Our Snapshot 2015 series provides a rough sketch of Planting Empowerment five years down the road - from operations to products to impacts. In this part, we describe how the Planting Empowerment business structure looks.

Planting Empowerment in 2015 will be a self sustaining, fast-growing business with approximately 1000 hectares under cultivation, and approaching $6,000,000 of investment raised for the plantations. The business will restructure to become either an L3C or a B-corporation.

An L3C is a new type of corporation whose principal activity is social or environmental improvement, is limited-profitability, and is more "tax-attractive" to institutional investors such as endowments and trusts. With an eye on attaining scale, we are considering this option in order to tap into the social/environmental carve-outs of some of these investors.

B-corporations are businesses certified as meeting standards of environmental stewardship, corporate governance, and employee rights, among many others. We feel this kind of corporation makes sense if there is stronger demand for PE's products from the smaller retail market. Becoming a B-corp would place Planting Empowerment into a group of forward thinking businesses that share a "triple bottom line" philosophy.

The financial vehicle to carry the business forward is still under construction, but there are two possible scenarios of how to reach sustainability:

1. Non-profit ownership of for-profit. Between 2009-2010, Planting Empowerment went through some growing pains. Namely, facing a lack of operating capital, PE decides to go under the wing of its non-profit arm. The non-profit "mother" buys Planting Empowerment in order to secure venture financing for the for profit, and in 2011 is successful in raising $200,000 in operating capital. With the knowledge that the for profit arm would eventually leave the nest, we focus the financing on building a sustainable, scalable operation.

2. Planting Empowerment remains an independent for-profit. In this scenario, PE either scales organically through its consulting activities and sale of its products, or attains venture funding from an angel investor or venture capitalist. We currently see this option as more unlikely, given the long term nature of growing trees, and lack of an exit event for funders.

In either scenario, Planting Empowerment in 2015 is a thriving, self-financed operation.

With our roots in development, Washington DC seems the city of choice from which to run the business. Depending on the type of corporation pursued, the business may be incorporated in a more tax-friendly state, but the main office will remain in our nation's capitol. The office will be staffed by two of Planting Empowerment's founders, along with three fulltime employees. The US entity will issue future offerings, and own the Panamanian operations arm responsible for the planting and maintenance of the plantations. A full time Operations Director will live and work in Panama.

In our next post, we will discuss the specific programs that Planting Empowerment creates to promote sustainable development through forestry.

Operations Director Damion Croston visited Panama in early May. Here he presents a couple of the more important items from the trip.

Small Fire in Plantation

In April we experienced a small fire in one of our plantations in Nuevo Paraiso. A local partner from whom we lease land was clearing an adjacent parcel to plant crops when the fire made its way past the fire break onto our plantation. Thanks to the vigilance and quick actions of worker Jose Rodriguez damage was kept to a minimum. An investigation is currently being conducted to assess total loss and to find ways to prevent another such incident. Sponsors can rest assured that the fire will not affect the value of their holdings, and PE assumes ownership of total losses associated with the incident.

UNDP Project

Last Fall we helped our local partners in Arimae obtain funding from the UNDP-GEF Small Grants Programme to conduct an economically and environmentally beneficial forestry project. We have continued to facilitate the project by providing technical assistance. The community has made significant progress since last year and will plant some of the products from the nursery they built as part of the project next month. In the future the nursery will be used to plant native species saplings which will be sold to Planting Empowerment for use in our own plantations. We will continue to provide our local community partners with assistance and economic opportunities whenever possible.

We started Planting Empowerment because we recognized an opportunity for rainforest communities to profit sustainably from their natural resources. The business model was formed around some basic tenets:

• To slow deforestation, forest dwellers need an incentive not to deforest
• Land tenure is paramount in addressing deforestation
• Rainforest dwellers can earn more from their undervalued parcels of land through sustainable forestry
• Forestry projects would be funded by environmentally and socially-minded investors

Since Planting Empowerment formed in late 2006, we have signed four land-lease partnerships with local Panamanians, planted 22,000 trees over 50 acres, and raised $140,000 from over 100 sponsors to finance these operations. We're pretty happy with the progress thus far, and have received positive feedback from our sponsors, local partners, and government agencies. However, there are still thousands of acres of deforested land available - owned by thousands of rainforest dwellers who want better lives.

As Planting Empowerment enters a growth phase, we are dealing with the growing pains of funding and organizational structure, among others. Sometimes we get so wrapped up in details that we lose sight of the big picture, er, don't see the forest for the trees.

So, in the next few posts we will describe our vision for the upcoming five years. Think of them as snapshots of different areas of the business - operations, environmental and social benefits, business structure, number of trees planted, capital raised, and so on.

Stay tuned.

A few months ago we updated the language on our website in order to eliminate any reference to our products as "investments".

Securities regulations require that public offerings be registered with the SEC - a costly and time consuming process. Thus, Planting Empowerment does not markets investments, but Sponsorships with the expectation of periodic repayments.

From a messaging perspective this gets confusing. Chances are you already understand something about responsible investments, and it is clearer to describe our products as such. However, we are obligated to avoid "investment" language in explaining our products, and that tends to cloud the message.

For example, in comparing website traffic over the last three months with the previous three months, we saw a significant decline in information requests and transactions. We attribute this to lack of clarity about our offerings.

