Community Investing at Trillium Asset Management Corporation Over the Past 25 Years
The concept of “community investing” is as old as money itself. People invest directly in their community for the greater good of that community. It is a notion that modern credit unions are built upon.
In 1973, ShoreBank (then South Shore Bank) opened its doors on the south side of Chicago. While other banks were leaving the inner cities, ShoreBank was incorporated specifically to focus on investing in the neighborhoods it served, becoming the first community development bank. In the early days of the social responsible investing (SRI) movement, local credit unions and ShoreBank were just about the only option for people who wanted to do community investing.
When we were founded, our clients were looking for investment opportunities that would provide a high social impact with a modest return. From the inception of Trillium Asset Management Corporation (Trillium), direct community investment has been a core part of our SRI mission.
In 1984 Joan Bavaria invited Chuck Matthai of the Institute for Community Economics (ICE), an organization that helps communities create and sustain land trusts, to a meeting of the Social Investment Forum. It is likely that this was the first time a nonprofit organization with a loan fund would meet directly with SRI managers. Trillium clients began investing in ICE later that year. Many of the clients who made early investments with ICE are still invested in their loan fund.
Our clients were among the first investors in many early community loan funds. Lakota Funds, a Native American CDFI[1] based on the Pine Ridge Reservation, Boston Community Capital and Opportunity Finance Network, among others, received early investments from our clients.
At Trillium, final investment decisions regarding community investments are ordinarily made only after consulting with the client. Clients may authorize TAMC to invest in a range of community investments without further consultation. In total, we have a portfolio of about three dozen international and domestic loan funds, and community banks and credit unions where our clients can invest. We have the ability to invest in organizations that fit the social and geographical concerns of our clients. If a client has a social and/or geographical interest that Trillium can’t fill, we will work with them to find an organization that meets their need.
Trillium made an early commitment to join the Social Investment Forum’s “1% or More in Community Campaign,” pledging that at least 1% of our assets under management would be in community investments. We are also part of an inaugural group of CDFI investors, including banks, socially responsible investors, and foundations, to use CARSTM [2]ratings in our due diligence process.
The money that our clients have placed in community investments instruments has provided capital to non-profit organizations that have created and saved tens of thousands of jobs and homes in the communities they serve. The patient capital these investments provide has been used in the U.S. and in countries on five continents.
The community investing industry still faces many challenges. Currently, most community investments are made manually, with pen, paper and the U.S. mail. Broker/Dealers are reluctant (or refuse) to hold these assets in their client’s account. Over the next decades, much work will need be done to standardize community investments and broaden the market and impact. At Trillium, we see a future where community investments are analyzed and rated by traditional investment analysts and are held and traded on the open market, much like stocks and bonds.
It is a daunting task, but we believe that the SRI community is up for the challenge.
[1] Community Development Financial Institution, or CDFI, is a U.S. Treasury Department designation adopted in 1996
[2] The Community Development Financial Institutions Assessment and Rating System (CARS
TM) is a third-party administered analysis and rating of non-bank/credit union CDFIs. It was developed by the Opportunity Finance Network to aid investors in their investment decision process.
Mercy Loan Fund/ Mercy Housing, Inc.
Vision / Mission
Mercy Loan Fund (MLF), along with its parent organization Mercy Housing, Inc. (MHI), works to create a more humane world where poverty is alleviated, communities are healthy and all people can develop their full potential.
MLF provides capital to community-based affordable housing developers with financing needs that are unmet through traditional financial institutions. MLF’s loans are used to develop, finance and operate affordable, program-enriched housing for families, seniors and people with special needs who lack the economic resources to access quality, safe, housing opportunities.
History
In 1981, the Sisters of Mercy of Omaha found that a lack of adequate housing was the root cause of many of the health and education problems they saw in their community. With an initial investment of $500,000, they founded MHI in Nebraska.
The Sisters began by acquiring properties that were at risk of being sold at market rate. They renovated the properties and leased them to low-income people. The Sisters realized that they wanted to provide services and programs that would help residents stabilize their lives and thrive in the community.
