KATALYSIS BOOTSTRAP FUND

Katalysis in the News

2008-03-28T11:37:00.000-07:00

Thanks to our always supportive Lodi duo of Heather Pyle and Davis Lucas Katalysis is back in the Lodi News Sentinel. The article focuses on the sights and stories of the latest Partnership Journey to El Salvador. Please follow the link below to view the article.

Lending a Hand

Microfinance Fever

2008-03-20T16:33:00.000-07:00

Forbes Magazine’s Mathew Swibel ‘s discusses the increased awareness the microfinance sector has been receiving from global investors. In particular the microfinance sector has enticed many private and high-profile investors to participate in this dynamic and successful effort to alleviate poverty through self– sustained business practices. Socially conscious investors are making wiser decisions as to how and who they decide to invest their money with. Ebay’s founder, Pierre Omidyar has been a long time investor and in the microfinance sector and has recently began to sell microfinance loans online. However, Swibel highlights that not all lenders are good lenders, a list of the Top Ten micro lenders has been provided, the United States does not fall under the top ten.

Microfinance Fever

Coming Soon: Partnership Journey 2008 El Salvador

2008-01-28T13:45:00.000-08:00

Hello and welcome to the first installment of a series of blog postings by the Katalysis Bootstrap Fund. Postings will focus on in country reports concerning the day to day experiences of the group traveling to El Salvador with the Bootstrap Fund. The trip begins on February 3rd and ends on the 9th. So please check back periodically to keep up to date with reports from the field looking at the realities of microcredit in El Salvador.

Microenterprise Update

2007-12-05T14:39:00.000-08:00

Rob Katz explains the difference between the newest web-based microfinance institution, MicroPlace and the very popular Kiva, also a web-based microfinance organization. Kiva was established in 2005 and has received much media attention. Microplace and Kiva have very similar peer-to-peer lending models. However, Katz explains that while Kiva is a NGO, MicroPlace had the resources (with backing from Ebay), to become a SEC-registered broker/dealer. Because of this, lenders on Kiva only receive their loans back - without interest. MicroPlace, as a broker/dealer, can pay interest to lenders and are backed by securities.
Read more at

http://www.nextbillion.net/blogs/2007/10/24/kiva-vs-microplace-whats-the-difference.

Unitus Holds Summit to Unite Microfinance, Business, and Philanthropic Leaders

Unitus, Inc. a leader in implementing new strategies to help the world's poor, held the Unitus Leadership Summit. Unitus invited Pierre Omidyar, an eBay founder and founding partner of Omidyar Network, and Matt Bannick, partner of Omidyar Network and former president of eBay, to provide their insights to the Summit attendees. The Summit's discussion sessions focused on strategy, technology, financing, and business efficiency. Conversations focused on the need to lower operating costs, the importance of developing new products and services to meet the growing needs of the poor, and opportunities to utilize private capital in the microfinance sector. Also discussed was the opportunity for microfinance institutions to provide other products and services, such as healthcare and clean water. Summit attendees ranged from start-ups to highly experienced organizations. All attendees had powerful lessons to share from their experiences fighting poverty.

Read more at http://www.prweb.com/releases/2007/11/prweb565821.htm

Microcredit news

2007-07-23T10:19:00.000-07:00

In early June, Grantmakers without Borders hosted a conference on international grantmaking and social change called Just Giving: Global Social Change Philanthropy. During the conference they discussed such issues as agriculture in Africa, US-consumption and its sustainability, and the challenges and opportunities of microcredit.

On Philanthropy

Microfinance News

2007-06-28T16:48:00.000-07:00

In the Foreign Policy In Focus article Microcredit: False Hopes and Real Possibilities, Robert Pollin, a professor of economic at University of Massachusetts-Amherst, takes a look at how a new microfinance model can bridge the gap between smaller micro credit firms and commercial banks to target small well established businesses.

Foreign Policy In Focus

In an interview with American Public Media's Tess Vigeland, Nicholas Kristof tells of his experience with microfinance and meeting his beneficiaries.

