A Path to Empowerment: Fundación En Vía’s Formula for Success in Teotitlán Del Valle

Taking out a loan in Mexico where interest rates are among the world’s highest can be a formula for disaster. Fundación En Vía, a nonprofit operating in the Mexican state of Oaxaca, provides no- and low-interest microloans that help women in Zapotec villages, including Teotitlán del Valle, to create and or grow their businesses. Financing the loans through responsible tourism that bring visitors to meet with borrowers, En Vía claims a high payback rate and has increased the educational services it offers to include free English classes to the entire community. By spending time with loan recipients and talking with the administrators of Fundación En Vía, I was able to gather information to demonstrate the ways in which Fundación En Vía has created a successful program for indigenous women to prosper and how it can serve as a model for other nonprofits.

Fundación En Vía has created a kind of social business by focusing on specific communities outside of the city of Oaxaca for its loan program. The dynamic in the villages outside of the city is impacted by globalization, but the lifestyles of the villages and the city are vastly different. Fundación En Vía focuses on the deeply rooted social issues in these communities by utilizing a hybrid model that integrates social purposes typically associated with non-profits and market-based methods associated with for-profit organizations.

Fundación En Vía’s vision for the communities it serves is to create social capital by providing group lending opportunities to women who would like to build or grow their businesses. En Vía is also promoting the growth of human capital by providing business and other classes to the women who obtain the loans through their program. They are “on the path to fighting poverty, strengthening community and creating social change through active outreach and programs” and they empower women to change their “lives, their families and ultimately their futures.”[1]

Fundación En Vía’s Beginning

            Carlos Topete, a local Oaxacan, explains that the creation of the non-profit, Fundación En Vía, was not common by the Mexican government’s standards. Topete’s original idea was to develop tourism, which unfortunately is a taxable venture while the problem he encountered with microloans is that banks cannot be non-profits. He wanted to focus the non-profit on education and the alleviation of poverty. Topete wanted to create this non-profit to help people and specifically focused on the communities that he calls home in Oaxaca.[2]

Topete explains that in Mexico one might create a non-profit in order to solve a problem. For example, there is a taxi association that is not lucrative. Its members pay a fee, and then receive a certain amount of money per drive causing the quotas to break even. The government cannot provide services for everything so this is where non-profits step in. For instance, if there were a Japanese business in town, a non-profit teaching Japanese would most likely be formed.[3]

There are currently 32 types of social businesses with four activities that are tax deductible (not paying taxes means the business is a non-profit). The government pays very close attention to the various activities because they receive money that the government does not get. This means non-profits such as Fundación En Vía are audited every year. The four activities most social businesses focus on are education, health, poverty alleviation, or nature. [4]

Fundación En Vía’s existence is based on trust because they are technically operating around the laws. In order for the non-profit to continue giving loans, everyone involved in the program must build on that foundation of trust. The administration of Fundación En Vía must trust its borrowers and the tourists who help keep the organization alive by taking their tours. Topete realized that he could not try to live out of the non-profit and he needed help creating value in order to employ himself.[5]

Emily Berens volunteered for Fundación En Vía for a year or two and helped really get the organization moving forward to achieve the potential Topete originally envisioned. According to Berens, Topete, or anyone you speak to in the administration of Fundación En Vía, the non-profit works because of its committed volunteers. Their volunteers have helped contribute to their successful payback rate of 98-99 percent.[6]

Topete explains that some non-profits are encouraged to grow horizontally, to more towns, more women, but Fundación En Vía is growing vertically primarily in order to focus on the communities in which it works. This helps the non-profit form personal relationships with the women it serves, which has proven to enhance its high payback rate.[7] In the beginning Topete and his team tried to develop slogan ideas to bring in tourists and capture their attention. One of the first options was “tours that change lives,” but Topete rejected this idea because he said it is hard to change your own life.[8] However, with the assistance of Fundación En Vía’s microfinance program some women in Oaxacan communities have had the opportunity to change their lives.[9] Topete is the kind of leader a non-profit such as Fundación En Vía needs who will motivate employees, give them a mission to care about, and let them know when they are making a difference that counts in the lives of the Oaxacan women.[10]

Topete shares one particular story about a single mother in Teotitlán del Valle whose father was ashamed of her and did not permit her to go out of the house often. Her father took her out of school once she finished the elementary level to make tortillas. A woman who was already involved with Fundación En Vía recommended the young woman to the non-profit. This young woman snuck out of her home to go to Fundación En Vía’s meetings and received her first loan to make tortillas. The young woman’s father passed away and she was then able to obtain a second loan she used to fix her sewing machine. Once the young woman became more involved in Fundación En Vía’s program she took sewing classes so she could operate her sewing machine and she realized she could be independent by making blouses. The young woman confided in Toptete that she feared her daughter would meet the same fate she had, but her daughter has the ability to consider attending a university now. This young woman is one of the many examples Topete used to exemplify how Fundación En Vía helps the women in these communities achieve an alternative way of living.[11]