MLF was founded in 1985 to provide financing for non-profit organizations, enabling them to develop affordable housing in their communities. MLF finances the development of single- and multi-family homes for rental and homeownership.
Programs / Impact
MHI, with support from MLF, has developed more than 19,100 affordable homes, both rental and single family, serving more than 58,000 people in 31 states, on any given day. An additional 8,153 homes are in the pre-development, construction or concept phase.
MHI employs over 1,160 people nationwide providing property management and on-site resident programs including computer centers, arts programs, health classes, financial education programs, employment initiatives and homeownership seminars that are funded through grants and donations.
MLF loans have ranged from $25,000 to $2.1 million, with an average term of 3.5 years. Some examples include:
- Lines of credit to affordable homeownership programs, used to purchase and rehabilitate single-family homes for sale;
- A predevelopment loan to assist with acquisition and rehabilitation of a single-room occupancy apartment building for people who are single, disabled or living with HIV/AIDS;
- A gap loan to a residents’ cooperative to purchase a 150-space mobile home park for seniors; and,
- A loan to help a tenants’ association purchase and convert a 15-unit rental property into a cooperative.
Client Population
The median annual income of families at MHI is $18,892. The median annual income of seniors is $12,106; and the median income of special needs residents is $9,167. All residents have household incomes below 80 percent area median income.
Seventy-eight percent of residents are families, 14 percent are seniors, 8 percent are people with special needs, including people with HIV/AIDS, formerly homeless, and people with physical and mental impairments. Currently, 58 percent of those served by MLF’s loans are ethnic minorities and 61 percent are female
Investing with MLF
On behalf of our clients, Trillium Asset Management Corporation (“Trillium”) made its first investment with MLF in 1990. Trillium, at a client’s request, will make investments in MLF of at least $5,000 for a term of not less than two years.
MLF is a registered with the Treasury Department as a Community Development Financial Institution and is a member of Opportunity Finance Network.
Self-Help
History/Overview
Self-Help Credit Union (SHCU) is a federally insured, state-chartered credit union located in Durham, North Carolina. Since its founding in 1984, SHCU’s mission has been to help build assets, creating opportunities for families and their communities. As a federally recognized community development financial institution, SHCU uses interest-bearing deposits, such as Certificates of Deposit (CDs), to make home and commercial loans to help those that cannot obtain financing from conventional lenders. SHCU programs have assisted minorities, women, rural residents, and low-wealth families to buy homes, to build businesses, and to strengthen communities.
For loans closed in 2006, 29% of SHCU’s borrowers were women and 80% of borrowers were people of color. Seventy-four percent of borrowers had a household income at or below 80% of the area median income.
Programs
SHCU’s deposit products include savings, money market, CD, and IRA accounts. ATM cards connected to money market accounts provide nationwide ATM access, and can be used without fee at select ATM machines in NC. SHCU recently merged with three full-service retail credit unions in Wilson, Laurinburg, and Wilmington NC.
SHCU has multiple loan programs that include real estate development, secondary market mortgage financing, home mortgage lending, small business lending and community facilities lending.
Through its secondary market program, Self-Help (The umbrella organization that includes SHCU, Center for Responsible Lending, Self-Help Ventures Fund, and the recently merged credit unions) works to increase the flow of money available for fair mortgages in the sub-prime mortgage market by partnering with Fannie Mae, the Ford Foundation, and mainstream lenders.
Policy & Advocacy Work
Self-Help uses its experience in lending and community development to inform its positions on public policy issues, and is a strong advocate in the national community development and credit union fields. Self-Help continues to fight predatory lending practices that strip wealth from low-income families. The affiliated Center for Responsible Lending uses Self-Help’s lending experience to recommend practical solutions to predatory lending abuses in legislative and regulatory arenas.
Self-Help has lead the effort to expose the dangers of sub prime “exploding” adjustable rate mortgages to Congress and regulators and authored widely cited reports on sub-prime mortgage foreclosures, overdraft loans, and payday lending.