American Public Media

Bootstrap News

2007-06-08T13:52:00.000-07:00

Dean Margee Ensign from University of the Pacific's School of International Studies wrote an article in the Stockton Record about "Putting poverty out of business." She takes a look at the current situation of poverty in the world and how the World Bank has been involved in trying to remedy the situation. She also looks at how local organizations are making a difference and sites how Katalysis and UOP's Global Center for Social Entrepreneurship are helping pave the way toward change.

http://www.recordnet.com/apps/pbcs.dll/article?AID=/20070603/A_OPINION0615/706030312/-1/A_OPINION06

Microcredit in the news

2007-06-08T13:47:00.000-07:00

Microfinance may be the answer to the debate in America about immigration. Elizabeth Napp from The Journal News, discusses the recent death of an undocumented immigrant from Guatemala in New York and how aid and microfinance might alleviate the influx of immigrant to the United States.

http://www.nynews.com/apps/pbcs.dll/article?AID=/20070526/OPINION/705260317/1151

As the G8 2007 meeting is upon us, ways to alleviate poverty are a major portion of the agenda. Here is an article about Germany's proposal for a micro-credit fund for African nations. One of their main goals is to raise aid to 0.7% of GDP by 2015.

http://www.ft.com/cms/s/5d854866-bba8-11db-afe4-0000779e2340.html

Schools can be an important resource in the fight on poverty. This article talks about how one teacher rallied his students to take notice to the challenges people from other nations might face and to do their part and help.

http://www.bakercityherald.com/news/story.cfm?story_no=4984

The Microfinance Experience in Latin America and the Caribbean

2007-04-27T16:48:00.000-07:00

This report by the Inter-American Development Bank outlines the evolution of microfinance in Latin America, from the 1980s to the point that some profitable microfinance institutions seem to be performing more strongly than commercial banks, as well as addresses its effectiveness in comparison to microfinance in Asia. The distribution is considered uneven throughout the region, with better coverage in the smaller countries of Central America. Asia and Latin America seem to have comparable average costs and loan rates, though across Asia it generally seems to be lower, and deposit taking and leveraging up from capital are comparable practices, with the Latin American performance taking the lead in this instance. Another point to be emphasized is the huge share of the economy that micro- and small enterprises comprise, hovering around 40% of the share of GDP for many countries. Considering the large share of the economy that these small businesses comprise, and the need for funds to be more widely available, it is clear how microfinance is helping alleviate poverty. At the time being 5% of microenterprises throughout Latin America are receiving funding from any type of financial institution, showing that there is still lots of room for improvement in coverage.

The full report can be found at: ADBInstitute

Time to Take the Credit

2007-03-30T16:12:00.000-07:00

Microfinance can work. The idea of providing microloans to those who have not previously had access to formal financial services has firmly taken root, supported initially by charities, and then through international financial institutions (IFIs), and has now moved into the realm of profitability. IFI’s have been focusing on providing capital to the same small group of top-tier institutions for quite some time now, although these top-tier micro finance institutions (MFIs) are now attractive to commercial investment. The achievements of these institutions with the support of IFIs are laudable, yet they have reached a point where private investment can take over as funding source, but haven’t widely done so this far. Continued financing through aid monies has been discouraging private investment, hampering the move to fully self-sustained for-profit operations, and limiting the reach of aid money. The microlending market could be more widely covered with investment through commercial monies, and the freeing up of aid monies to be redirected where most needed such as the smaller scale MFI’s.

Original article can be found in The Economist of March 17th, 2007!

Small Loans and Big Ambitions

2007-03-30T16:07:00.000-07:00

With the advancement of microfinance institutions to a level of sustainability and even profitability, people have begun to raise questions of ethics regarding making money off of the poor. Counter to neo-liberal principles, various countries have imposed rules upon lending institutions such as interest-rate caps to regulate the industry, as well as proposals to step in with the offer of subsidized loans. Such moves have been coming together to inhibit its growth, and could possibly even put profitable microlenders out of business. For-profit investment from the private sector has been lacking due to the fear by international banks of attracting the negative stigma of profiting off of the poor, and international financial institutions (IFIS), which have made the microfinance revolution possible in the first place, are now seemingly inhibiting further development of the industry by crowding out commercial lenders. The question remains if the world of microfinance can successfully re-invent itself. Will it be able to attract for-profit investment, and reach the next stage of evolution by becoming a sustainable and profitable enterprise?

Original article can be found in The Economist of March 17th 2007!

IDB Fund to Invest in Microinsurance Venture

2007-03-15T23:42:00.000-07:00

ParaLife, a new microinsurance venture, has become the beneficiary of an investment of US$ 3 million, through the Multilateral Investment Fund (MIF) of the Inter-American Development Bank (IDB). The money is to be geared towards providing life insurance to people with disabilities, low-income families and microentrepreneurs in Latin America.