Berens’s involvement helped transform Fundación En Vía so that it was adapted to serve the needs of the women in the communities. Since Oaxaca is a big tourist state in Mexico, Fundación En Vía could be driven by what borrowers need and the resources they had, which was money and travelers. However, this was not a good enough reason to simply base the program on monetary loans and tours. Berens helped cultivate the idea and implement the business and education classes with loans and tours at the foundation. Every detail of the program is centered on what works best for the borrowers such as the repayment schedule. Berens also emphasized the importance of the committed volunteers.[12] Fundación En Vía has had offers to expand on their opportunities by going worldwide, but the people behind the organization feel they cater to the needs of the specific, local community. Attempting to implement their exact methods in another country or simply another region would not benefit any other specific community’s needs.[13]

According to the non-profit En Vía has a dual meaning: “Emprendedoras y Viajeros, Intercambiando y Aprendiendo” translated as “businesswomen and travelers, exchanging culture and learning” and meaning “on the path.”[14] They are giving the women in the communities in which they work the opportunity to exchange culture and learning experiences with travelers while they follow a path to build their own businesses. Fundación En Vía’s model demonstrates how social value is not one-dimensional and “the business world lives with multiple measures of investment success.”[15]

 

Responsible Tourism

Responsible tourism is a way for tourists to engage and interact with the local people in the communities in which they visit. This type of tourism benefits the local communities and “minimizes negative social and environmental impacts.”[16] The Cape Town Declaration defines responsible tourism as: “(i) minimizing impacts; (ii) generating economic benefits for host communities; (iii) involving local people in decision making; (iv) conserving natural and cultural heritage; (v) providing meaningful connections between tourists and local people; and (vi) being accessible and culturally sensitive.”[17] The idea behind this movement is to create responsible consumers because they are taking a tour of a community that allows them to become knowledgeable about the culture they are exploring and not simply sightseeing without obtaining any new information. By being involved in responsible tourism a tourist is helping to preserve the economy, culture and environment. Fundación En Vía utilizes responsible tourism to fund microfinance loans through its mindful, minimizing technique.[18] Fundación En Vía emphasizes a “high level of involvement and an extrinsic goal direction” meaning that it tries to provide tourists with the ability to become more aware of the Oaxacan communities they explore on a more personal level because they are directly involved in impacting the lives of the women they meet while taking the tour.

Responsible tourism is a key focus of Fundación En Vía’s ability to operate successfully as a non-profit. The tours provided by Fundación En Vía allow tourists to catch a glimpse of the daily lives of a local Oaxacan.[19] The tour takes tourists into the local communities outside of the city center where they are introduced to “different artisanal trades, traditional foods, and local economies.”[20] The tours are a way to facilitate a cultural exchange between people who may never have the opportunity to meet or share their cultures in the same way.[21] This gives the tourists the opportunity to not only support the local community, but also gain a deeper understanding of the way local Oaxacans live and insight into their traditions.[22]

The tours allow people to understand where their money is going because 100 percent of the tour fees fund an interest-free microcredit loan to local Oaxacan women.[23] The outing gives people a chance to see what financial inclusion and education looks like and how important it truly is in the lives of the women who participate in Fundación En Vía’s loan program.[24] Visitors taking the tour have the opportunity to meet some of the women who have received a loan and enjoy a personal view of the local culture and life that is often unavailable on the average tour.[25] Travelers have the opportunity to see how they are affecting the lives of the people who benefit from their excursion fees, which is considered responsible tourism especially considering Oaxaca is the second poorest state in Mexico.[26]

Of all of the many aspects of Fundación En Vía its workshops are unique in that they provide a wide range of themes from branding to health and nutrition.[27] The workshops are at the women’s disposal and Fundación En Vía tries to accommodate the women by providing workshops on any topic the women find necessary.[28] The workshops are designed to help the women in their professional lives and personal lives.[29] One of the annual workshops is branding and designs. I had the opportunity to meet some of the graphic designers that worked with the women on two occasions during the summer to create brands for their businesses.[30] This was a way for the women to introduce the concepts of marketing while building an identity for their businesses through the development of a name and logo.[31]

During my service-learning study abroad trip I had the chance to directly volunteer with Fundación En Vía’s English classes. This program was launched in 2010 and is currently provided in two communities: Teotitlán del Valle and Tlacohahuaya.[32] The classes are offered twice a week to anyone in each community. The program is able to continue because of its team of dedicated volunteers. The courses mostly consist of youth and range from beginner to advanced levels. The people who come to these classes take the time out of their day to learn English from the volunteers and it gives tourists an opportunity to become involved with the local communities on a more personal level. The lessons are not forced upon anyone in the communities. They are something that these communities asked for from Fundación En Vía as a way to learn how to communicate with people who tour their communities. These people who visit Oaxaca predominantly speak English so knowing English is helpful when trying to sell their products.

