand in hand and the Biden administration has found new ways of engaging all three in Guatemalan Society. Furthermore, improving Guatemalan livelihoods will also result in financial gains.
The global trend of business for sustainable development has also taken hold in Guatemala. For example, a recent partnership between the U.S and Mexico addresses the lack of economic opportunities in El Salvador, Guatemala, and Honduras, by fostering agricultural development and youth empowerment programs in these countries.
Part of the Biden-Harris strategy is to advance economic opportunities in Guatemala by supporting entrepreneurs, agricultural businesses, and development of micro, small, and medium enterprises in addition to expanding access to affordable housing. USAID has launched a three-year regional initiative to support local partners in the Northern Triangle to increase community resilience. Women’s empowerment initiatives, particularly for young indigenous women in rural areas, are one of the highest priorities. The ($39M) Guatemala Entrepreneurship and Development Innovation Initiative is one example of an attempt to gather public forums of social impact goals.
Commitments from Harris Trip to Guatemala
As part of her trip to the Northern Triangle (El Salvador, Guatemala, and Honduras), Kamala Harris unveiled the agreement of 12 companies and organizations to invest in Guatemala, Honduras, and El Salvador. Concretely, the private sector is supposed to secure inclusive economic growth known as the Call to Action strategy. The 5 key areas are; Reform Agenda, Digital and Financial Inclusion, Food Security and Climate-smart Agriculture, Climate Adaptation and Clean Energy, Education and Workforce Development, and Public Health Access. Existing and new partners are expected to collaborate across global public, private and social sectors and businesses are expected to connect with interagency partners such as Guatemalan Nonprofits to foster a business-enabling environment.
Some technological solutions for businesses to cater to Guatemalan nonprofits are emerging. For example, BAC Credomatic serves a selection of 85 nonprofits in six Central American countries with their banking services.
It is worth remembering that these cooperation models are blurring the lines between organizational structures. New-thinking and innovative projects are not internally nor externally black and white and the danger with mixing for-profit and nonprofit entities makes it unclear for donors and the public about which organizations cater for the social good, who the shareholders are, and what the legal and tax implications are.
This lack of clarity in the division between public, private, and non-profit, will likely continue as companies pay increasing attention to the benefits of cooperating with and investing in civil society.
Impact Investing and Microfinance in Guatemala
Impact investing is investing to generate social, environmental, and sustainable solutions in practice. Guatemalan private sector companies involved in the sector include; The Argidius Foundation, PriceSmart Foundation, IDC-Alterna, Pomona Impact, Ascenda, and Valhalla Capital.
Traditionally, funds from these investment programs are distributed to businesses, not non-profit organizations, which is one of the incentives for non-profits to create income generating arms whose profits feed into the nonprofit entity. Some Guatemalan NGOs engage market-based strategies, impact investments, or launch their own social businesses. Examples of Pionero Philanthropy nonprofit partners who do this successfully in Guatemala include Casa Guatemala, Maya Traditions, Mercado Global, Konojel, and Aktenamit.
Remittances & New Technology
14% of Guatemala’s GDP comes from foreign remittances — mostly from the U.S. This is invariably money that expat Guatemalans send to their families back in Guatemala. A useful support system is microcredit lending, better known as microfinance programs. This is where individuals can apply for a loan regardless of employment or financial status. Friendship Bridge is good example of a relevant local nonprofit actor providing microfinance in rural Guatemalan society.
National banks and the government can together develop cash transfer systems and technological ways for beneficiaries to easily receive subsidies. The Kamala Harris plan is for 12 companies to provide access to internet/ broadband, combat corruption, and provide digital skills. By further educating and digitalizing the public, Guatemalans will have more opportunities and will in theory feel a lower need to leave the country. Furthermore, greater resources will go to causes such as public health, food security, access to credit, climate adaptation and education.
Some are now asking whether implementing Bitcoin currency would be possible in Guatemala after El Salvador’s controversial implementation. However, whilst utilizing technological advances through Fintech sounds positive, there is a significant lack of regulation and security in the sector.
How Business Tackles the Root Causes of Migration
As the U.S. and Guatemala have interlinked issues such as gang violence and drug trafficking, unifying their economic ties would likely reap many benefits. Using business as an instrument to do this could bring together government, policymakers, business, academia, and Guatemalan society including nonprofits.
Given that lack of economic opportunity is the main driver of migration, the business sector could greatly remedy this issue. More employment would encourage those who benefit from these opportunities to stay in their home communities. More economic opportunities could also foster greater security and prosperity in Guatemalan society.
Part of Biden’s strategy to reverse migration is through working with the private and non-profit sector. Interventions include job training, prevention programs, and language learning to tackle the root causes of migration. Furthering the dialogue with Duolingo (and the newly Consejo Nacional Empresarial) and their Guatemalan founder Luis Von Ahn is a concrete example of using mobile applications for language learning in Guatemala — as well as a link between foreign investments and U.S.-Guatemala relations.
Movements towards income generation by nonprofits continue to grow. Consequently, more opportunities for job security and longevity are created in Guatemalan society. The result; greater sustainability and job security for nonprofit staff members and the nonprofit entity itself.
How Supporting Guatemalan Nonprofits Can Help
It is not only companies that need to be ethically and sustainably driven. Nonprofits of all sizes also need to have these core drivers within their core operations.
All nonprofit partners of Pionero Philanthropy are carefully vetted and selected based on select criteria.
Pionero Philanthropy’s evaluation methodology ensures that volunteers, academics, board members, donors or advocates can contribute however they wish.
Contact us directly to hear about how you can help strengthen the Guatemala nonprofit ecosystem.
The most important thing is to spread awareness about Guatemalan society and connect with the nonprofit community.
We look forward to hearing from you soon.