The organization plans to establish itself in Mexico, from where it wants to expand throughout the region. According to IDB estimates 50 million people are with disabilities in the area and could greatly benefit from the services ParaLife proposes to provide.

For more information:
http://www.paralife.com/ingles/media_news3.htm

Micro Health Plans for Macro Benefit

2007-03-13T00:55:00.000-07:00

With the recent rise of interest in micro-financing programs as a means of combating poverty have also arisen new creative approaches to the micro-scheme. Scott Atlas, professor at Stanford School of Medicine, is reporting on the emergence of micro-health plans, what he dubs as an essential compliment to microcredit. He notes that, “Microcredit did not always succeed in bringing people out of poverty, the major reason being the burden of out-of-pocket health-care payments. In the absence of health insurance, family illness was consuming any money earned.”

The Grameen Bank in Bangladesh provides its clients health insurance for $3 a year per family, thereby helping families avoid financial ruin in the wake of burdensome health expenses. Creative hybrid partnerships with medical clinics, physicians, and volunteers often enable the program, allowing good health to contribute to economic development.

For more info: http://washingtontimes.com/commentary/20070123-101929-1369r.htm

A Better Way to Wire Cash Home?

2007-03-06T09:22:00.000-08:00

Microfinance International (MFIC) is an upstart headquartered in Washington D.C. attempting to challenge the dominance of Western Union in the remittance sector since 2003. Many Microfinance organizations, including partners of Katalysis have been offering this financial service, but Atsumasa Tochisako is adding a spin by implementing new software to facilitate the process. Formerly Japanese banker in Latin America, he is now heading this organization, in an attempt to prove that a financial service company can benefit the poor and still make money.
According to numbers from the Inter-American Development Bank [IADB], “Remittances sent to Latin America and the Caribbean from all parts of the world are expected to exceed $60 billion in 2006, surpassing both the amount of official development assistance and foreign direct investment to the region.” MFIC charges approximately $10 to transfer $200-$1500, whereas Western Union charges $50 for comparable services.
The most significant aspect of the service MFIC offers is that it allows for microfinance institutions in developing countries to process the remittances through a network developed through ARIAS software. This platform brings down the cost of transfer, extends formal finance services to a broader clientele, and all requires no more than a computer and the Internet.
Kai Schmitz, executive vice-president and chief operating officer of MFIC notes “becoming profitable quickly was important for us – to set a standard for other companies that would like to do this.” The company is looking to break even mid-2008.

For full article: Business Week

MIX and REDCAMIF to release first-ever Microfinance Benchmarking Report for Guatemala

2007-03-02T14:39:00.000-08:00

Microfinance Information eXchange, Inc. (MIX) and Red Centroamericana de Microfinanzas (REDCAMIF) are announcing the Benchmark Report for Guatemala, which is to survey the financial and operational performance of microfinance institutions operating in the area. The results used in the report are based on the results of 15 Guatemalan microfinance institutions, and are then compared to others throughout Central and South America, and the Caribbean. As of now the report is available in Spanish, an English version is to be published shortly.

For full article click:
http://www.mixmarket.org/en/news/guatemala_benchmarking.asp

Final Thoughts on Partnership Journey 2007

2007-03-01T09:32:00.000-08:00

Looking back on the trip after after almost a month, I still feel the excitement. The faces and stories are both memories I can both see and hear. This trip that the group went on really was not your average vacation. We dove head first into the realities of life in Honduras. The group saw microcredit's impact on both the rural and urban populations. Also we visited with Journalists, Historians, and other experts to better understand the history, current challenges, and what we can hope for regarding the future of this country. I thought that sharing our itinerary might give people an overall sense of our trip. We really kept a jam-packed schedule as you can see. So thank you for reading the blog and we hope to see you next year. If you have any questions about next years trip please feel free to email us at information@katalysis.org

Katalysis Bootstrap Fund
Honduras Schedule: February 4 – 10, 2007
Center for Global Education Staff: Juan Carlos Lopez and Cesar Acevedo