The impact of responsible tourism on the sightseer varies case by case just like the model used to run and organize a non-profit by vary case by case because they must be constructed to work in the specific community. Responsible tourism creates a socio-moral aspect that is fluid depending on the person taking the tour.[33] Most tourists experience a ‘bottom-up’ approach to responsible tourism because they come in with little to no prior knowledge of the community and while on the excursion they gain a considerable amount of knowledge of the people and the culture.[34]

 

Microfinance

            Non-profits such as Fundación En Vía “play an effective role in working with the poor at the grassroots level in areas involved in addressing the determinants of poverty, creation and testing of new ideas, strategies of poverty alleviation through various local experimentation, consciousness-raising, awareness-building, training among the poor, and their skill development.”[35] Fundación En Vía’s model demonstrates these qualities by addressing the needs of local Oaxacan women and giving them the tools to build or grow their own businesses and empowering them to take charge of their own lives in the process by obtaining an interest free microfinance loan.

Fundación En Vía provides interest-free microfinance loans to groups of three women to give them the ability to choose the path of their own lives. Fundación En Vía’s choice to direct its efforts toward the women in the Oaxacan communities was not accidental. The group most affected by financial exclusion is typically women in many developing countries such as Mexico.[36] This makes sense when looking into the communities’ dynamics where the women typically stay home with the children and take care of the home while the men are the ones who travel to the city or other areas for work. Women do not typically have the opportunities to start or run their own businesses when men are the source of their primary income. The idea of offering modest financial services with zero to low-income borrowers in order to reduce a cultural or physical gap that may be present is another reason Fundación En Vía chose to utilize micro loans.[37] These women in Oaxaca are given access to “affordable, comprehensive, and valuable financial products” because of Fundación En Vía’s microfinance program that is funded by the tours they provide.[38] It has also been proven that women are more capable of repaying microcredit than men and have been known to manage to invest their loan in a more profitable enterprise.[39] Fundación En Vía’s efforts are a way of improving social responsibility by reaching out and gaining loyalty from a group of people who are not typically capable of obtaining microfinance loans.[40] Of the tour fees, 100 percent of the money provides loans to the groups of women.[41] Once the loan is repaid, the money funds another loan, which is then repaid and funds one more loan. After the third repayment the money funds another loan while the remaining money accounts for administrative costs and the education program.[42]

The problem with microfinance is that it has operational limits that are not clearly defined.[43] This is a more recent phenomenon in which Fundación En Vía participates by providing microfinance loans to self-employed workers or individuals who are in charge of small, family-owned businesses.[44] These businesses are often incapable of obtaining bank credit because of their situation and the non-profit acts as a form of ‘social intervention’.[45]

The small businesses that the women own can be expanded, or for those who do not have a business, created.[46] This empowers the women to provide for themselves and their families financially on their own terms.[47] Before the advent of Fundación en Vía the women did not have the opportunity to access fair credit because Mexico’s interest rate on microloans is one of the highest in the world.[48] The rates average at 70 percent and may reach 150 percent according to Fundación En Vía’s research. These incredible rates make the women’s ability to obtain a microloan almost impossible.[49]

The loan program that Fundación En Vía has created has not only enhanced the women’s lives, but it has also helped “funnel a tiny portion of the capital and resources generated from tourism into local communities.”[50] Fundación En Vía’s goal as a local non-profit in Oaxaca is to meet the needs of the community that Topete grew up in by sharing similar ideals and truly relating to the communities. Topete and Fundación En Vía hope to continue this program in order to have a “long-term, sustainable impact on the community.”[51]

Fundación En Vía currently works with over 250 women in six indigenous communities including: Teotitlán del Valle, San Jerónimo Tlacochahuaya, Santo Domingo Tomaltepec, San Sebastión Abasolo, San Miguel del Valle, and Santa María Guelacé.[52] The typical person involved that benefits from microfinance are those who are citizens of developing countries who struggle to provide for themselves, a fact that Fundación En Vía has recognized when choosing to participate in specific communities in Oaxaca.[53] The loans provided to the women range from about 1653 pesos to 4132 pesos (100 US dollars to 250 US dollars). According to Fundación En Vía’s website, they have “given out over 1500 loans to almost 400 women” since 2008.[54]