Impact
Since its founding, Self-Help has financed $5 billion in loans to 55,000 homeowners, small business owners, and nonprofits in North Carolina and around the country. In 2006, Self-Help provided $500 million in financing to 4,262 individuals and organizations nationwide. Self-Help helped 4,000 families finance the purchase of their homes. Self-Help’s small business and nonprofit borrowers created or maintained more than 2,430 jobs and 2,685 childcare and public charter school spaces in North Carolina and the U.S.
Investing with SHCU
Trillium Asset Management Corporation (“Trillium”) purchased its first CD, on our client’s behalf, with SHCU in 1991. Over forty Trillium clients are currently invested in SHCU CDs. Many of our clients invest in specialized CDs to support targeted lending in childcare services and environmentally responsible organizations and projects. Child care and environmental CDs pay the same, market competitive, interest rates as SHCU’s standard CDs.
On behalf of our clients, Trillium will purchase SHCU CDs of at least $5,000 for a term of not less than two years. There is a $25.00 fee to join SHCU.
Lakota Funds
Overview/ History
Lakota Funds is a community development organization actively promoting the socioeconomic sustainability of Oglala Lakota Oyate on the Pine Ridge Indian Reservation in South Dakota. Pine Ridge encompasses most of Shannon County, South Dakota (which is roughly the size of Connecticut).
Lakota Funds was established in 1986 by a group of local community leaders as a project of First Nations Development Institute with assistance from Oglala Lakota College.
To break the cycle of poverty on Pine Ridge, the group focused on the key roadblocks to economic development: access to capital, technical assistance, business networks, and infrastructure. To meet those goals they created the first Native American Community Development Financial Institution (CDFI). Initially, 85 percent of Lakota Funds’ borrowers never had a checking or saving account, 75 percent never had a loan, and 95 percent had no business experience.
Programs
Lakota Funds developed the Wawókiye Business Institute (WBI) in association with Oglala Lakota College and the Pine Ridge Area Chamber of Commerce. WBI is a program of small business facilitation and success coaching, focused on the needs of Pine Ridge’s population. The majority of the WBI clients are first generation entrepreneurs, working to overcome enormous socioeconomic obstacles. WBI creates a nurturing environment for community businesses and aspiring entrepreneurs by providing trained business success coaches.
With its network of resources, WBI can also assist private businesses that are struggling and existing businesses that are contemplating expansion. All WBI services are provided at no charge.
In collaboration with WBI, the Core Four Business class is offered by Oglala Lakota College. The class is a tool for developing or expanding a small business by helping entrepreneurs test their business concepts. It also teaches basic management, marketing, operations and cash flow.
Lakota Funds started the first Native Individual Development Account (IDA) program in the state of South Dakota in 2001. Each client sets a goal to save enough money for a down payment on a home, to start a business or go to school. Each dollar that is deposited into an IDA account is matched 2:1, up to $1,800. IDA clients are required to attend workshops on financial literacy, credit counseling, homeownership and small business training.
Impact
When Lakota Funds began, Shannon County was the poorest county in the U.S. according to the Census. It is now less poor than fifty-five other U.S. counties. Lakota Funds has begun to create an entrepreneurial culture within their community. There were only two Native American-owned businesses on Pine Ridge in 1986; today there are 328 licensed businesses.
Lakota Funds has lent over $3.5 million to more than 600 borrowers; provided business training to more than one thousand entrepreneurs; helped create over 750 permanent jobs; and provided marketing services to more than 1,600 artists and craftsmen. It has also developed the Lakota Trade Center, a small business incubator, and co-founded the Pine Ridge Area Chamber of Commerce.
TAMC’s History with Lakota Funds
On behalf of our clients, Trillium made its first investment with the Lakota Fund in 1994. Linnie McLean and I visited Pine Ridge in May 2007. We met with key members of Lakota Funds’ staff and board and some of their borrowers. On behalf of our clients, TAMC will make investments of at least $5,000 for a term of not less than two years. Currently, 14 TAMC clients have an investment with Lakota Funds.