Sunday, February 4

9:30am Arrive on TACA # 390
12:37 Arrive on Continental # 756
12:40 Arrive on American 953
2:30 Check in at Hotel Portal del Angel
Col. Palmira, Ave. Republica del Peru No. 2115, Tegucigalpa, Honduras. Tel. (504) 239-6538
4:30 Introduction, orientation and schedule review
5:00 Meet with Mario Argueta, presentation on Honduran history
6:30 Dinner

Monday, February 5

7:30am Breakfast
9:00 Meet with Anibal Montoya from FUNED and visit clients
in the Tegucigalpa area
Anibal_Montoya@wvi.org
Melvin Rodríguez – supervisor
Kathy Vasquez- Loan officer
Visited Mr. Miguel Angel Lopez in El Atillo
Visited a communal bank in Colonia 28 de marzo
Oralia Garcia- Loan officer
12:00pm Lunch
Johana Mejia Bonilla- Loan officer
Visited Colonia San Miguel and met with three clients
4:30 Meet with Thelma Mejia; presentation on the current Honduran Situation

6:30 Dinner

Tuesday, February 6

7:30pm Breakfast
8:30 Meet with Raul Sanchez and others representatives
12:00 Lunch
1:00 Depart for Valle de Angeles (shopping opportunity)
3:00 Meet with Mayra Falck; presentation on economic and gender issues in Honduras

6:30 Dinner
7:00 Group session

Wednesday, February 7

6:30 Breakfast
7:00 Depart for La Esperanza
10:00 Meet with Santa de Euceda from ODEF and visit clients in La Esperanza area
Met with the following clients: Graciela Clara, Sergio Giron and Reina Fernadez

12:00pm Lunch
3:00 Depart for San Pedro Sula
5:30 Check in at Gran Hotel Sula

6:30 Dinner

Thursday, February 8

8:00am Breakfast
9:00 Continues visit with Santa Euceda from ODEF in the San Pedro Sula area (same information as above)
12:00pm Lunch
3:00 Meet with Elvin Hernandez from Fe y Alegria in El Progreso; presentation on the present socio-economic situation in Honduras

6:00 Dinner
7:00 Group session

Friday, February 9

7:30am Breakfast
8:00 12:00pm Board of Directors’ meeting
12:30 Lunch
2:00 Final group session and written evaluation
6:00 Dinner out

Saturday, February 10

8:00am Breakfast
8:30 Depart for airport
10:30 Depart for Roatan on Isleña airline # 152
10:00 Depart for airport
1:00pm Depart for the US on Continental # 763
12:30pm Depart for airport
3:15 Depart for the US on American # 942

La Esperanza and Beyond

2007-02-08T20:35:00.000-08:00

Yesterday we traveled to La Esperanza. Not only did we visit our Partner ODEF's office, we also visited the clients in the surrounding rural area. Here are their stories:

Maria Isabel Pineda Sanchez:

Maria has obtained three loans, her first loan was in the amount of 3,000 lempiras (divide by 20 to find the dollar amount). All of her loans were taken out for cultivating fresh vegetables: broccoli, cauliflower and cabbage. Maria is a single mother after being widowed 18 months ago. After realizing the fact that she would need to support her family she decided to take out a loan to continue the business that her husband had started. She counts on her 15 year old son and her only daughter to help her with the day to day operations. Her loan goes to the purchase of seed and fertilizer. The loan from ODEF allowed her to start a new chapter in her life. She is full of pride because she can feed her family. She expressed to us a gratitude like no other because we were the first group to come out and visit her beautiful farm.

Eustacio Gomez:

Eustacia has borrowed 4 times from ODEF totaling 35,000 Lempiras. He is a farmer and his main crop is potatoes. When we went to visit, his family of 6 was present. The little ones were all smiles and the older ones were busy working while their father answered all of our questions. We had many questions for him but one stood out because of his inspiring response. "What is the hardest part about farming and running your business?" He calmly replied that he knew that in order to get ahead and raise his standard of living he would have to face hardships. He didn't think about what was hard and what was not, he just kept moving forward in order to give his children the opportunities that he didn't have.

Senora Enemecia Gonzalez:

Enemecia started with ODEF with a loan of 4,000 Lempira for her weaving business. To date she has borrowed 5 loans in the sum of 28,000 Lempira. Her business employs 5 members of her family. Her family in total has 9 members including her daughter that is 1 year old. With her loans she has been able to purchase and build two new looms in order to keep up with increasing demand for her beautiful weaving. She really showed us the entrepreneurial spirit that microcredit has been able to help her develop.

