Leading Microfinance Groups...Calvert Foundation's First Local
Read on our Website: http://www.calvertfoundation.org/news_and_media/junction_newsletter/200802.html
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CALVERT FOUNDATION eNEWSLETTER
The Junction - February 2008
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*** NEWSWORTHY ***
FORBES ARTICLE ON MICROFINANCE HIGHLIGHTS CALVERT FOUNDATION'S CONTRIBUTION TO THE FIELD AND RECOGNIZES PORTFOLIO PARTNERS
Forbes says, "A growing number of people are chasing returns in barefoot banking," and it is true. With the increased media attention given to microfinance after Muhammad Yunus won the Nobel Peace Prize in 2006, there are a growing number of ways to support microfinance. Forbes mentioned Calvert Foundation's partnership with MicroPlace.com as one such way to support small local
entrepreneurs around the world. By investing online through eBay company MicroPlace, you can become a part of the microfinance movement without even leaving your home.
Forbes also provided a top 50 ranking of microfinance
institutions, based on scale, efficiency, risk and profitability.
Four of the organizations in this ranking are part of Calvert
Foundation's $40 million dollar microfinance portfolio. We would like to extend congratulations to Fundación Mundial de la Mujer Bucaramanga, Fundación Mundo Mujer Popayán, Fundación WWB Colombia
– Cali, and MI-BOSPO Tuzla for making this top 50 list.
These groups do important work in the field, helping
microentrepreneurs - mainly women - start or grow their
businesses, which creates a better life for them and their
children.
> Read the series on microfinance on Forbes:
http://www.forbes.com/forbes/2008/0107/050.html
> Learn more about our microfinance portfolio:
http://www.calvertfoundation.org/social_impact/impact_sectors/micro...
PHILANTHROPY NEWS DIGEST RECOGNIZES $16 MILLION RECEIVED BY CALVERT FOUNDATION FROM MACARTHUR, OPIC, OMIDYAR AND OTHERS
Philanthropy News Digest recently covered the $16 million in
support that various funders provided to Calvert Foundation for its work on making microfinance investments available online through eBay company MicroPlace.
"These are the organizations that put the financing on the line, both grants and program-related investments, to make possible the groundbreaking initiatives that are attacking poverty head on," said Shari Berenbach, Executive Director of Calvert Foundation.
Berenbach noted the crucial role the funds provided to defray
start-up expenses and establish an essential risk-capital pool
needed to protect retail investors. The fundraising included:
$2.25 million from Omidyar Network (initial grant support for
operations, net assets and loan loss reserves); and $200,000 from the Rockefeller Foundation (grant). Program Related Investments (PRIs) included $1.2 million from the DOEN Foundation (junior subdebt); $2 million from the John D. and Catherine T. MacArthur Foundation (junior subdebt); and $10 million from OPIC (senior subdebt; scheduled to close shortly).
> Read the full article on Philanthropy News Digest:
http://foundationcenter.org/pnd/news/story.jhtml?id=202400005
> Learn more about MicroPlace:
http://www.calvertfoundation.org/get_involved/microplace.html
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*** PORTFOLIO NEWS ***
CALVERT FOUNDATION MAKES FIRST LOCAL CURRENCY MICROFINANCE LOAN
On January 31, Calvert Foundation completed its first local
currency loan to microfinance organization EDPYME Edyficar in
Peru. The transaction loaned the equivalent to $500,000 to
Edyficar in the local currency of Peru, called "Nuevo Soles." The foreign exchange risk – which is usually taken on by microfinance groups – was this time fully hedged through a deal with a major bank. The offering client of Edyficarof local currency loans has become an important trend in the microfinance industry to protect these groups and their borrowers from the risks involved with foreign currency exchange.
The possibility of currency devaluation is a significant risk for
microfinance groups that receive loans in dollars or euros since the local currency rates in the developing countries where they work tend to constantly fluctuate. A study done in 2004 on 23 countries with active microfinance markets showed that over a three-year period, the currencies of 22 of the 23 countries depreciated.
