Latin Finance - September/October 2009 - 78

roundtable concerns,” she says. “It’s amazing the resistance to rational, market-clearing functions — not much of an appetite on the part of donors. There is much more of a desire for more customized opportunities that are focused on the philanthropist.” She highlights the work of the Acumen Fund in getting their donors involved and creating what she calls a “club of their supporters.” with Compartamos and MFIs, some day there won’t be just a handful of funds investing in this.” Beyond making one sector attractive to investors is the need to make all the players in that sector appealing to investors. The second and third tier microfinance or other service providers need financing as well. Working with philanthropic investors, they tend to focus on the headline firms, notes Sharma. “Taking them to one notch below, two notches below is very rare,” he says. Standard Chartered is launching a lending facility in the second half of this year to address the financing needs of second-tier microfinance institutions in Asia, Africa, and the Middle East. “Patient” Capital Though there are sustainable ways to structure philanthropic invesments, but it’s not for everyone who is looking to make a difference. “A word that hasn’t been out on the table is ‘patient’capital,” says Singer. She notes that E+Co borrows on eight-to-ten year terms, and lends for five-to-seven year terms. Rodriguez notes that his IGNIA fund has a long investment term — 12 years, extendable to 15 years. “Which for a venture capital fund is a long time,” he says . “The reason we did that is this needs to be patient capital.” Yet he says that investors have been able to see the need for such a long lock-up time, with a $40 million fund closing this past May. That patience can be further leveraged through working with public and private partners. Rodriguez points to a selfconstructed housing project IGNIA is funding. The project helps borrowers without title. Traditional banks would never give a mortgage to these clients; MFIs cannot loan out at the 20-year tenor necessary to make affordable, when they can only borrow for two years. IGNIA got the government to loan to an MFI at a 20-year tenor, which allowed the MFI to provide mortgages to the project’s informal-sector clients. The first loan was disbursed in July. Think Like Businessmen Making It Cool A key part of getting philanthropic investors involved is getting them to buy into the excitment of a particular project. IGNIA’s Rodriguez points out that the experience of Compartamos was what made microfinance “cool” to investors. “All of a sudden, people realized it was an extremely profitable activity. Before the Compartamos IPO, we had 200 MFIs in Mexico; today we have 800. It became a gold rush.” This demonstration effect can serve as a catalyst to investors looking to make an impact. The Calvert Foundation’s Berenbanch agrees. “Now is the time to get involved, while there aren’t as many players in this market,” she notes. “Like Calvert Foundation, a nonprofit organization providing microcredit, fair trade, and base-of-pyramid investing in more than 25 countries in Latin America. E+Co, a US nonprofit organization focused on alleviating energy poverty in the developing world through seed and growth capital to small and mid-sized companies whose primary business is in providing energy through clean technologies. IGNIA, a Mexico-based venture capital investment firm that supports the founding and expansion of social enterprises serving the base of the socio-economic pyramid in Latin America Singer talks about the “two-pocket” investor, who keeps business and philanthropy separate. Standard Chartered’s Sharma agrees, noting that for many companies, the philanthropic work goes through a foundation or corporate social-responsibility program; the business goes through a business. “So the left hand doesn’t know what the right hand is doing,” he laments. Rodriguez comments that “you see very admirable business leaders — when they’re talking about philanthropic issues — they check their brains at the door.” He notes that the discipline they have in business is gone the minute they focus on philanthropy. James notes that it’s not just bringing business discipline to philanthropy, but bringing social goals to business practices. “We’re looking not only at our impact, but at our customers’ impact,” she says, noting that Standard Chartered has been making sure that the companies it provides financing to follow its social guidelines. Kapur notes that bringing rigorous business practice to bear on philanthropy will provide the catalyst for sustainable development. As she sums it up: “We need to invest at the intersection of public good and market discipline.” n Root Capital, a nonprofit social investment fund working in 30 countries in Latin America and Africa providing capital, financial education, and market connections to small and growing businesses in poor and environmentally vulnerable places. Standard Chartered, a leading financial institution in many of the world’s most dynamic markets. Employing nearly 75,000 people representing 125 nationalities in more than 75 countries, the Bank believes that sustainable development is essential for the successful social and economic development of the countries in which it does business. The Standard Chartered Private Bank, a global subsidiary, recently launched a program for high-net-worth individuals called “Investing for a Better Future,” which aims to make giving easier for its clients. 78 LatinFinance September/October 2009

Latin Finance - September/October 2009

Table of Contents for the Digital Edition of Latin Finance - September/October 2009