In short, the characteristics of our offerings have not changed:

• You still support sustainable forestry projects in Panama
• You still help to reforest degraded land, create jobs, and promote sustainable development
• We project a "full repayment, plus a bonus"
• We update you on the social and environmental impacts you are creating

You should view sponsorship as a long term comittment. While we are investigating short term revenue-generating activities from the plantations, growing and harvesting trees takes time, and there is a chance that you will not receive repayments. However, through the support of our 100+ customers, 22,000 trees are in the ground, and locals are benefiting from lease payments and increased employment.

Selling securities is expensive. For now this is a cost that Planting Empowerment, as a small organization, can not afford. We are in the process of raising capital to fully register our sponsorships with the SEC, at which point they will become investments. When these steps are completed the investments may be sold through brokerages or as part of a mutual fund - in addition to being available through our website.

The SEC takes measures to ensure that individual investors are protected, and we are fully compliant with their regulations.

Sponsoring sustainable forestry projects is a smart way to look after your own financial interests while doing something good for the planet. The plantation inventory of our Adelante project is 70% sold. If you would like to get involved, please visit our Sponsor page.

We sat down with the Forest Carbon Portal to discuss Planting Empowerment's innovative approach to forestry and carbon offsetting. This interview provides details about our tree plantations and the local communities' involvement in forest-carbon projects. The Forest Carbon Portal is an excellent resource for learning about terrestrial carbon capture projects around the world.

English:

Spanish:

The Christian Science Monitor and The New England Center for Investigative Reporting recently released a six-part report entitled "Blowing Smoke". Most of the stories examine a project designed to produce voluntary carbon offsets that either has not been fulfilled (the Vatican's tree planting scheme in Hungary), or negatively affects native livelihoods (Poor farmers in India lose land to windmills).

Another of the offset projects profiled is managed by SilvaTree, based in Panama. The report claims that SilvaTree is inconsistent in its claims that its pawlonia tree plantations are certified by the Voluntary Carbon Standard (VCS). SilvaTree states that they are taking legal action against CS Monitor for defamation and misrepresentation.

I thought each of the reports was interesting, and recommend reading them. However, we are worried that the SilvaTree exposé will give all forestry projects a bad name. So, we'd like to explain a bit more about how Planting Empowerment operates.

Planting Empowerment doesn't guarantee a financial return. The only guaranteed return I know of is the 0.5% interest on my savings account, insured by the FDIC. And the guarantee is only that I won't lose my principal. Too many timber plantations lure investors by guaranteeing high returns only to disappoint them at year five when promised dividends don't appear. If it sounds too good to be true, it probably is.

We sell a hectare of mixed native species (with 30% teak) for $15,000. We plant 1100 trees per hectare, pay higher prices for land because of our lease model, and share our cut of profits with the landowners/local communities. SilvaTree charges $35,000/hectare and guarantees a higher return while only planting 660 trees. More trees planted doesn't necessarily mean more wood production, but it does provide a larger pool from which to cull and maximize timber quality. Also, PE plantations include at least seven different types of trees. This diversity lowers the risk of blight in our plantations, and reduces exposure to price fluctuations in timber markets.

On purchasing carbon offsets: the forestry carbon market is still young and you should educate yourself about forestry carbon credits at the Forest Carbon Portal website before making any purchases. They put out a good report on the market and you should compare it to SilvaTree's and other businesses' claims about their carbon credits. Planting Empowerment has sold carbon credits, but only in personal deals where both parties understood the transaction and where those credits came from. Planting Empowerment will refrain from selling carbon credits to the general public until the market solidifies and we certify the plantations.

A note about REDD (Reducing Emissions from Degradation/Deforestation) projects in Panama. Investing in any REDD scheme that purports to generate carbon credits is like playing craps. The Panamanian government has yet to decide who actually owns the carbon in the trees. Be prepared to lose all your investment when the government/local landowners get the majority of the revenue from carbon offset sales.

We encourage the ideas that new plantation companies are exploring and their potential to slow deforestation and improve economic opportunities. However, we are skeptical of "guaranteed" returns, monocultures, and promises of selling carbon credits. Most importantly, forestry projects designed to benefit the environment should also benefit locals who depend so much on their natural resources. Our position is that projects that displace or alienate the local population are not sustainable in the long run.

In Panama the weather is separated into two distinct seasons, the wet season (la lluviosa) and the dry season (la seca) which occurs during the months of December through April. Right now Panama is still in the midst of its dry season, and because of the absence of rain maintenance on our plantations has been minimal. This has given us the opportunity to focus on the UNDP – GEF Small Grants Program project that we’re helping our indigenous partners in Arimae to coordinate.

Kate Kirby, who has done a lot of extensive research on carbon emissions and land cover change with the Smithsonian Tropical Research Institute in Panama, completed a participatory mapping workshop in February with community members teaching them how to use GPS units to map coordinates of the forest reserve. This information along with historical knowledge from the community will be used to determine the rate of land cover change over time. When combined with data on carbon storage in different land cover types, this information will give the community the raw data needed to begin the process of estimating its carbon stocks.

Construction of the tree nursery is complete and the seedling trays have finally arrived from the manufacturer in Sweden. This week the community will begin the process of planting the seeds collected from the reserve into the seedling trays. The nursery will produce approximately 9,600 native species saplings which will be ready for transplant during planting season.