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Shared Interest
History/Overview
Shared Interest was established in 1994 by the Fund for a Free South Africa (FREESA), an organization established by black South Africans living in exile in the U.S. The goal was to supply credit to the communities marginalized by apartheid by forging productive new relationships between South African banks, CDFIs and low-income borrowers.
In 1996, Shared Interest co-founded the Thembani International Guarantee Fund (Thembani) in South Africa. Today, Shared Interest raises funds that are used to partially guarantee loans issued by South African financial institutions to low-income South Africans.
Impact
A guarantee fund is a pool of money that is used to secure a loan. For example, a bank in South Africa might not be willing to lend money to low-income people of color who are HIV-positive, have never had a job, live in a rural area, or do not have collateral, because they pose a big risk from the bank’s perspective. However, the bank will lend money to these people if the risk is reduced by a guarantee.
The guarantee and the loans are facilitated by Thembani, Shared Interest’s sister organization in South Africa. Thembani “guarantees” that South African banks will reduce their risk, by committing to cover part of any losses should borrowers default on their loans. The money raised by Shared Interest to secure these loans is invested in the U.S. and used as security for South African bank loans. These loans are made to South African organizations advancing community development and individual self-sufficiency. The staff of Thembani is comprised of South Africans, who structure the guarantees and provide technical support to both low-income communities and banks.
The Shared Interest guarantees have facilitated loans that have created 50,000 small businesses; 65,000 safe, affordable homes; and 160,000 jobs – benefiting more than 975,000 South Africans of color – 75% of them women.
Loans
One of the most interesting and successful collaborations has been a loan to The Bee Foundation, which is a private business in a northern province of South Africa that is producing honey. Two thousand rural borrowers (75% women) have joined the beekeeping business. Each new beekeeper receives fifty hives stocked with African bees. They also receive training and equipment to harvest honey and an above market price for their honey from the Bee Foundation.
With the participation of the University of Pretoria, the project is also helping to advance the protection of African bees. The bees receive a medicine required to protect them from a threatening mite through the water supply in their specially adapted hive. And the University is expanding and sharing its research on other medicinal and cosmetic byproducts made from honey.
TAMC’s History with Shared Interest
On behalf of our clients, TAMC made its first investment with Shared Interest in 1995. In 2003, Linnie McLean, TAMC’s Director of Finance and Administration joined Shared Interest’s Board. In the past four years she has met with many of Thembani’s borrowers in South Africa. On behalf of our clients, TAMC will make loans of at least $5,000 to Shared Interest for a term of not less than three years. Currently, thirty TAMC clients have investments with Shared Interest.
Native American Bank, N.A.
Overview
Native American Bank, N.A. (NABNA) is a certified Community Development Financial Institution (CDFI) promoting economic development in areas that are underserved by traditional financial institutions. NABNA is committed to being a self-sustaining CDFI and is the only Indian owned community development bank in the United States.
Background and Mission
Native Americans rank last among all demographically identified groups in America in terms of poverty, unemployment and substandard housing.
In 2001, following years of study and deliberation on the part of many Indian leaders, twenty tribal investors pooled their resources and established Native American Bank through the purchase of Blackfeet National Bank in Browning, MT. NABNA is owned by Native American Bancorporation
The mission of NABNA is to pool Indian economic resources to increase Indian economic independence. NABNA’s broader vision is to be a powerful engine for Indian economic development, establish a significant Indian presence in the financial marketplace, and project the growing economic power of tribes and Indian businesses onto the national scene.
Services
The core banking functions of NABNA provide Indian Country with a commercial bank that is expert in the unique aspects of doing business in Indian Country, i.e., one that understands tribal sovereign immunity, tribal courts, trust lands and other special aspects of lending in Indian Country
The most significant component of NABNA’s banking functions is making loans. NABNA makes commercial, mortgage and agricultural loans in Native communities. More than 85% of NABNA’s loan portfolio involves loans to Native Americans.