Day 2

2007-02-06T09:13:00.000-08:00

Yesterday we traveled all over the surrounding areas of Tegucigalpa to meet with a microfinance institution (MFI) as well as entrepreneurs themselves. After a 7:30 breakfast the group hopped in the vans to visit one of Katalysis' Partner MFI's, FUNED. FUNED is based in the city limits and its mission is distinctly Christian based. All of the clients that we met throughout the day were clients of FUNED. So after an overview of FUNED business practices the group got back into the vans to visit or first client of the trip. We traveled up a substantial
hill. After a 30 minute jaunt we arrived at a pulperia (grocery store) we were greeted by two of FUNED's loan officers. We were supposed to meet the women who was receiving the loans but due to a family emergency she had to be somewhere else. But her husband that was running the business with her was present to tell us a little bit about the how microcredit has allowed him to improve the lives of his children, expand their business and make some improvements to their home. Some interesting aspects of this particular borrower are that he has two children attending a private university and he and his wife work about 10-12 hours a day 7 days a week. There are two products that this particular pulperia sold that made it so successful: nacatamales and tortillas. People travel from all around Tegucigalpa and other nearby cities to enjoy the hand prepared food that this family provides. He even said in the past that demand for his product has come from people in the United States. He is pictured below in front of the store.

Our next trip was to a community called 28 de Octubre (28th of October). The name comes from the date that the community was founded.
Within this community there was a group of women and women, that bared the same name as the community, that were part of a community bank. A community bank will receive a loan as a whole and then divide the money accordingly to the members and their businesses. So you have a strict sense of accountability as well as a close knit network of support within these groups. If one perosn defaults on their loan the rest of the group is given the task of finding a way to pay the loan back. We were invited into one of the members homes and with all of us comfortable they each explained what they did with their loans. Some sold clothes, others fruit and one of them was the neighborhood tortilla vendor. All community lending groups have a President, Treasurer, Controller and a Secretary. These positions are voted on democratically by the members of the group. This visit was definitely a highlight for the group. Below is a picture of the group.

We met many amazing people and heard even more amazing stories. This type of travel is very unique and makes one feel many emotions. The people of Honduras are strong and capable people and today we saw that with access to credit lives are changing for the better. So until tomorrow I say goodbye with a little help from my friend below.

Arrival of the Fittest 2-4-07

2007-02-04T19:46:00.000-08:00

Four suitcases, and two participants short we made it to Tegucigalpa, Honduras. The day consisted of missed flights and lost luggage but the majority of us are here and the stragglers will be here tommorow.

After gathering our bearings we made it to the Portal de Angel Hotel in Tegucigalpa. The hotel is majestic and offers us peace and tranquility especially after such a long red-eyed filled day.

We started our trip by commencing to listen to a local historian give us an overview of the History of Honduras. Many questions were asked and many topics were discussed. The speaker really went in depth into some sobering topics that we will witness first hand throughout our adventure. In this hemisphere Honduras is the fifth poorest country with 70% of its poeple living in poverty. Access to water and access to health services are just a few things that are limited or non-existent for these people. Tommorow we will venture out into some nearby communities to witness first hand what micro-credit is doing to help alleviate poverty in Honduras.

After all the hustle and bustle in this day of travel our guest helped us realize at least one important thing, we have finally arrived and it is time to understand this unique and beautiful country. I hope you stay tuned to learn more about our travels.

Hasta Pronto!

Using the Same Tape Measure: MicroRate To Launch Tool for Rating Microfinance Funds

2006-07-12T14:56:00.000-07:00

by Bill Baue

"The rating tool, a project supported by Gray Ghost Microfinance Fund, Omidyar Network, and Gates Foundation, is yet another step toward establishing microfinance as a distinct asset class. SocialFunds.com -- Microfinance, which provides tiny loans to help people bootstrap out of poverty by running small (often one-person) businesses, took another step toward becoming a distinct asset class with the advent of a mechanism for objectively rating microfinance funds. MicroRate, an independent company that already rates microfinance institutions (MFIs), has been working to develop a microfinance fund-rating tool for several years. At a May 1 Silicon Valley Microfinance Network (SVMN) talk, Bob Patillo of the Gray Ghost Microfinance Fund (a $75 million microfinance "fund of funds") announced a project to support the MicroRate rating tool that is also backed by the Omidyar Network and the Gates Foundation."

