Community Development Funds 101: How Fair Trade Standards Unlock Critical Action

Community Development Funds and the Fair Trade Model

When you purchase a Fair Trade Certified™ product, you know that you’re supporting fair wages, safe working conditions, and direct investments into communities through Fair Trade Community Development Funds. So, how do these funds work, and how can you be sure they are truly making a difference?  

Our rigorous standards ensure that farms and factories create positive working conditions and environmental impact, while our monitoring and evaluation processes allow us to receive real-time feedback from workers. In turn, the Fair Trade model is improving lives while protecting our planet—and constantly growing.  

What are Fair Trade Community Development Funds? 

Simply put: farmers, workers, and fishers are our top priority—and Fair Trade Community Development Funds land directly in their hands to be invested in community projects of their choosing. Here’s how it works:  

1. Businesses Pay a Premium: Fair Trade USA industry and brand partners pay an additional sum of money, known as a Fair Trade Premium, that is incorporated into the product’s selling price. These funds go into a worker-controlled Community Development Fund at origin.
2. Workers Take the Lead:  The Fair Trade Committee, a group of democratically elected workers, discuss their community’s most pressing needs and manage the usage of funds.
3. Needs Are Identified: Through a needs assessment process, the Fair Trade Committee forms project plans. Then, the committee presents possible plans to fellow workers. 
4. Community Development Fund Projects are Selected: Workers vote and funds are allocated to projects of their choosing.

Because no one understands a community’s needs better than community members themselves, Fair Trade USA prioritizes worker voice and flexibility, allowing Community Development Funds to be used where they are needed most. 

Members of a Fair Trade Committee at a Fair Trade Certified textile factory in India meeting to discuss the best use for Community Development Funds

Utilizing Community Development Funds

The opportunities for using Fair Trade Community Development Funds are endless. Among the many stories of projects around the world, you’ll find the heart of our mission: unlocking the voices and power that result in thriving communities. The examples are vast, but projects fall into three key categories:   

Community Development 

Community Development Funds often support projects that improve infrastructure and living conditions, including housing projects, solutions for clean drinking water, farm/fishery improvements, or purchasing equipment and tools for workers. In Capulí Grande, Colombia, a community chose to invest in a water treatment plant, giving 70 families access to safe drinking water—an essential step toward a healthier future. 

Resource Distribution 

Funds that are used on in-kind goods may be used to purchase and distribute school supplies, food baskets, home appliances, winter clothing, and more. At a hydrangea farm in Medellín, Colombia, farm workers are using funds to purchase school uniforms for their children, easing the burden of back-to-school costs and ensuring children have fresh uniforms that fit.  

Cash Payouts 

Cash payouts allow for funds to be distributed equally among all workers.  Workers are able to use funds for their personal and family needs. In Svay Rolum, Cambodia, workers at a factory use part of their Community Development Fund for $20USD cash gifts on birthdays. One worker shared that having funds to celebrate her birthday was a yearly morale-booster, and saving money allows her to also purchase gifts for friends and family.  

Pictured: Luz Sisa and her daughter Shirley wave from daycare at a certified flower farm. Their community has utilized Community Development Funds to support education, dental care, and community housing.

Lasting Impact  

Regardless of how they are spent, Fair Trade Community Development Funds are always used to improve quality of life and strengthen communities. Fair Trade USA works closely with partners to gather feedback and ensure workers are confident in fund allocation. These investments create scalable, worker-led change—proving that ethical sourcing isn’t just about better products, but better futures. 

By choosing Fair Trade Certified, you’re not just buying a product—you’re supporting a movement that empowers workers by providing them their own agency to create lasting change in their own communities. And that’s something worth investing in for long term sustainability and worker well-being. 

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