Microfinance

Nearly 3 percent of the poorest of the world’s population (≈ 200 million people) are not able to set up a bank account, lend money or buy insurance. For these people, microlending may be a life-changing opportunity to gain the necessary capital for their businesses to grow and for the lives and standards of living of borrowers and their families to improve.

Half of our net raised funds (after administration costs, advocacy work and investments in awareness and fundraising) will be invested in microfinance in low- and middle-income countries. The other half, and the interests generated from microfinance investments will be donated to local health and development projects.

We aim to invest – and thus you as a donor or paying member – through The Triodos Microfinance Fund. Our reasons for wanting Triodos to manage our investments are as follows:

  • The Triodos Microfinance Fund only provides loans and equity in developing countries in Asia, Africa, Eastern Europe and Latin America.
  • Loans and equity are provided to microfinance institutions and Small and Medium Enterprise (SME) banks that selectively serve underserved client groups.
  • 83% of borrowers are women (2016).
  • Their investment portfolio is spread across 76 different microfinance institutions and SME banks in 36 different countries (2016). These institutions and banks in turn have more than 18 mio. borrowers (2016). With this level of diversification, the overall risk in the investment portfolio is significantly lowered.
  • Triodos portfolio managers are represented on the boards of all loan recipients. This means that they are able to closely follow the activities of the invidual banks and institutions they lend to, to ensure that quality, environmental and ethical requirements are met by all lenders.
  • They have an average annual return on shares of 4.1% during the past 5 years (2018). Any returns we gain on investments will go directly to funding projects.
  • Triodos Investment Management has more than 25 years of experience with equitable, sustainable investment and manage more than €3.3 billion in assets (2018). This experience is more than we could ever provide as a volunteer-based fund, so instead of using the valuable time of our volunteers to attempt to navigate the terrain of microfinancing across multiple continents ourselves, we will let Triodos manage our investments so we can focus on our core activities: Locally accountable decision-making on health and development projects for the world's poorest.

Example of a business supported by Triodos:

 

The below charts show where half of your money as a donor will be invested (the other half going to health and development projects):


      

The below numbers illustrate characteristics of the Triodos Microfinance Fund portfolio:



Image credit: Triodos Investment Management (http://www.triodosimpactreports.com/inclusivefinance2016), used with permission.


For more details, please see the Triodos Impact Report 2016.