http://www.socialfunds.com/news/article.cgi/2014.html

Morgan Stanley, BlueOrchard Bond Routes International Investments to Microfinance

2006-07-12T14:55:00.000-07:00

By M. Sapp

Bond to Benefit Low-income Start-up Enterprises in Developing Countries

Originally published: June 13, 2006 Source: Women eNews, USA

"What was once the realm of donor dollars and tiny loans to extremely poor women in Bangladesh is developing into a multimillion dollar market for international investors.
In March, New York-based investment banking giant Morgan Stanley offered a $106 million bond on behalf of 65 microfinancing institutions, or MFIs, and the bond sold immediately. Banks, insurance companies and investment funds from the United States and Europe snapped it up. Dutch development bank, the Netherlands Development Finance Company (FMO), bought 30 percent.

The deal follows two other bonds worth a total of $57 million in 2004 that were offered only in a limited number of markets and currencies. Morgan Stanley's deal breaks new ground by turning international investors in the United States and Europe into microfinance creditors who see new opportunities to profit by helping individuals start up businesses in developing nations.
To read the complete article, please click here."

Summary taken from http://www.microfinancegateway.org/content/article/detail/33672

Wall Street Journal Features Article on New Profit-Based Microfinance Model

2006-07-10T15:22:00.000-07:00

Microfinance has been a non-profit venture since its discovery in the 1970s. This may be a changing reality in the microfinance world. A new profit-based model is emerging in India. The man who is pioneering the movement toward for-profit/ large bank investing in microfinance is 37 year-old Mr. Akula of SKS Microfinance Pvt. Ltd.

Mr. Akula has applied a two step modification to the more traditional micro lending model in order to make the process as efficient as possible. The first step was streamlining. Mr. Akula placed rules upon borrowing and payment. Simple rules allow for loan officers to see more borrowers in the course of a day. Streamlining of payment in combination with the creation of simple loan management software allows for much more efficient accounting practices.

With the reputation of 100,000 borrowers and a default rate of only 2% large lending institutions have become willing investors in SKS’ for-profit style micro-lending. In 2004 Citigroup began lending to SKS and ABN Amro Holding NV and HSBC Holdings PLC were soon to follow.

http://microcapital.org/cblog/index.php?/archives/220-Remember-this-Day-For-Profit-Microfinace-Blazes-Front-Page-of-Wall-Street-Journal.html

Working Through the Details of Microfinance

2006-04-25T11:52:00.000-07:00

On April 19-20th a group of bankers and MBA students and MFI's assemble to talk about micro-financing. The group tries to imagine what life would be like without insurance, credit cards and bank accounts, a common situation in developing countries.

The purpose of this event was to:

Present best-practice microfinance programs from around the world in order to hear what lessons might be learned from the experiences of others
Provide a dynamic forum for microfinance and economic development practitioners with the goal of improving their ability to provide services to small-scale entrepreneurs
Bring attention on microfinance as an important tool for economic development

National Public Radio has a report on the out come.

This audio report can be heard via NPR morning edition:

http://www.npr.org/templates/story/story.php?storyId=5354904

World Economic Forum Report on Microfinancing

2006-04-06T11:10:00.000-07:00

The world economic forum presented a report on Blended Value Investment in March 2006. This report includes some of the most recent innovations and statistics in the field of microfinance. The report is a market based approach to addressing many of the challenges facing the global community. It is a result of the 2005 Davos meeting, where session participants requested that a research project be conducted that could explore in great detail how a variety of capital finance strategies are being applied to the area of blended value investment.

Since the area of microfiance is viewed by many as an excellent example on how economic and social value may be leveraged though investment innovations, participants ask that this research also summarize current practices in microfinance that might inform investment activities in other related areas.

This paper is organized into three inter-related sections, each with case studies presenting details on the process and innovations within the blended investment area. The first section explores debt finance. The second section in which credit guarantees and enhancements. Tea third section deals with private equity investment innovations.

For the full report please visit: www.weforum.org

REPORT: INVESTORS INCREASINGLY DRAWN TO COMMUNITY INVESTING, WITH 40 PERCENT JUMP IN ASSETS

2006-04-04T10:43:00.000-07:00

WASHINGTON, D.C.///March 28, 2006///Community investing -- the capital that institutions and individuals invest in towns and neighborhoods in the U.S. and around the globe that are underserved by traditional financial institutions – surged by 40 percent from 2003 to 2005 and nearly quintupled in the last decade, according to the “Community Investing Trends Report” of the Community Investing Program (http://www.communityinvest.org), a project of the Social Investment Forum Foundation and Co-op America.

