While sustainable tourism offerings are increasing along with traveler interest in giving back to the communities that they visit, most operators support local organizations through donations. But a growing wave are opting for microfinance to create larger, lasting impacts for more people.
On a recent two-week trip through Morocco, our van of global travelers wound through the High Atlas Mountains. The driver slowed the vehicle as our guide pointed out his window toward a non-descript building set back from the road: “There,” he said. “That’s the school you’re supporting.”
We all looked toward the building, children milling around outside. That was the building our money helped construct. Those were the kids we were helping to educate — all because we booked this particular trip through this particular travel company.
From the Amazon to the Australian outback, tour operators fund thousands of schools, women’s collectives and community-focused organizations. These initiatives support important projects and businesses that, in turn, empower marginalized and at-risk populations, provide needed infrastructure, and help communities develop self-sufficiency.
It makes sense that travel companies invest in projects like these: According to Booking.com's latest annual sustainable travel report, 68 percent of respondents would like the money they spend on travel to go back into the local community. Recognizing the importance of supporting locally based initiatives as part of a community’s sustainable ecosystem while also responding to traveler interest in doing the same, an increasing number of tour companies have made responsible travel commitments a cornerstone of their offerings. For many companies, that means choosing specific local organizations to support financially by donating a percentage of booking fees.
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Yet, a few tour companies are breaking rank from the status quo of donating money directly toward a specific cause and, instead, are investing in microfinance programs.
“Working directly with microfinance institutions in the countries where we travel ensures that local experts drive loan approval and investment,” said Chris Baker, founder of OneSeed Expeditions. “We trust our in-country partners to make the best decision possible about local needs and long-term investments.”
As part of its commitment to making a positive impact in the countries in which it operates, OneSeed —a certified B Corporation — has donated 10 percent of all revenue to local microfinance since its first trip in 2011.
The motivation to fund local community initiatives through microfinancing echoes the common refrain of “give a man a fish and you feed him for a day, but teach a man to fish and you feed him for a lifetime.”
“We do support local charities, too; but I guess we feel that for many local people, it’s just having the capital to start a small business which is holding them back,” said Chad Carey, co-founder of Chimu Adventures. “Why fund a charity, which may give them food and water for a week or month; when, with a little capital, they can start a business and feed themselves and their families for a lifetime?”
By leaving decisions in the hands of people qualified to distribute funds appropriately, leadership at both OneSeed and Chimu feel confident that money is being invested in the people and projects that need it most. OneSeed partners with Kiva in some of the countries in which it works and directly with microfinance institutions in other countries, such as Anza in Tanzania and Banigualdad in Chile. Chimu, which operates in Latin America, also works with Kiva to learn about prospective projects and chooses the ones it wants to fund.
Operating in this way also allows for a more diverse array of businesses to be funded beyond those that might appear glamorous in marketing materials.
“Tourism can provide a massive economic benefit but can be limited to sectors directly related to tourism,” Baker said. “Investing in small local businesses through microfinance allows for a more diverse investment in the economy, often supporting businesses that would otherwise not be supported from tourism — like farming, shops, bakeries, solar energy startups and water treatment products, to name a few.”
Though it might seem like donating money in this manner minimizes control over funding options, the opposite may actually be true because tour operators can closely scrutinize the lending institutions they use.
“Our partner microfinance institutions must operate as a nonprofit, offer a fair interest rate, work with local women, and offer additional services outside of lending like one-on-one mentorship or classes in marketing, business, and finance,” Baker said. With flexibility to choose lenders that meet their needs while leaving specific investment decisions to those lenders’ discretion, tour companies are free to focus on their main business: offering travel experiences.
Using microfinance institutions, both OneSeed and Chimu can clearly demonstrate the financial impact travelers have made on local communities, even if they don’t have glossy photos of the specific people and organizations who have benefited. Chimu has funded 860 projects in 47 countries; 72 percent of recipients are female and 45 percent of loan projects are related to food and agriculture projects. As of March 25, OneSeed has invested more than $369,000 through 824 loans, with an average loan size of $448.
Despite these impressive numbers, the decision for travel companies to choose specific, on-the-ground efforts to support is appealing: Travelers can learn about the specific people and efforts their money supports. Photographs — and even visits during tours — let them see the schools they help build, the businesses they help support, and the beaches they help clean. There’s something in this kind of messaging that makes people feel particularly good about their contributions to local communities.
Seeing the school that my dollars helped fund when I booked a trip to Morocco felt good, but, Carey noted, community investment is about the people who benefit, not about the people who give: “It’s not about providing a tourism side business for us,” he said. “It’s about choosing where we can have the largest possible impact to the most people.”