When a microfinance organization borrows in dollars, they exchange the funds at a certain rate (for example, 3 Nuevo Soles = 1 Dollar) to be able to fund microloans in their own local currency. If their local currency depreciates, or become less valuable in comparison to the foreign currency (4 Nuevo Soles = 1 Dollar), the organization is responsible for paying the extra cost (which in this case would be 1 extra Nuevo Sol on every Dollar loaned). This extra cost is often passed on to microentrepreneurs who are borrowing with increased interest rates since earlier rates would not be enough now for the microfinance group to pay off the loan made in dollars.
When a loan is made in local currency, microfinance groups are able to avoid the risk of currency devaluation. Calvert Foundation believes it is important - whenever possible – to avoid passing on this risk to the borrowers that these institutions serve. This first local currency loan represents an important milestone in the development of Calvert Foundation's microfinance portfolio and we are looking forward to increasing local currency lending in 2008.
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*** SPOTLIGHT ON ***
JOIN US! CALVERT FOUNDATION BRIEFING CALL FOR INVESTORS
A home means a lot to the safety and stability of a family.
Yet due to the real estate crisis, many are in jeopardy of losing their homes - particularly low-income families, who are paying the price for Wall Street greed.
Find out how Calvert Foundation is leveraging your investment to preserve critical capital support for Affordable Housing groups working to keep families in their homes. Join us for a private briefing call for investors and supporters!
"The State of Affordable Housing"
March 12, 2008 at 2 pm EDT / 11 am PDT
To receive dial-in information, RSVP to Elizabeth Sessler at
800.248.0337, elizabeth.sessler@calvertfoundation.org, or sign up online at http://www.calvertfoundation.org/signup.
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*** ASK SHARI ***
IS CALVERT FOUNDATION'S AFFORDABLE HOUSING PORTFOLIO STILL PERFORMING WELL DESPITE THE CURRENT HOUSING CRISIS?
Executive Director Shari Berenbach: I am happy to say that these groups in our portfolio are more than weathering this storm – they are actually performing quite well, and continue to meet an ever growing need for their services. In fact, in times like these, it is more important than ever to support investment in responsible groups like these, as credit opportunities dry up and more and more families need help. If you have considered investing in communities but have yet to do so, please know that your investment is needed now more than ever to make a lasting impact on families in need.
Calvert Foundation's Affordable Housing portfolio consists of $20 million in loans to 36 successful, nationally recognized nonprofit housing developers and lenders. An assessment of our Affordable Housing portfolio done in December shows that these groups remain in good financial health with only one borrower experiencing significant credit deterioration as a result of the current dynamics in the housing market. We are working closely with that borrower to restructure the loan and no charge-offs or further restructurings are anticipated at this time.
Calvert Foundation's borrowers continue to succeed at providing affordable financing and homes to low-income communities while avoiding the delinquencies and foreclosure rates common among conventional mortgage banking providers. Nonprofits outperform market-rate lenders for several reasons, such as:
* These groups originate fixed-rate mortgages and have avoided exotic, variable rate mortgage lending where most losses are occurring.
* They are close to and knowledgeable about the communities in which they lend.
* They have excellent pre-purchase and post-purchase counseling systems in place for low-income borrowers.
* They typically retain servicing for the loans that they
originate and know their borrowers well, including how to
communicate with them.
* They are patient and work hard to restructure loans when
borrowers face difficulty rather than foreclosing quickly.
I hope this serves to comfort you that our Affordable Housing
investments are hard at work in an efficient and responsible way. If you are already an investor, you might consider an increase at this vulnerable time for communities – particularly knowing that the Affordable Housing organizations in our portfolio are going against the grain and doing quite well.
I look forward to sharing more on our investor briefing call
March 12th. I hope you will join us!
> Ask Shari a question! Email newsletter@calvertfoundation.org
