How Business Supports Guatemalan Society

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How Business Supports Guatemalan Society

With Guatemala’s free-market, abundant natural resources, emerging entrepreneurial sector and proximity to the U.S, it is an attractive country for investment.

More than half of Guatemala’s economic activity takes place in four sectors: manufacturing (20%), retail (18%), private sector (14%), and agriculture (12%). New investment sectors are beverage and food processing, forestry, and information technology (USAID).

Textiles and tourism go hand in hand as one of the two main industries and sectors in Guatemala.

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. 

As part of this vision, 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 Guatemala’s society today.

How Businesses Traditionally Support Nonprofits in Guatemala

Woman standing by stove
Nonprofits and the Business community in tandem can help solve social issues in society. Pionero Philanthropy’s partner nonprofits for example can work in cooperation with businesses to install smokeless stoves such as the shown above

The most traditional way that companies can support nonprofits is through monetary funding. Corporate donations are beneficial for the donor through tax breaks, the nonprofit, as their financial burden is lessened, and for the community that the nonprofit supports. With more resources, companies can also subsidize microcredit-lending programs and by extension, the communities and individuals who apply to these programs. 

Some companies assist beyond fundraising, for example in regard to assisting during times of natural disaster and crises within the country they are invested or operate in. 

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

Two Guatemalans looking at a computer
As the largest economy in Central America, Guatemala’s economic sector and entrepreneurial environment are the strongest in the region and growing. 

Stronger development, civil society, and non-governmental organizations go hand in hand and the Biden administration has found new ways of engaging all three. 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.

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, Microfinance, and Remittances in Guatemala

Konojel is a nonprofit partner and shining example of a nonprofit with a social enterprise attached whose restaurant provides work, training, and nutrition to its community and tourists alike.

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.

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, where individuals can apply for a loan regardless of employment or financial status. A good example of this social impact program is Friendship Bridge which is a relevant actor providing micro-finance in rural Guatemala.

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. Whilst utilizing technological advances through Fintech in theory sounds like a positive development, 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 societal 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 civil society including nonprofits.

Boy with wheelbarrow of papayas
A boy in Quiché, Guatemala pushes a wheelbarrow of Papayas to sell. Lack of economic opportunity is a key driver for migration to the US.The main focus of the U.S. is to provide economic opportunities to the Northern Triangle and empower Guatemala’s youth and indigenous women in particular.

Furthermore, given that a lack of economic opportunity is one of the main drivers of migration to the USA, using the business sector to remedy this issue could be a great help to the migration question. An increase in economic opportunities could also foster greater security and prosperity in Guatemala in addition to encouraging those who benefit from these opportunities to stay in their home communities. 

Part of Biden’s strategy to reverse migration is through working with the private and non-profit sector for 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 and as a result provide more opportunities for job security and longevity. 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. For the same purpose as businesses can contribute to social impact long term, nonprofits of all sizes can benefit from the same model. 

All nonprofit partners of Pionero Philanthropy are carefully vetted and selected to be able to support the people of Guatemala in the best way possible. This is a chain that ensures that you as a volunteer, worker, board member, ambassador, or community advocate can get involved and contribute however you want. 

Support does not only have to be active involvement. From your living room, you can browse through Pionero Philanthropy’s nonprofit database, or contact us directly to hear about how you can help strengthen the Guatemala nonprofit ecosystem.

The most important thing you can do is spread awareness about the reality of the Guatemalan people – past and present – and to connect with the nonprofit community either online or offline. 

We look forward to hearing from you soon.

Sources: 

Medium

Marketplace

Joe Biden.com

U.S. Embassy in Guatemala

White House Briefing

Biz Latin Hub

The Central American Group

Duolingo/ Luis Von Ahn