11 May The Reciprocity Fund
The Reciprocity Fund
Interview with Maria Luisa Chavez; Latin America Manager of The Reciprocity Fund
Jen: How was The Reciprocity Fund Created?
Maria Luisa: Despite the critical importance of indigenous communities and their stewardship of land and society, indigenous communities throughout the world are disproportionately affected by extractive industries and experience disenfranchisement, economic isolation and exploitation that is far more tragic and profound than is reported through government data or mainstream media. The Reciprocity Fund was created to address this by providing capital to social enterprises that create sustainable livelihoods for indigenous populations, as well as fight the world’s greatest challenges of environmental degradation, declining soil health, and shrinking biodiversity.
A smallholder farmers community that supplies Grupo Xaxeni with native plants for ornamental and plant extract industries. Photo Credit: Beneficial Returns
Jen: How are your investment funds catalytic in a way that is different from other funds?
Maria Luisa: Supporting indigenous systems for resilience and livelihoods is critical to reducing poverty while contributing to the Sustainable Development Goals. We offer affordable long term funding for people that have no access to traditional financial institutions, who have no collateral to secure their loans, and who might have never had a credit experience before us, in spite of all the incredible work they are doing to protect our natural resources and improve the livelihoods of the members of their communities.
Jen: How do you describe the kind of non-financial returns the fund offers?
Maria Luisa: We provide philanthropists the opportunity to increase the social impact of their undeployed charitable dollars. Through the grants or recoverable grants we receive, we offer our investors the opportunity to put their dollars to work more than once (one investment of 7 years can cover more than one loan cycle) in order to generate greater social impact within the most vulnerable communities in Latin America and Southeast Asia.
Jen: Can you describe how you use integrated capital to do your work?
Maria Luisa: In addition to deploying different forms of capital (grants, recoverable grants, loan participations) for providing unsecured loans to indigenous led social enterprises, we also provide our beneficiaries with a great array of network connections and advisory support that can help them grow their business, solve a particular problem they’re facing, or just be able to connect with experts, allies, buyers, investors and donors who provide more resources to the success recipe for each borrower.
Jen: How do you address racial justice, income inequality, and/or gender justice through your products and services?
Maria Luisa: Indigenous peoples represent around 5% of the world’s population but make up 15% of the world’s extreme poor. While indigenous peoples own, occupy, or use 25% of the world’s surface area, they safeguard 80% of the world’s remaining biodiversity. They have been historically marginalized and disenfranchised, economically isolated and neglected for thousands of years. The Reciprocity Fund exists with the purpose of providing loans to social enterprises that work to create sustainable livelihoods for indigenous populations, including them in the financial system and giving visibility and recognition to their work.
Jen: Can you share with us an example of an investment?
Maria Luisa: Simbiosis is a Peruvian social enterprise that provides livelihoods and empowers poor Andean women. The company sells Boletus luteus, a native Andean mushroom, for the export market. The business employs 320 mushroom producers, most of whom are women, who harvest the wild mushrooms and dry them. During mushroom season, which lasts 5-7 months, Simbiosis workers earn an average of USD $500 of supplemental income.
Jen: What do you tell people who think your fund is risky?
Maria Luisa: Directing capital to indigenous communities is challenging because the enterprises are usually remotely located, under-resourced and small, making them higher risk and more costly to service than other investments. With capital in the form of recoverable grants, The Reciprocity Fund is able to efficiently support the growth of social enterprises in indigenous communities, bringing solutions to scale that can preserve land, traditions, and ancestral knowledge that benefits agriculture, medicine, and culture globally. Not investing in these companies is riskier.
The recoverable grants to The Reciprocity Fund are pooled with other recoverable grant dollars and 100% is used to fund loans to social enterprises that support indigenous communities. All administrative costs of the Fund are covered by the 8% interest rate paid by borrowers and by our seed investor. At the end of the seven-year grant period, your grant will be returned less your pro rata share of any loan losses experienced.
Geography: Latin America and Southeast Asia
Year Founded: 2019
# of Investments: 21
# of Investors: 8 (donors, funders, supporters, investors)
Funds Raised: +$1.5 Million USD since inception
What’s on Maria Luisa’s Mind?
Book: Lost Children Archive: A novel by Valeria Luiselli
Song: The Fall – Rhye
Podcast: How to be a better human