The executive offices of Native American Bancorporation and NABNA are located in Denver, CO. The principal banking office of NABNA is in Browning, MT, on the Blackfeet Indian Reservation, located in northwest MT. The 1.5 million acre reservation is home to about 7,500 members of the Blackfeet Nation. Over time, NABNA expects to open offices (including branches) that will serve local reservation communities
In addition to loans, the services that NABNA provides to its commercial and tribal include:
* Checking accounts
* Cash management services
* Money market accounts and certificates of deposit
* Electronic banking
* Funds transfer
* Letters of credit
Impact
During 2005 NABNA:
* Loaned more than $26 million. 50% of its loans were made to borrowers making less than 80%of the area median income.
* Loaned $852,000 to affordable housing loan providers.
* Loaned $3.1 million to entities creating or preserving jobs for low-income persons.
* Established its first loan/deposit production offices on the Rocky Boy’s Indian Reservation in Montana and in Anchorage, Alaska.
Investing with NABNA
NABNA certificates of deposit are market-rate, FDIC-insured investments. On behalf of our clients, TAMC will make investments with NABNA of at least $5,000 for a term of not less than two years.
The CDFI Assessment and Rating System
The Community Development Financial Institutions Assessment and Rating System (CARSTM) is a third-party-administered analysis and rating system of non-bank/credit union Community Development Financial Institutions (CDFI). It was developed by the Opportunity Finance Network (OFN) (formerly the National Community Capital Association) to aid investors in their investment decision process.
Opportunity Finance Network has more than ten years experience evaluating and underwriting CDFIs, providing consulting services to CDFIs and investors, and gathering and analyzing data about the CDFI industry.
CARStm looks at impact performance as well as financial strength and performance of CDFIs, and issues a combined rating between AAA+1 (the highest) and B 5 (the lowest). The letter designation is for impact performance (on a scale of AAA, AA, A, B) and the “+” signifies whether the CDFI plays a leadership role in policy. The number is the financial strength and performance rating and is an assessment based on creditworthiness.
The Impact Performance rating is an assessment of how well the CDFI does what it says it is trying to do. This rating is based on an assessment of the CDFI’s effective use of its financial resources to achieve its stated mission and the CDFI’s own evidence of how its activities contribute to its mission. The impact performance assessment is based on four key criteria:
• Alignment of strategy and operations: how well the CDFI’s mission, strategies
products and services, output data and impact data are tied together.
• Effective use of financing resources: how well the CDFI uses its financing
resources in support of its mission and target population.
• Tracking of outputs that show effectiveness: how well the CDFI tracks and
uses its own relevant output indicators.
• Tracking of outcomes or impacts that show effectiveness: how well the CDFI
tracks and uses data and information about the actual outcomes of its work
(such as jobs actually created, housing units occupied by low-income
families, improved community conditions).
The financial strength and performance analysis is in a CAMEL (capital, assets, management, earnings, liquidity) format, and assesses each of these areas in detail. The financial analysis includes key ratios and indicators for the past three years, financial statements for the past five years, tables and charts showing trends, and a peer comparison that investors can use to provide context for the investment opportunity they are considering.
Each CARSTM report includes the ratings and a thorough written analysis. A site visit, including management interviews and a review of documents and files, is part of the ratings process, as are conversations with board members.
As investors incorporate the CARSTM ratings and analyses into due diligence reviews, OFN believes CARSTM will become a recognized benchmark in the community investment field. To date, twenty-one CDFIs have been rated, seven are currently in the review process, and an additional twenty are in the pipeline.
One of the most significant, early impacts of CARSTM has been that it is prompting improved transparency and performance on the part of CDFIs. Because of the rigor of the process and analysis, CARSTM helps CDFIs understand their own strengths and challenges.
TAMC is part of the inaugural group of sixteen CDFI investors, including banks, socially responsible investors, and foundations, to use CARSTM in our due diligence process.
New Hampshire Community Loan Fund
Overview
New Hampshire Community Loan Fund (NHCLF) is a nonprofit community development loan fund and micro finance institution serving low- and moderate-income people in New Hampshire.
