Small Foundations: How to Invest in Microfinance

This analysis assesses six investment intermediaries to help small foundations understand their investment options and make the right choice. It examines financial returns versus social returns produced by various intermediaries and the level of involvement required to help small foundations visualize their investment goals. The analysis provides a list of investment intermediaries that small foundations can use to realize their goals. These are:

• Peer-to-Peer, which obfuscates levels of the microfinance value chain;
• Microfinance funds, which use financial instruments to manage large funds;
• Retail, which allows investors to invest in a securitized pool of loans to MFIs;
• Development agencies, which possess large projects or initiatives in microfinance;
• Microfinance networks, which prioritize social goals;
• Large foundations, which create microfinance initiatives or focus on microfinance.

Finally the study states that the trends in foundation investments are gradually moving from charitable objectives to financial objectives. The growing arena of microfinance provides a rich set of intermediaries that facilitates involvement in microfinance, in particular for small foundations, which can choose a mode of participation that best fits their own investment criteria.