CBF Foundation Microfinance Initiative

In most ministry programs money is contributed, spent, and is gone.  Of course good work is accomplished, but there is an endless need for more gifts to sustain the ministry.

One of the most attractive aspects of microcredit is that the dollars invested are not consumed – they are recycled over and over.  As loans are repaid, those same dollars are loaned out again, and again, and again.  This long term sustainability is what makes microcredit the most efficient strategy, dollar for dollar, to help people lift themselves out of poverty – and stay out.

Learn more about microfinance, including it's impact and frequently asked questions.
 

Endowment principal can do as much good as endowment proceeds

Microcredit, small loans to entrepreneurs in poor parts of the world, offers the most powerful opportunity for helping people lift themselves out of poverty and stay out.  Through CBF Foundation, your church can invest a portion of your endowment (scholarship fund, building fund, ministry fund, etc…) in microfinance.  The principal of your endowment will be changing lives while earning a fair market rate of return to provide income for the ministries it was designed to support.

For more specific information regarding the investment characteristics of microfinance, email the foundation info@cbff.org, or invite a foundation representative to visit with your church’s finance/endowment/stewardship committee.

Where the CBF Foundation invests its microfinance fund:

 

Success Stories:
See the impact of microfinance on the lives of specific borrowers



Impact Chart: 

In the chart below, you can see the power of how many lives microfinance can touch per dollar invested given certain assumptions about the average size of a loan, the length of time it takes to repay, the number of times the same dollars can be re-loaned per year, and the number of people per family.  There are very few strategies which can use as few dollars to give as many people the best possible chance to lift themselves out of poverty -- and stay out!

Learn more:
CBF Foundation Microfinance Fund Summary
CBF Foundation and microfinance by Don Durham
Book: Banker to the Poor: Micro-Lending and the Battle Against World Poverty
Book: A Billion Bootstraps: Microcredit, Barefoot Banking, and the Business Solution for Ending Poverty
Book: The Poor Will Be Glad: Joining the Revolution to Lift the World Out of Poverty 
Web sites: Kiva, Chalmers, Banker to the Poor, Mix Market  



Frequently asked questions:
What is a microloan?
What is microfinance?
What is a microfinance institution or MFI?
How do borrowers apply for micro loans?
How can churches participate in the CBF Foundation Microfinance Initiative?
How can individuals participate in the CBF Foundation Microfinance Initiative?
Who manages CBF Foundation’s Microfinance investments?
 

A micro loan is a loan as small as $25 to an entrepreneur who does not have access to traditional financial services. Micro loans are only made for starting or expanding a business to provide income for the borrower’s family, and not for personal living expenses. Most micro loans last approximately 6 months and are repaid with market rates of interest. Micro loans are not charity, they are an expression of confidence in the hard work and skill of a capable entrepreneur who happened to be born in a part of the world poor in capital resources. Globally, micro loans enjoy repayment rates from 96% to 98%.
 
What is microfinance?
Microfinance is the system of investments which supplies capital to the various MFI's around the world which make micro loans to individual entrepreneurs.
 
What is a Micro Finance Institution, or MFI?
A Micro Finance Institution, or MFI as they are commonly know, is a local organization which provides financial services to entrepreneurs in parts of the world not yet served by traditional banks. The primary service of MFI’s is lending. However, many MFI’s also provide savings account and simple insurance services for their borrowers, as well as best practices training to help insure that they succeed as they grow their businesses.
 
How do borrowers apply for micro loans?
CBF Foundation does not administer loans directly to individuals. We provide capital to MFI’s around the world. Those organizations work with local entrepreneurs who apply directly to their local MFI to receive a loan.
 
How can churches participate in the CBF Foundation Microfinance Initiative?
CBF Foundation fund management clients have the option of investing a portion of their fund principal in microfinance. We offer a fund which invests in micro lending banks which, in turn, make loans directly to entrepreneurs who do not have access to traditional financial services.
 
How can individuals participate in the CBF Foundation Microfinance Initiative?
CBF Foundation has established an endowment fund which is invested 100% in microfinance. All proceeds of this endowment benefit the CBF budget. Individuals may make permanent contributions to this endowment in the form of current gifts, or future planned gifts.
 
Who manages CBF Foundation’s Microfinance investments?
Just as we have an independent, third party investment advisor to manage our traditional investment portfolio, CBF Foundation also has an independent manager for our Microfinance Initiative investments. Developing World Markets is an international investment banking firm which specializes in helping investors provide capital to microfinance institutions around the world.

At DWM, we evaluate all microfinance institutions (MFIs) that we invest in across a robust set of financial and social criteria, including financial strength, social impact, long-term competitiveness and management values. Our due diligence is both a backward-looking and forward-looking process, involving reviews of past performance and future business plans and projections of an MFI.

We perform on-the-ground due diligence, visiting an MFI’s head office, branches and clients in order to evaluate management structure, loan quality, social compliance, the management information system, internal risk controls as well as conduct a competitive market analysis. We also complete a rigorous desktop review of the MFI’s audited financial statements for the past 3 years, monthly performance data, and business plan. In addition, we undertake a country and currency risk analysis to evaluate the political stability, economic climate, regulatory environment and FX market in the MFI’s country of operation.

After the due diligence process is complete, the DWM Investment Manager will prepare and submit an investment proposal to DWM’s Investment Committee for further review and approval. Once an investment has been made, DWM continues to be highly engaged with MFIs in our portfolio, closely monitoring financial and social performance as well as maintaining an ongoing relationship with the MFI.

DWM is a signatory to the UN Principles for Responsible Investment (UNPRI) & the Principles for Investors in Inclusive Finance. We are also a member of the Smart Campaign Client Protection Principles.  DWM requires all of our portfolio MFIs be signatories of these industry efforts that serve to protect the clients of the MFIs by ensuring transparent pricing, appropriate collection practices, ethical staff behavior, mechanisms for avoiding over-indebtedness and for redress of grievances while protecting the privacy of client data.

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