NHCLF is most widely known for its work helping residents of manufactured home parks (MHP) form cooperatives and assisting the cooperatives in the purchase of their MHP. NHCLF provides loans and supportive training in affordable housing, services such as childcare, and employment opportunities including job creation and self-employment.
Mission
The mission ofNHCLFis to serve as a catalyst, leveraging financial, human, and civic resources to enable traditionally underserved people to participate more fully in New Hampshire’s economy.
Programs
NHCLF provides a variety of financing options and opportunities:
• NHCLF’sHousing Program assists residents in MHPs to purchase them in cooperative ownership.
• The Meredith Instituteadvances homeowner-centered strategies in manufactured housing nationally through advocacy, training and system-building.
• Economic Opportunity, including micro-business lending, workforce development, and enterprise development.
Impact
Since its first loan of $43,000 in 1984, NHCLF has loaned more than $68 million, with a borrower repayment rate of 99.3% and a lender/investor repayment rate of 100%.
In FY2005, NHCLF made 25 micro-enterprise loans and financed three nonprofit facilities and 346 housing units. Seven small businesses were also financed, leading to job creation for 117 individuals.
Impact Story
Families living in the Rambling Woods MHP declared their independence when they bought the Bethlehem property with a $377,000 loan from NHCLF.
“On that day, we got control of our own lives,” said 55-year-old Wayland Phillips, the first treasurer of the Rambling Woods Cooperative.
“Finally, we didn’t have to worry about having our water or sewer shut off because the owner wasn’t paying the bills,” said Phillips, who has lived in the park for nearly 25 years.
The residents were afraid to complain about the problems in the park for fear that the landlord would raise the rent. In addition to the water and sewer being shut off occasionally, the roads were filled with potholes and bumps. And the rents kept climbing.
Today, the tidy rural community with newly paved roads bears no hint of the earlier chaos. “In a co-op park, we make decisions together and make the park a better-looking place for all of us,” said Julie Phillips.
Investing with NHCLF
NHCLF was one of the first organizations to undergo CARS (CDFI Assessment and Rating System) analysis. In both the initial analysis and the January 2006 follow-up, NHCLF received a AAA Impact Performance Rating, the highest rating available. NHCLF also received a Financial Strength and Performance rating of 2, indicating that it is fundamentally sound and exhibits solid financial strength, performance and risk management practices.
On behalf of our clients, Trillium Asset Management Corporation (TAMC) made its first investment with NHCLF in 1994. TAMC will make investments in NHCLF for our clients of at least $5,000 for a term of not less than two years.
The Reinvestment Fund
Overview
The Reinvestment Fund (TRF) is a leading innovator in the financing of neighborhood economic revitalization. Central to its mission is a commitment to put capital and private initiative to work for the public good. TRF builds wealth and opportunity for low-wealth communities and low- and moderate-income individuals through the promotion of socially and environmentally responsible development.
Program
TRF manages $287 million in assets from over 850 investors, including individuals, religious and civic groups, financial institutions, the public sector and private foundations. It uses these assets to finance housing, community facilities, businesses, renewable energy projects and public policy research.
Client Population
While TRF began in the greater Philadelphia region, its market area now extends across the entire Commonwealth of Pennsylvania and through New Jersey, Delaware, Maryland and into Washington, DC.
Impact
Since its inception in 1985, TRF has created opportunity and choice for low-wealth communities and low- and moderate-income individuals in concrete and measurable ways. TRF has made more than $460 million dollars in loans and investments across its lines of business. These investments have resulted in the development of 11,652 housing units; 4.3 million square feet of retail space and community facilities; 27,771 jobs; 9,362 childcare and 14,631 charter school slots. It has also led to the financing of 233 businesses and the creation of 660,165 megawatt hours of energy – enough to power 70,000 homes for a year.
Impact Story
The Pennsylvania Fresh Food Financing Initiative is a new TRF program that works to increase the number of supermarkets or other grocery stores in underserved communities across the state. Created in 2004 with support from the State of Pennsylvania, the Initiative is an $80 million multi-faceted pool that is a one-stop-shop for financing fresh food retailers in underserved areas.
