Identifying appropriate funding sources and structures

The funding strategy for a CBT venture is one of the most important determinants of its future success. The local community should be included in decisions regarding funding to increase the sense of local ownership and responsibility for the consequences of those decisions and to make sure that local realities are taken into account when deciding what forms of finance are best suited to the context. Funding sources can include access to credit, loans, or grants from partners or interested external stakeholders.

Finding the right financial fit
The community needs to consider up-front what kind of financing is best suited to their needs and goals. Any CBT venture trying to raise finance should avoid finance options that do not create an incentive for good management performance and practice or that run the risk of causing conflict within or between communities. Community participation in the decision-making about which kinds of loans or grants to apply for is an important part of minimizing future friction over benefit dispersal within the community.

Seeking funding
The business plan should include a financial section that outlines how funding for the CBT operation is crucial to the success of a CBT venture. The business plan should include a funding proposal, which can be used when applying for external funding or access to credit. The management of a CBT venture can seek assistance from stakeholders and partners to draw on external expertise when writing business plans, credit applications, or funding proposals.

Financial planning
It is important that the leadership team of any CBT venture takes into account in its financial planning that tourism is seasonal, with peaks and lows, and thus the income generated by the CBT will fluctuate accordingly. Communities involved in a CBT venture could run the risk of becoming dependent on tourism income and losing the ability to generate income using other skills. Diversification should continue to be encouraged as long as the alternative income-generating activities are not socially or environmentally harmful.

Making profit work for the community
Whenever possible, the profit generated by a CBT venture should be reinvested in the community in which it is based, either through direct profit-sharing schemes or by hiring staff from the local community and sourcing goods and services locally. The CBT management team might choose to collaborate with local government authorities to ensure these funds are used to meet the community’s needs (such as investment in education or social services).