With a focus on revitalization through increasing home ownership, small business job creation, and vital community-level services, community investing rose to $19.6 billion in 2005 from $13.7 billion in 2003 and just $4 billion in 1995. Over the past decade, the community investing measured in the report has grown more than 388 percent, making it one of the fastest-growing segments of socially responsible investing (SRI), according to the CI Trends Report.

Shared Interest Executive Director and Community Investing Program Chair Donna Katzin said: “Community investing remains one of the fastest growing areas in the world of socially responsible investing and that trend is likely to continue with the heightened interest in community investing in the wake of Hurricane Katrina. While the socially responsible investment strategies of screening and shareholder advocacy focus on promoting corporate responsibility, community investing enables individuals and institutions to invest directly in local organizations and projects that create more equitable and sustainable communities around the world. The continuing surge in community investing assets is increasing economic opportunities for lower-income communities and spurring industry developments that make it easier for a broad range of investors to participate in this expanding field."

Trillium Asset Management Vice President/Director of Finance and Administration Linnie McLean said: “Investors are increasingly attracted to community investing because it allows them to have a strong impact on low-income communities domestically and internationally while earning a return on their investment. Community investments are helping people rebuild in areas impacted by hurricane Katrina and last year’s tsunami, it’s helping families around the world by creating business opportunities through microenterprise loans, and it’s helping low-income people across the United States take part in the American Dream of owning a home. No matter what their social or geographic interests, investors can find a community investing product that works for them.”

Underdog Ventures President and Founder David Berge said: “It’s really encouraging to see community investors combine their absolute commitment to a positive impact in communities, with an increasing sophistication across the risk and return spectrum. Community investors who began their involvement with market-rate insured deposits at community development banks or credit unions are now turning as well to loan funds, pooled funds and venture capital products to diversify their community investment portfolios while creating a high-impact in targeted communities.”

Highlights of the “Community Investing Trends Report” include the following:

* Since 1999, the first year the Community Investing Program separately tracked community investing sectors, the assets in Community Development Banks have grown more than 247 percent from $2.9 billion in 1999 to $10.1 billion in 2005. Since 2003, assets of Community Development Banks have increased 41 percent from $7.2 billion.

* Assets in Community Development Credit Unions grew by 749 percent from $610 million in 1999 to $5.1 billion in 2005. In 2003, $2.7 billion in community development credit unions’ assets were identified.

* Community Development Loan Funds’ assets increased 97 percent from $1.7 billion in 1999 to $3.4 billion in 2005, growing by $83 million since 2003. Of this $3.4 billion in loan fund assets, $165 million are in international funds that provide or guarantee loans for small business creation and community development abroad.

* Assets in Community Development Venture Capital Funds have grown 480 percent since 1999, from $150 million in 1999 to $870 million in 2005. In 2003, $485 million were identified in Community Development Venture Capital.

* Socially responsible investment professionals and institutions continue to lead in channeling money to community investing, including over $2 billion from Social Investment Forum members.

As the Community Investing Trends Report notes: “Community investing arose to support the spectrum of community development organizations working to revitalize distressed communities. Since the 1970s, national and international community investment institutions have been making loans and investments and creating permanent, positive changes in the poorest neighborhoods in cities, in rural areas, on Native American reservations, and in other places underserved by traditional financial institutions. Economic self-help — the concept of giving a hand up, not a hand-out — and truly empowering the communities served, are at the heart of community investment institution’s missions. Through providing loans and financial services, as well as mentoring and education, these institutions have helped lower income families and communities begin to control their own financial destinies.”

The impacts of community investing can be clearly seen in the areas affected by Hurricane Katrina. For example, in Marrero, Louisiana, Sandra and Alvin LaBeaud suffered extensive damage to their home from the hurricane: the back half of their house was missing, the ceiling had caved in, and there was mold everywhere. Hope Community Credit Union was able to offer them an emergency six-month, no-interest/no fee loan to help the LaBeuads catch up on their mortgage and rebuild their lives. Community investing institutions throughout Louisiana and Mississippi are having similar impacts on people’s lives in affected communities.