The Initiative provides financing for supermarket operators that plan to operate in these underserved communities where infrastructure costs and credit needs cannot be filled solely by conventional financial institutions. In September 2004 the first Initiative-sponsored supermarket, Shop Rite of Island Avenue in Philadelphia, opened its doors.
“Not only have we been able to create jobs in this close knit community, we’ve also been able to offer affordable and nutritious food options. We’re delighted to be part of creating a stronger and healthier community,” commented storeowner Jeff Brown.
One year after opening in the community, the Shop Rite on Island Avenue has quickly become an integral part of the community, visible at community meetings, and participating in neighborhood festivals. The Shop Rite’s busy flow of customers is also stimulating additional development in the area and job opportunities nearby. Thanks to TRF financing, the neighborhood now has a supermarket that is bringing new life to the community.
To date, the Initiative has committed $6.2 million in grants and loans to finance seven supermarket projects with a total of 833 new jobs and approximately 240,000 square feet of new retail space.
Investing with TRF
Trillium Asset Management’s (TAMC) Investment Management Committee added TRF to its list of approved Community Investments in 1992. On behalf of our clients, TAMC will make investments in TRF of at least $5,000 for a minimum term of three years.
Oikocredit
Overview
Oikocredit: Ecumenical Development Cooperative Society is a worldwide cooperative society dedicated to promoting social and economic justice by challenging people, churches, nonprofit organizations, and others to share their resources through socially responsible investments and by empowering disadvantaged people with credit.
Program
Oikocredit’s loans are channeled through a network of regional offices spread over Latin America, Asia, Africa, Central and Eastern Europe and managed by local professionals. Oikocredit loans are directed at cooperatives, microfinance institutions, and trade associations. Loans are made based on specific criteria:
• The enterprise must benefit groups of disadvantaged people and contribute to the social and economic advancement of the community.
• The cooperative structure is favored where applicable.
• Preference is given to enterprises in which women are direct beneficiaries.
• The enterprise must be economically viable, with appropriate management and technical leadership.
• There must be a clear need for foreign investment.
Client Population
Oikocredit serves rural, poor communities in 65 countries on five continents. Oikocredit’s division of projects by region is as follows: South America (38%), Africa (19%), Central America and the Caribbean (17%), Central and Eastern Europe (14%), Asia (10%), Other (2%).
Impact
With 398 active lending projects as of December 31, 2004, Oikocredit is one of the largest financiers of the microfinance sector worldwide. Oikocredit borrowers are small and medium-sized enterprises involved in a wide variety of industries, including many forms of agriculture and animal husbandry, fishing, crafts and artisanry, textiles, mining and transportation. They also finance microfinance institutions that split up their loans into thousands of small loans to very poor people.
Impact Story
Opportunity Microcredit Romania (OMRO) started lending activities in December 2000 in the heart of Transylvania as a pioneer in the field of microlending in Romania. Oikocredit has disbursed two loans totaling 500,000 Euros to OMRO since 2002. Those loans were used to expand OMRO’s loan portfolio and to open two branches.
OMRO now lends to about 960 clients including Juliana Lazco who owns a small business producing sports bags. When her husband left her, he also left numerous debts, almost causing the business to go bankrupt. With a loan for working capital, Juliana knew she could save the business. As no one would lend her the money she feared that she would no longer be able to support herself and her two children.
OMRO believed in Juliana’s capacity to run the business. Juliana received a loan of 2,000 Euros, which enabled her to purchase raw materials and pay the salaries of her two employees. She was soon able to hire eight more employees and repay her loan with the income she generated. “OMRO means more to me than financial help alone,” Juliana says. “The staff listened to my problems and provided me with good advice. Without their support, I would probably have failed.”
Investing with Oikocredit
On behalf of our clients, TAMC has been investing in Oikocredit through Oikocredit USA for over ten years. TAMC makes investments in Oikocredit USA of at least $5,000 for a minimum term of two years.