In 2012 Fundación En Vía altered their program slightly by also providing interest-bearing loans in order to provide women with more prospects such as higher capital.[55] This also allowed the non-profit to provide loans of greater value ranging from 5785 pesos to 9090 pesos (US $350 to US $550).[56] However, the women must complete the original program first in order to obtain the interest-bearing loans. This means that they must complete all three of the interest-free loans: 1653 pesos, 2480 pesos, and 4132 pesos (US $100, US $150, and US $250) and an additional course explaining the interest rates and how to calculate them in order to ensure repayment.[57] The women who have done this no longer participate in the tours.[58] The capital Fundación En Vía gains from the loans is recycled into another loan in order to lend to more women.[59] The costs of running this organization are very high due to the regulations in Mexico on microfinance organizations.[60]

There are three categories of ethical finance that Fundación En Vía demonstrates in its model. The first being finance that supports “the fight against poverty and financial exclusion (inclusive finance)” where the organization has humanitarian and social objectives and donations provide financial sustenance.[61] One of Fundación En Vía’s main goals is to alleviate poverty by providing microfinance loans funded by their tour fees, and to give the women of the Oaxacan communities the opportunities to build or expand businesses. In this way they demonstrate characteristics from the inclusive finance model. The second category is selective finance, which takes on investments for things such as culture, art, social ends, and the environment.[62] Ethical Investment Funds (EIF) make ethical investments that may be on an individual or collective basis depending on the situation and what would work best for the particular community.[63] Fundación En Vía provides its microfinance loans to groups of three women on a collective basis to create interdependence among the women to repay the loan in order to maintain the ability to receive another loan. This non-profit also focuses on preserving the culture, art, social ends, and the environment of the local Oaxacan communities by solely focusing on these communities’ well-being. The final category is compliant finance meaning finance that fulfills “company regulations and associated rules which govern issues related to diligence, fairness, and transparency of adopted behavior.”[64] This entails implementing behaviors that reduce conflict risks between the business and the investors.[65] Fundación En Vía ensures fairness, diligence, and transparency by being open to listening to the needs of the women obtaining the loans and providing what would help them in their businesses. The non-profit also makes sure that it reduces the risk of conflict by maintaining a professional line while also knowing the women on a personal level to balance the reliance of the organization on the women and vice versa. This is the idea of reciprocal trust in order to manage credit risk.

The main features of microcredit include: loan size, financed assets, loan terms, frequency of repayments, credit worthiness analysis, distribution channel, risk mitigation, sustainability, and quality of portfolio.[66] Fundación En Vía sets a specific amount recipients will receive for each level of their loans, which increases with each successful repayment. This organization takes a risk of funding loans to women who do not necessarily have financed assets because they cannot ensure the loan’s repayment. Fundación En Vía also provides the women a set amount of time in which they must repay each loan they receive and where they must repay the loan. The non-profit assumes the risks involved with loaning to women who may have no experience borrowing money because they are attempting to alleviate poverty. Their distribution channel is the money that comes from the tours they provide to the communities outside the city of Oaxaca. The women who choose their groups to obtain a loan with carry out the risk mitigation process. They must assess for themselves whom they deem responsible to repay their portion of the loan. This non-profit is able to sustain itself through the tours it provides and by the dedicated work of its volunteers since it provides interest free loans.

In terms of group lending, Fundación En Vía must have a credit risk mitigation strategy. Fundación En Vía does this by only providing loans to women in groups of three in the beginning of the process to ensure the repayment of the loan. If one member of the group is unable to repay their portion of the loan it is then the responsibility of the other group members to respond to the debts owed. Typically there are five people in a group, but Fundación En Vía’s model utilizes groups of three women since the communities are not large.[67] Fundación En Vía’s model focuses on a peer-monitoring characteristic, a basic principle of group lending. Peer-monitoring creates social pressure and the “beneficiaries of the group carry out constant mutual monitoring on the use of the received funds and on the repayment of capital and interests.”[68] This also gives the women a strong sense of belonging to the community, which works well since the communities in Mexico are generally collectivist societies. The communities in which Fundación En Vía works are more rural, being located on the outskirts of the city of Oaxaca. For example, Teotitlán del Valle is a thirty-minute bus ride outside of the city depending on traffic and has more characteristics of a rural area, such as vast farmland, rather than a busy city center. Fundación En Vía’s model that prioritizes peer-monitoring works well “as long as the bonds in the community are strong, and equal treatment to different borrowers” is ensured, which “can determine adverse selection and moral hazard.”[69]

 

The Grameen Bank

The Grameen Bank, grameen meaning rural or countryside in Bengali, is a financial institution in Bangladesh that was developed in the 1970s because of desperate socioeconomic circumstances.[70] This bank was founded in order to assist the poor, particularly women, in receiving credit if they “own less than half an acre of land or whose assets do not exceed the value of one acre of land.”[71] The Grameen Bank specializes in offering credit to poor, rural women who have historically not had access to formal credit, and this endeavor has shown promising potential in an “otherwise stagnant society of rural Bangladesh.”[72] Many aspects of this bank’s model have been copied in developing countries around the world, however in many instances they are unsuccessful.[73]

