Former Root Capital board chair Ana Zacapa poses with an employee from Cooperativa Cafetalera Ecológica El Rosario Limitada (COCAEROL) on a 2023 visit to Honduras. Credit: Root Capital
Ana Zacapa, Board Member at Root Capital
What are the challenges of impact investment? And how can pioneering finance models help overcome them? Few people are better qualified to answer these questions than Root Capital Board Member Ana Zacapa.
After joining Root Capital’s Board of Directors in 2017 and becoming Chair in 2019, Ana has helped shape the future of the organization, supporting the leadership team in delivering Root Capital’s mission while staying true to its original values.
Ana completed her term as Chair in April 2024, and is serving another term as a board member to continue supporting Root Capital. Below she reflects on some of what Root Capital has achieved, the challenges it has overcome, and the bright future lying ahead.
The Challenge
Impact investment can be challenging. Many impact organizations genuinely aspire to form lasting partnerships with the communities they support, but there is often an imbalance between the parties that makes this problematic.
“Often in practice, relationships end up being ones of giver and receiver, of benefactor and beneficiary,” says Ana.
This is frequently complicated by the sheer size and complexity of the problems that social change organizations are trying to address. How do you catalyze rural prosperity? How do you fulfill such an ambitious mission, while staying flexible enough to change your organizational model if needed?
Lastly, there is a financial challenge. How can impact investors raise the money they need to operate, without hampering their mission? “If they are solely donation funded or they don’t have different types of investors, they may have no choice but to compromise their work,” explains Ana.
Ana Zacapa, former Root Capital board chair, poses with staff from Root Capital and Cafe Organico de Marcala SA de CV (COMSA) at Finca la Fortaleza on a 2023 visit to Honduras. Credit: Root Capital
Our Collaboration
Root Capital has found a way forward to overcome the challenges traditionally associated with impact investing, without compromising on its values. How? According to Ana, the first thing Root Capital understood is that real partnerships are not built overnight.
“At Root Capital, our work relies on having respectful, ongoing conversations with clients. We recognize our clients’ knowledge and expertise, and they recognize ours. We listen to them, and they listen to us. We influence each other. To be able to do this you need trust. Trust is built with time. That is why our relationships with clients are long-term.”
To achieve long-lasting, trust-based relationships, is it essential that leadership teams have deep knowledge of local markets and communities. “Our regional leadership in Latin America and Africa has been with Root Capital for more than a decade and their expertise shapes our vision and guides our work with clients,” says Ana. “The entrepreneurs we invest in see Root Capital leaders as peers and business partners.”
Finally, Root Capital has successfully built a business model that reduces dependency on sources of finance that may hamper its vision and mission. “We focus on a market segment long ignored by conventional capital markets,” says Ana. “This type of market-making is only possible because of our blended capital financial model. It allows us to prioritize impact, while demonstrating the business case so others can follow.”
The Impact
So, what are the outcomes of this innovative approach to impact investment?
“Ultimately, the relationship we create with our clients is one of value exchange and mutual accountability, and this puts both parties, as much as possible, on equal footing, challenging the usual dynamics in social impact work,” reflects Ana.
This ethos has shaped the way Root Capital approaches social impact and change, ensuring that its staff are deeply rooted in the territory, elevating local leaders and voices, and implementing requirements for board members to regularly visit clients as part of good governance.
As a result, the organization’s leadership team is able to tackle the specific challenges of the communities they work with, without losing sight of the complex global issues they’re trying to address and the ongoing challenges with fundraising.
Crucially, for 25 years Root Capital has been able to remain true to its mission, prioritizing impact. “This would not be possible without Root Capital’s pioneering approach as one of the world’s first true impact investors,” says Ana. “Philanthropic funds, government guarantees, low-interest loans, unrestricted funds that can be used for net assets are all necessary for our model to work. It is innovative. It is complicated. It is a lot of work. And yet, our blended capital model is non-negotiable to drive impact and innovation.”
“I feel proud of what we have accomplished so far and excited for what is ahead,” she concludes. “I can confidently say that Root Capital is one of the highest impact nonprofits in the world.”