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Information Center | Frequently Asked Questions
What does Global Partnerships do?
What is microcredit and microfinance?
How did Global Partnerships get started?
Where does Global Partnerships work?
What are your results to date?
How can I get involved?
Is my donation tax deductible?
How do Global Partnership’s microfinance funds work?
Why do you offer investment funds?
How does Global Partnerships select partners?
What is the average loan size made by your microfinance institution partners and what is the repayment rate?
What percentage of your partners’ loans goes to women?
What interest rate do your partners charge borrowers?
What does Global Partnerships do?
Global Partnerships (GP) is dedicated to expanding opportunity for people living in poverty. We do this by supporting successful organizations called microfinance institutions (MFIs) that provide loans and other financial and social services to those living in poverty. All of our microfinance partners share our commitment to serving more people, including those in hard-to-reach places; providing loans to successful entrepreneurs as well as those who need an initial loan to get started; and offering services beyond microfinance to improve the lives of those living in poverty.
Today, Global Partnerships works with 19 microfinance institutions in six countries throughout Latin America. Through these microfinance partners we are serving more than 500,000 borrowers. Keeping in mind that each loan impacts not only the borrower, but also the borrower’s entire family, we are touching the lives of more than 2.28 million people.
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What is microcredit and microfinance?
Microfinance refers to services offered to people who have little income or collateral and no access to commercial financial services. Microfinance includes financial services such as microcredit—small business loans of $50 or $100 that are used to start or expand a business—as well as micromortgages, small savings accounts and microinsurance. Microfinance is a proven and lasting solution that empowers people living in poverty to help themselves.
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How did Global Partnerships get started?
In 1993 Northwest philanthropists and community leaders Bill and Paula Clapp had the opportunity to travel to El Salvador to visit microcredit programs when the industry was still in its infancy. Moved by the stories they heard of the transformative effects of microfinance, they were inspired to found Global Partnerships in 1994 as a family foundation. GP initially raised philanthropic contributions to provide grants, loans and technical assistance to Central American MFIs. While philanthropy continues to be essential to our work, we recognize it cannot provide the $50 billion estimated to meet the demands for microfinance in Latin America. In 2002 Global Partnerships began to offer investment opportunities to help bridge the gap and provide our partner microfinance institutions with affordable capital. Investment funds leverage philanthropic contributions and raise resources from socially motivated individual and institutional investors. These funds are loaned to our MFI partners.
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Where does Global Partnerships work?
Global Partnerships works in six countries: Bolivia, El Salvador, Guatemala, Honduras, Nicaragua and Peru. Our work is focused where the disparity between the wealthy and the poor is greater than anywhere else in the world. An estimated 200 million Latin Americans live below the poverty line and approximately 25% of the population lives on less than $2 a day. Of the 60 million people in Latin America and the Caribbean who could use access to microcredit, only 9 million are being served.
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What are your results to date?
As of March 31, 2008, Global Partnerships works with 19 MFI partners serving 500,000 people, with more than $28 million in capital dedicated to our mission.
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How can I get involved?
You can support Global Partnerships with a charitable, tax-deductible contribution. Your gift will allow a woman living in poverty the opportunity to earn a living wage and provide for her family through access to microfinance. You may also wish to support GP by volunteering or learning more about our work by participating in a PartnerTrip. To learn more about these or other opportunities, please visit the Opportunities and PartnerTrip sections of our website.
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Is my donation tax deductible?
Global Partnerships is a 501(c)(3) nonprofit organization (EIN: 82-0574491). Donations are tax deductible to the extent allowed by law. To learn how to make a donation, please visit our Donate page.
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How do Global Partnerships' microfinance funds work?
GP’s microfinance funds leverage philanthropic giving with the investment of socially motivated private capital to provide our partners with the necessary capital to reach more people. To date, GP has launched two microfinance funds: Microfinance Fund (MFF) 2006 and MFF 2005. In addition to these Funds, GP invests on behalf of strategic partners Developing World Markets and the Grameen Foundation and now has investments of $28 million dedicated to mission.
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Why do you offer investment funds?
Microfinance institutions need capital to expand their services and reach more people living in poverty. While philanthropy is essential, it cannot provide the $50 billion estimated to meet the demands for microfinance in Latin America. Global Partnerships offers investment opportunities to help bridge the gap and provide our partner microfinance institutions with affordable capital.
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How does Global Partnerships select partners?
We select MFI partners who share our commitment to serving more people, including hard-to-reach populations; providing loans to successful entrepreneurs as well as those who need their first loan; and offering services beyond microcredit to improve the lives of those living in poverty. Our challenge is to identify partners who achieve the greatest possible social impact. We focus on investing in partners who fall into one of three distinct models: Financial Service Providers, Integrated Service Providers and Community Wealth Creators. Financial Service Providers offer microfinance products, such as microcredit, microsavings, microinsurance and tuition assistance loans. They tend to grow relatively rapidly and focus on introducing new financial services aimed at meeting the needs of poor people. Integrated Service Providers focus on serving the very poor, especially women, and integrate health services and education into the process of providing financial services to clients. Community Wealth Creators are often organized as cooperatives and operate in rural areas where economic opportunity is most limited. They often offer some of the most affordable microfinance products, and they reinvest profits to create borrower savings and/or to foster community economic development.
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What is the average loan size made by your microfinance institution partners and what is the repayment rate?
All of our partners offer entry-level loans of $100 or less, with an average loan size of $498. Of all microloans made by our 19 partners, 98 percent are repaid in full.
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What percentage of your partners’ loans goes to women?
The majority (70 percent) of the borrowers served through our partners are women.
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What interest rate do your partners charge borrowers?
Our microfinance institution partners charge between 20 and 36 percent annually on their loans. The interest covers the high costs of servicing small loans, reaching people living in rural areas and providing other social and educational services. In addition, most microenterprises turn over their inventory very quickly and as a result, borrowers pay 2 to 3 percent monthly interest. While these rates seem high compared to rates in the United States, without microloans, the financial alternatives for people living in poverty are scarce, and often their only alternative is to turn to local moneylenders who charge much higher rates of interest.
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