In the developing countries that have taken aspects of the Grameen Bank Model, the country has an economic structure that cannot hold up while its political system is in a fragile state.[74] Fundación En Vía, like the Grameen Bank, seeks to deal with the rural sector with informal sources of credit due to the formal financial sector’s unwillingness.[75] These models help with “ceteris paribus, the access to different credits” as informal sectors who are capable of providing “flexible, speedy, collateral-free, and need-based credits to the rural poor.”[76]

The success of the Grameen Bank is that it expanded in the communities in which it intended to work. The Bank began its microcredit program in one village, much like Fundación En Vía, about 25 years ago.[77] The Grameen Bank also shares a high payback rate of around 98.7 percent, bringing it international recognition, like Fundación En Vía has done with its program maintaining a 98-99 percent payback rate.[78] This bank caught the government’s attention due to its successes and currently there are about 13 ministries in the Bangladesh government implementing microloan projects in order to reduce the poverty rates.[79] Fundación En Vía and the Grameen Bank realize that women make up at least 50 percent of a population, therefore when they are excluded from the development process the effect could be disastrous.

Muhammad Yunus is the visionary behind the popularity of microloans and the establishment of banks realizing they could trust the women to payback the loans if a personal relationship is formed insinuating interdependence.[80] Yunus began his work by successfully providing small loans to local villagers and receiving repayments while traditional economic theory and state-run banks that attempted his method had failed.[81] The Grameen Bank and Fundación En Vía recognize how the poor are more honest in their repayment of loans and how they are more likely to work hard in order to “maximize their incomes to repay their loans as well as improving their poverty situation.”[82] These organizations see the potential women have in becoming empowered if only given the opportunity to do so by receiving a loan. The ultimate success of a 98-99 percent payback rate shows that the organizations’ trust in the women to repay their loans is well placed.

Fundación En Vía and the Grameen Bank models target women because their incomes typically go towards the well-being of the entire household. This is the example of “when women earn, children learn” because the women are more likely to put their earnings toward providing the best lives possible for their families.[83] The independence and creative entrepreneurship of the women in the societies that have access to microcredit leads to a reduction in the dependency levels of each new generation leaving each generation with more opportunities for empowerment.[84]

It is no surprise that Fundación En Vía formed after the First World Conference on women in Mexico, “gender issues have become a predominant theme in worldwide development discourse.”[85] An astounding 80 percent of the clients in 34 of the largest micro lenders around the world are women even though not all organizations solely focus on women as loan recipients.[86] While the Grameen Bank’s clientel is 96 percent women, Fundación En Vía’s is focused solely on the women in the communities in which they serve.[87] The successes of the micro credit model that the Grameen Bank has created have not only helped with the alleviation of poverty, but also in areas such as “healthcare practices, family planning, and schooling behavior.”[88]

The Grameen Bank has a ten-point rating system it uses to evaluate the poverty status of its clientele while Fundación En Vía has no such system as of right now.[89] This may be due to the scale at which it operates has not grown to the extent of the Grameen Bank. The Grameen Bank’s model uses this system to evaluate the core poverty indications: “quality of client housing, nutrition, healthcare, and education.”[90] This has aided in the progress and promotion of the “progress poverty index,” which utilizes the economic and income data from specific countries in the development of “tools for measuring poverty status relative to one and two dollars per day purchasing power parity standards.”[91]

The idea behind both of these institutions, Fundación En Vía and the Grameen Bank, is that if they can provide people that are mired in poverty the tools to pull themselves out of poverty then they are more likely to do so. When these people are only supported by financial aid they become reliant on an outside resources when all they really need is someone to give them confidence in their own abilities to pull themselves out of poverty and the resources they need to do it on their own. This holistic approach the Grameen Bank model has paved the way for organizations such as Fundación En Vía to build their own model that specifically focuses on the local communities in which it works. This is another key factor to the successes of these organizations is that they remain local even though their models may influence other support systems to form in another community. Each model for each community must be unique in that it adheres to the needs of that specific community’s socioeconomic standpoint.