HOW TO BECOME A COMMUNITY INVESTOR

Any institution or individual can become a community investor. The Social Investment Forum Foundation and Co-op America encourage all investors to direct at least 1 percent of their assets to community investing. One of the most popular ways to invest in communities is by opening an account at a community development bank or credit union.

Most individual investors open money market accounts or certificates of deposits. Checking and savings accounts, CDs and IRAs also may be provided through community development banks or credit unions, which will use the deposit to strengthen the local community. If there is not a community development bank or credit union in their local community, many investors open up accounts in community investment institutions in other locales

Another approach is to invest in community development loan funds, pooled funds, and venture capital funds. These investments support local or international projects that are serving lower-income communities. For individuals and institutions wanting to invest in mutual funds, some mutual funds have a community investing component as well.

For the most comprehensive list of community investing options, visit the Community Investing Center on the Web at http://www.communityinvest.org.

ABOUT THE COMMUNITY INVESTING PROGRAM

The Social Investment Forum Foundation and Co-op America started the Community Investing Program in 2001 to help spur investment into the community investing field, especially from socially responsible investors. The Program works with institutional and individual investors on overcoming the barriers they face to community investing and educating them about their options. The Social Investment Forum Foundation is a national nonprofit organization providing research and educational programs on socially responsible investing. Co-op America is a national nonprofit organization founded in 1982 that provides the economic strategies, organizing power and practical tools for businesses and individuals to address today's social and environmental problems. The program's Web site is http://www.communityinvest.org.

CONTACT: Patrick Mitchell, (703) 276-3266 or pmitchell@hastingsgroup.com.

Partnership Journey 2006 Managua, Nicaragua

2006-02-28T12:07:00.000-08:00

From February 5th-11th, ten of us embarked on a trip Nicaragua to witness microfinance in action. The group included Board members Ann Hunter Welborn, Dave Brown, Norma Garcia and Norma’s son Mateo, as well as Joe and Judy Johnson of Stockton, CA, and wine makers Heather Pyle and David Lucas of Lodi, CA along with my daughter Maya and me.

On the trip, we visited with 4 of Katalysis Bootstrap Fund's Partners, ACODEP in Managua, Jose Nieborowski Foundation and Prodesa in the city of Boaco, and the Leon 2000 Foundation in the city of Leon. This included meetings with the Directors and key personnel, as well as field visits with urban and rural borrowers. Some highlights of the trip were:

* Visiting owners of two small home based stores near Managua who sell basic products to their neighbors.
* A saddle making business in Boaco. The owner is just 28 and over the past
8 years since he started it, the business has grown to employ more than 23 young men from the community in making leather saddles, which he sells to stores throughout the country.
* A seamstress in Leon who has grown her business and is now making clothing for the domestic market and for export and employing 7 others.
* A small jeweler and a tailor in Boaco who have been able to buy their homes and make improvements to them through the earnings
* A woman who has been selling homemade juices near the University in Leon for over 30 years. With access to loans now she has increased her sales enough to put a new tin roof on her home and tile floors in her home.

We met with Raul Sanchez, and Armando Garcia, Executive Director and President of the Katalysis Central America Microfinance Network, respectively. In one meeting, we met Sonia Aburto, the head of the economic think tank in Managua called FIDEG, which is undertaking a social impact study of microfinance in Nicaragua. We heard from Ms. Aburto how prior to their first study of microfinance 3 years ago she had believed that microfinance did not have a positive impact on the poor. After delving into the study, however, she found herself to be an advocate of microfinance.

For me it was wonderful to connect again with the impact of this work. Meeting the people and hearing their stories brings the purpose of the work to life again in a way that reading about it simply cannot.

The next Partnership Journey will be to Honduras from February 4-10, 2007. For more information contact us at
information@bootstrapfund.org

Best regards,

Christina Jennings
Executive Director
Katalysis Bootstrap Fund

Walls Street Journal Recognizes Success of Socially Responsible Investments

2006-02-23T11:44:00.000-08:00

The Wall Street Journal evaluates Socially Responsible Investments (SRI's). The author highlights different socially responsible loan funds. These funds, similar to the Katalysis Bootstrap Fund, are finding that the number of socially responsible investors is increasing. Written in January 06 the article titled, "A New Way to do Well by Doing Good", gives a fresh look into what SRI's are all about.

Click here to learn more: http://www.post-gazette.com/pg/06005/633114.stm