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Calvert Foundation Overview Investing for Social and Financial Return
What is Impact Investing? <ul><li>Investment that delivers a social AND financial return: </li></ul><ul><ul><li>Burgeoning...
About Calvert Foundation <ul><li>For 15 years, Calvert Foundation and its subsidiaries have been pioneers in offering inve...
Here’s How It Works Investors Organizations in our portfolio People left behind by mainstream finance 1. INVEST 5. INVESTO...
Portfolio <ul><li>Borrower Detail </li></ul><ul><li>$193 million portfolio </li></ul><ul><li>250 Borrowers </li></ul><ul><...
Investment Approach <ul><li>100% repayment on investor principal and interest through: </li></ul><ul><li>Diversified Portf...
Investment Process Initial  Vetting Pre- Clearance Memo Term Sheet Due Diligence Disburse -ment Investment Committee Legal...
Client Protection Principles <ul><li>1) Appropriate Product Design </li></ul><ul><li>2) Transparency </li></ul><ul><li>3) ...
<ul><li>Is the MFI in compliance with it’s mission? </li></ul><ul><li>Have you signed on to the Smart Campaign? </li></ul>...
Impact:  Microfinance <ul><li>Small loans to the working poor help them create income-generating opportunities. </li></ul>...
Learn More <ul><li>For more information about how Calvert Foundation:  </li></ul><ul><li>www.calvertfoundation.org </li></...
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Calvert Foundation Overview

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This presentation was delivered to the International Transactions Clinic at the University of Michigan Law School on 12 April 2011.

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Transcript of "Calvert Foundation Overview"

  1. 1. Calvert Foundation Overview Investing for Social and Financial Return
  2. 2. What is Impact Investing? <ul><li>Investment that delivers a social AND financial return: </li></ul><ul><ul><li>Burgeoning new industry with lots of potential for growth </li></ul></ul><ul><ul><li>Drives dollars to low-income communities often neglected by traditional financial institutions </li></ul></ul><ul><li>The ultimate goal of this type of investing is not to maximize profit, but to be part of a sustainable solution to pressing social challenges by empowering people left out of the financial mainstream. </li></ul>
  3. 3. About Calvert Foundation <ul><li>For 15 years, Calvert Foundation and its subsidiaries have been pioneers in offering investment that delivers a financial and social return. </li></ul><ul><ul><li>Over $500 million under management </li></ul></ul><ul><ul><li>More than 8,000 investors </li></ul></ul><ul><ul><li>Investment in more than 250 organizations around the world </li></ul></ul><ul><ul><li>No investor has ever lost money </li></ul></ul><ul><ul><li>Portfolio losses of just over 1% </li></ul></ul>19,910 homes built/rehabilitated 7,300 small businesses funded 34,100 JOBS CREATED IN THE U.S. 304,000 microenterprises launched
  4. 4. Here’s How It Works Investors Organizations in our portfolio People left behind by mainstream finance 1. INVEST 5. INVESTORS RECEIVE BACK PRINCIPAL AND INTEREST 2. WE MAKE AFFORDABLE, FLEXIBLE LOANS USING INVESTOR DOLLARS 3. ORGANIZATIONS FINANCE HOMES AND BUSINESSES, EDUCATION, AND MORE FOR THE UNDERSERVED 4. EMPOWERED COMMUNITIES PAY BACK THEIR LOANS
  5. 5. Portfolio <ul><li>Borrower Detail </li></ul><ul><li>$193 million portfolio </li></ul><ul><li>250 Borrowers </li></ul><ul><li>63% Domestic, 37% International </li></ul><ul><li>Average Loan Size: $900,000 </li></ul><ul><li>Average Term: 3 years </li></ul><ul><li>Loan must be <5% of CF portfolio and <10% of borrower’s total assets </li></ul>
  6. 6. Investment Approach <ul><li>100% repayment on investor principal and interest through: </li></ul><ul><li>Diversified Portfolio: </li></ul><ul><ul><li>250+ nonprofits and social enterprises with strong management, operations, financials, and capitalization </li></ul></ul><ul><li>Professional Management: </li></ul><ul><ul><li>Industry-leading due diligence and monitoring </li></ul></ul><ul><ul><li>99% portfolio repayment rate </li></ul></ul><ul><li>Security Enhancements: </li></ul><ul><ul><li>Over $30 million in sub debt, loss reserves, and net assets </li></ul></ul>
  7. 7. Investment Process Initial Vetting Pre- Clearance Memo Term Sheet Due Diligence Disburse -ment Investment Committee Legal Doc Negotiation Organization is evaluated against Minimum Social and Financial Investment Criteria. Possible investment is analyzed and greatest risks and mitigants described Terms and conditions including financial and social covenants are agreed upon by potential borrower and Calvert Foundation. The term sheet is non-binding. Organization’s financials, management, products and social performance analyzed, political and economic environment described, investment recommendation made in 20pg report Comprehensive loan agreement that includes limits on loan sizes MFIs can extend to clients, reporting requirements on target clients and in some cases social covenants
  8. 8. Client Protection Principles <ul><li>1) Appropriate Product Design </li></ul><ul><li>2) Transparency </li></ul><ul><li>3) Responsible Pricing </li></ul><ul><li>4) Responsible Treatment of Clients </li></ul><ul><li>5) Effective Complaint Resolution </li></ul><ul><li>6) Privacy of Client Data </li></ul>In 2008, a group of microfinance thought leaders determined there was a need for an industry-wide code of conduct and a proactive assertion of microfinance as a double bottom line industry. After gathering further input from an array of industry participants, the Smart Campaign was launched with 6 Principles of Client Protection:
  9. 9. <ul><li>Is the MFI in compliance with it’s mission? </li></ul><ul><li>Have you signed on to the Smart Campaign? </li></ul><ul><li>Does your organization have a written Code of Ethics? </li></ul><ul><li>Has your organization had a social rating in the last 3 years? </li></ul><ul><li>What is the MFI’s Client Retention Rate? </li></ul><ul><li>How does the MFI avoid client overindebtedness? </li></ul><ul><li>How does the MFI ensure transparent communication on product offerings? </li></ul><ul><li>What interest rate methodology is used (flat/declining balance)? </li></ul><ul><li>What is the staff turnover rate? </li></ul><ul><li>Does the MFI offer any social performance training for staff? </li></ul>Key Questions for MFI Impact
  10. 10. Impact: Microfinance <ul><li>Small loans to the working poor help them create income-generating opportunities. </li></ul><ul><li>Increased income to mostly women borrowers, helps create stronger families, communities, & local economies. </li></ul>Real-Life Story: Mary Wanjiru Njaga is a founding member of the Bidii Women Group, the 16th savings and credit group registered with Kenya Women Finance Trust (KWFT) in the Mount Kenya Region. The group was started in 1993, at which time Mary only had a small business. However, with the help of loans from KWFT, Mary now runs her own bookshop called “Market Bookshop.” Mary’s business is flourishing and she can now meet all of her expenses.
  11. 11. Learn More <ul><li>For more information about how Calvert Foundation: </li></ul><ul><li>www.calvertfoundation.org </li></ul><ul><ul><li>Phone: 800.248.0337 </li></ul></ul><ul><li>[email_address] </li></ul>
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