There are characteristics that distinguish the poverty lending organizations from financial systems including: objectives, target groups, methodology, services, and costs.[92] Financial systems typically serve poor entrepreneurs while developing “viable financial institutions to serve financial needs of poor MSEs.”[93] Financial systems have mediation between borrowers and savers and “can be streamlined to a minimum.”[94] Poverty lending organizations have objectives that may include: “advance well-being, self-worth, empowerment, attempts to address multiple constraints through provision of multiple services.”[95] These organizations target the poorest populations while their methodology includes loan ceilings and client graduation.[96] Services may include credit and non-financial services, such as the business classes Fundación En Vía provides its clientele.[97] However, unlike Fundación En Vía, some poverty lending organizations may come at high costs to the borrowers.[98]

 

Collectivist vs. Individualistic Culture

Fundación En Vía is operated in a collectivist society where “family connectedness is very important, members seldom are concerned about their individual selves, … change takes place in the context of the family, and the family is an extension of the self.”[99] In an individualistic society people are autonomous beings who “focus on his/her own health outcomes and abilities to make a change without considering family members in the process.”[100] Fundación En Vía’s model considers this cultural orientation. In the typical collectivist society each person is receptive to things that emphasize the consequences that may impact the community or their family as a whole, not just themselves. Fundación En Vía combines these because the collectivist society is prominent in Oaxacan communities, but it is promoting an individualistic outlook in a way by empowering the women to provide for themselves which in turn provides for their families and impacts their community. The non-profits helps women become aware of their own abilities to empower them in their businesses while maintaining their collectivist characteristics with the group lending aspect of the micro loan program.

 

Loan Repayment Process

Topete, the creator of Fundación En Vía gave me the opportunity to visit some of the communities with him, the administrative coordinator and the education program coordinator to see how they receive their payments for the loans. The first place we went to was Santo Domingo Tomaltepec. In this town the women’s meeting area was in the back portion of a shop. The administrative team of Fundación En Vía were greeted graciously and given a place to organize their papers and files. While the two women were setting up, Topete spoke with each of the women asking questions about their families and businesses like a friend would. Once the meeting got started one could tell that it was very relaxed and each woman would go up to pay their portion of the bill. They would then sign a book confirming the amount they paid. If the women themselves were not able to attend the meeting a family member such as a son or grandson would come pay in her place. I noticed immediately that each person on the administrative team working with Topete knew each woman’s name and chatted with her personally when the business portion of the meeting was over or before it started. After the women had all paid, Topete announced Fundación En Vía’s new initiative to build energy efficient clay stoves in various homes and contact information for the women that were interested.

The second site we visited that day was San Jerónimo Tlacochahuaya. This meeting took place at one of the women’s homes behind her house. In this town the women approached the administrative team with their entire group of three to pay while Topete conversed with the other women waiting to pay. Some groups would send one woman to represent her group and pay. For example, one woman did not have time to stay, but she came long enough to give her portion of the payment to another woman in her group to pay on her behalf. At this site I was more aware that there were women of many different ages that participate in the program, younger and older. This meeting was also quite relaxed and personal. The administrative team made sure that they had up-to-date information regarding the women’s phone numbers and names in order to get in touch with them if needed. I also had the chance to see one woman join the program by filling out an application for a loan. She had to provide information about her business and what she needed the loan for such as the items she would buy that would go towards her business. Once the women receive the loan they have one week to buy their materials they listed on the application.

 

Repayment

Many non-profits experience a very poor payback rate.[101] However, Fundación En Vía has a 98-99 percent repayment rate for its microfinance loan program.[102] This works well because non-profits are autonomous and flexible unlike government organizations that are centralized and lack decision-making autonomy.[103] Fundación En Vía is able to overcome the problems of providing micro loans to communities in rural areas by making them interest free, which has prompted the successes of the non-profit allowing it to expand in the Oaxacan communities.

 

Education Program

Some of the best microfinance projects are said to be supported by “offering different types of training courses to the beneficiaries, from management to accounting and also marketing to provide the beneficiary with the necessary abilities to better manage his microfinances.”[104] In situations of extreme poverty the survival of poor women is at stake because “female productivity is on average below that of males’.”[105] Fundación En Vía, like other non-profits, hopes to enable poor women to enter the labor force by creating their own businesses, which in turn contributes to the alleviation of poverty.[106] They do this by providing interest free micro loans, but also making business classes a necessary component to obtaining a loan and offering other courses the women have asked for in order to further their education. Fundación En Vía allows its front-line workers, the women, to share the successes, good practices and new ideas with the organization in order to get what they want out of the program and from their own lives.[107]

Fundación En Vía not only provides microfinance loans to women in the local communities, it also provides relevant educational programs that support an overall well-being of the communities. The educational programs include: business classes, English classes, computer classes, and other workshops. As a required portion of the loan program Fundación En Vía provides business classes to the women obtaining loans.[108] The business classes provide the women with courses to learn basic skills such as “separating business and personal income, recording sales, identifying expenses, and calculating profits, among other principles.”[109] These skills are crucial to managing money and help to improve financial literacy while “promoting better business and loan management practices.”[110] These skills are necessary because the women must stray from their collectivist society ideals when running their businesses in order for them to survive, but Fundación En Vía ensures that the women are able to create a hybrid lifestyle to maintain their independence in their business while living in a collectivist community.

