Grameen America Celebrates 10 Years of Empowering Women through Microfinance as it Announces Foray into Impact Investing
This month, Grameen America, the fastest growing microfinance organization in the United States, celebrates its 10-year anniversary of empowering low-income women entrepreneurs in underserved areas in the U.S. through affordable microloans. In tandem, the organization announced that it has expanded its investor base through impact investing after closing out its first Social Business Fund, which included both new and existing investors.
“We are thrilled to have established the first-ever social business fund by a U.S. microfinance organization. It’s an innovative solution that will enable impact at national scale and will help transform the lives of over 100,000 low-income women entrepreneurs and their families,” said Andrea Jung, President and CEO of Grameen America.
In its past 10 years of U.S. operations, Grameen America’s highlights include:
· Disbursing more than $820 million dollars in microfinance loans to low-income women
· Expanding to 20 branches across 13 cities in the continental U.S. and Puerto Rico
· Serving over 98,000 low-income female entrepreneurs
· Creating or maintaining 100,000+ American jobs
· Facilitating more than 490,000 hours of financial literacy training
· Achieving a 99% loan repayment rate
Previously, Grameen America had been funded largely by traditional philanthropy and concessionary capital from foundations, charitable organizations, individual investors, and commercial lenders. The organization’s adoption of impact investing as an additional means of funding comes at a time when impact investing—defined by the Global Impact Investing Network as “investments made into companies, organizations, and funds with the intention to generate social and environmental impact alongside a financial return”—is on the rise. It is estimated that impact investing is already a $114 billion sector, with 40% of funds originating in the U.S. and 58% from the for-profit asset management world.
As an initial endeavor, Grameen America launched and closed its Social Business Fund in the fall of 2017 to support its microloan portfolio growth. The fund was structured with nominal annual interest payments, a 20% first loss guarantee, and return of principal to investors targeted after five years.
“We wanted to offer our donor base an additional way to fund our growth,” said David Gough, CFO, Grameen America. “Our stakeholders are interested in the concept of impact investments that have great social returns while offering an economic return as well. This new funding vehicle will help us expand our outreach and better serve the communities we’re in.”
Grameen America plans to raise additional capital using innovative structures. Grameen America intends to use capital raised through new and traditional means, including donor contributions, so that the organization can achieve 100% sustainability and disburse up to $2 billion in loans to low-income women within the next five years.
Grameen America’s other plans for the future include opening up a branch in Houston, which has been affected by recent natural disasters. Grameen is also exploring expanding its footprint in other new markets.
Photo courtesy of Sudipto Sarkar.