Since technology is an ever-present force in our modern society there is a need for computer literacy classes in the communities. The computer classes offered give the women the opportunity to learn how to operate computers and its applications as well as how to navigate the Internet.[111] The classes allow the women to “discover the vast possibilities the Internet can offer in terms of both personal enjoyment and business opportunities.”[112] This may allow the women to expand their businesses to other regions of the world if they wish or simply promote their business through a Facebook page.

These classes and loans allow the women to gain self-reliance. This helps increase self-reliance at a national level as well, which could be a good thing even in a collectivist society because it teaches participants to be independent when necessary in maintaining their own life. This means that individuals and households are self-supporting based off of their incomes.[113] This would in turn “enable a country to carry out developmental and non-developmental action programs with little or no foreign assistance and aid… free [the people] from all forms of cultural, ethnic, factional and exploitative economic bondage,” and reduce the differences between the rural elite and the poor.[114] These women gain the opportunity to change their lives and their family’s lives. They have the opportunity to pull themselves out of poverty by simply being given a chance to do so and having someone give them the tools to do this efficiently. The education classes provided by Fundación En Vía give the women prospects of attaining a higher education in business skills and to potentially learn English. Simply learning English gives the women the ability to communicate with more of their customers, a choice they made for the betterment of their businesses as well as to have the ability to learn about other cultures from the tourists that come to their towns.

 

Social Change

Fundación En Vía hopes to empower women in the Oaxacan communities in which they work. They emphasize social value whereas a for-profit entity focuses on economic value. Non-profits such as Fundación En Vía are accountable to their stakeholders who borrow money from them while for-profits take accountability for shareholders.[115] The lines distinguishing these two entities have been blurred in some aspects causing neither to be purely for economic or social values. Organizations do not necessarily choose which value they would be more inclined to support. For-profit organizations do not completely rule out social value because it is interdependent when it comes to economic value. For-profit organizations sometimes create social initiatives in order to build on their business models.[116] Non-profits on the other hand are not created to completely resolve social problems while businesses do not “simply make a profit.”[117] Fundación en Vía and the Grameen Bank do not represent traditional non-profits, but characterize a new hybrid model that blurs the line at a social enterprise where the non-profit sits on the line between incomes earned and collected while maximizing social benefits.

Fundación En Vía is a social business in that it creates social and economic value that is not inconsistent or incompatible. By providing tours Fundación En Vía is a business that earns money but that money provides loans to the women in the Oaxacan communities. They are driven in creating social change, leading them to their unique way of doing business and model. Fundación En Vía’s model is described by: “the nature of the social change is embedded in, and happens as a result of the core product or service.”[118] Such social businesses are designed to offer “powerful, sustainable solutions to some of the world’s most pressing problems” such as poverty, especially for women.[119]

Social businesses are not solely profit driven entities because they have the potential to “act as a change agent for the world and sufficient business-like characteristics to ensure it survives to do so.”[120] Fundación En Vía’s tourism portion of their model is essentially a business that collects money from the tour fees, but the twist is that the money funds a microfinance loan. It is not a charity in this sense because they do accept donations. Social businesses can only be self-sustainable if they are able to recover their expenses.[121] The money generated by Fundación En Vía’s social industries are reinvested in their business, but with this model it is reinvested in the women it provides loans to in various forms such as through education classes. It operates just like a typical business with “products, services, customers, markets, expenses and revenues” in a way because it does provide a service to the tourists who visit Oaxaca.[122] The money used for business expenses such as paying employees is only generated once the loan repayment cycle occurs a third time. Fundación En Vía’s primary purpose is to serve the society in which it exists which makes it a social business in this aspect. The non-profit characteristic that separates it from social businesses is that it is not designed to “completely recover their total costs from their operations, and are therefore obliged to devote part of their time and energy to raising money.”[123] This is done through Fundación En Vía’s website and promotional advertisement as well as the tours. Fundación En Vía shares characteristics with social businesses in its model, but does not fully fit into the category with social businesses.

 

Conclusion

            Fundación En Vía utilizes a unique model to function as a non-profit. It is centralized in Oaxaca, Mexico and solely focuses on the women in the towns surrounding the city of Oaxaca. Their model demonstrates characteristics of the Grameen Bank model in many ways, an aspect which has proven beneficial when working in these communities. Like the Grameen Bank model, Fundación En Vía provides microfinance loans to women in various Oaxacan communities, but it does not serve men like the Grameen bank does. Their purpose is to empower women to create their own lives which in turn is beneficial to the communities where they live. These women live in a collectivist society that may not allow them to pursue building a business but Fundación En Vía gives the means to do so. This allows the women to be independent in the collectivist society but these women are also more likely to use their income towards the betterment of family and community.

Fundación En Vía demonstrates qualities of a social business in that they provide tours to people in hopes of providing them more insight about the communities they tour. However, they are not completely a social business because 100 percent of the tour fees fund a microfinance loan that goes to a woman beginning the finance program Fundación En Vía has created. The little profit that Fundación En Vía makes is not made until the third cycle of the loan repayment process. The profit then funds their education programs and paying their small administration staff.

The education programs, like the Grameen Bank model, help to ensure that the women are knowledgeable about how to effectively use the loan and balance their money. This program also includes classes that the women may ask for in order to become more knowledgeable in a specific area that may benefit their businesses. Additionally, they are provided with English classes that are taught by volunteers. If it were not for the volunteers this program could not function as it currently does. The English classes also provide a way for tourists to become a part of the community and understand a part of the culture that they would otherwise not have the opportunity to experience.

Fundación En Vía has a unique model in that they focus their efforts on the local Oaxacan communities rather than trying to expand their model to work in other regions of Mexico or the world. They stay true to their values of hard work and loyalty to local markets. Carlos Topete and his team have helped many women in Oaxaca get on the path to empowerment and have allowed them to continue their successes by simply giving them the opportunity to do so. Fundación En Vía is constantly reaching out more and more every day in hopes of empowering more women to change their lives.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[1] “En Vía,” Fundación Emprende, Intercambia y Aprende, August 20, 2015,

http://www.envia.org/index.html.

[2] Carlos Topete, informal interview, June 8, 2015.

[3] Carlos Topete, informal interview, June 8, 2015.

[4] Carlos Topete, informal interview, June 8, 2015.

[5] Carlos Topete, informal interview, June 8, 2015.

[6] Carlos Topete, informal interview, June 8, 2015.

[7] Carlos Topete, informal interview, June 8, 2015.

[8] Carlos Topete, informal interview, June 8, 2015.

[9] Carlos Topete, informal interview, June 8, 2015.

[10] Paul N Bloom and Edward Skloot, Scaling Social Impact: New Thinking, (Social Entrepreneurship. New York: Palgrave Macmillan, 2010) Page 118.

[11] Carlos Topete, informal interview, June 8, 2015.

[12] Emily Berens, informal interview, September 10, 2015.

[13] Emily Berens, informal interview, September 10, 2015.; Carlos Topete, informal interview, June 8, 2015.; Kim Grove, Fundación En Vía Tour, May 25, 2015.

[14] “En Vía,” Fundación Emprende, Intercambia y Aprende, August 20, 2015,

http://www.envia.org/index.html.

[15] Paul N Bloom and Edward Skloot, Scaling Social Impact: New Thinking, (Social Entrepreneurship. New York: Palgrave Macmillan, 2010) Page 117.

[16] Robert Caruana, Sarah Glozer, Andrew Crane, Scott McCabe, “Tourists’ accounts of responsible tourism.” (El Sevier 46, 2014), Page 116.

[17] Robert Caruana, Sarah Glozer, Andrew Crane, Scott McCabe, “Tourists’ accounts of responsible tourism.” (El Sevier 46, 2014), Page 116.

[18] Robert Caruana, Sarah Glozer, Andrew Crane, Scott McCabe, “Tourists’ accounts of responsible tourism.” (El Sevier 46, 2014), Page 121.

[19] “En Vía,” Fundación Emprende, Intercambia y Aprende, August 20, 2015,

http://www.envia.org/index.html.; Tazul Islam, Microcredit and Poverty Alleviation (Aldershot, Hants, England; Burlington, Vt.:Ashgate, 2007), Page 78-79.; Paul N Bloom and Edward Skloot, Scaling Social Impact: New Thinking, (Social Entrepreneurship. New York: Palgrave Macmillan, 2010) Page 103.

[20] “En Vía,” Fundación Emprende, Intercambia y Aprende, August 20, 2015,

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[21] “En Vía,” Fundación Emprende, Intercambia y Aprende, August 20, 2015,

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[22] “En Vía,” Fundación Emprende, Intercambia y Aprende, August 20, 2015, http://www.envia.org/index.html.; Paul N Bloom and Edward Skloot, Scaling Social Impact: New Thinking, (Social Entrepreneurship. New York: Palgrave Macmillan, 2010) Page 103.

[23] “En Vía,” Fundación Emprende, Intercambia y Aprende, August 20, 2015,

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[24] “En Vía,” Fundación Emprende, Intercambia y Aprende, August 20, 2015,

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[52] NEED A CITATION FOR THE TOUR??

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