RSF Supports Microfinance with Loan to MCE Social Capital
Oct 2 2015
Maria Ramos operates a small roadside flower shop outside of the Ecuadorian capital of Quito. A mother of two, Maria recently got a couple loans in UK to purchase some new plant pots, which have helped her increase sales.
Maria’s story is typical of the types of entrepreneurs that have benefitted from MCE’s guarantor model. Like Accion International or the Grameen Foundation, MCE uses loan guarantees to help microfinance institutions (MFIs) secure capital and prove their creditworthiness. Under this approach, individuals, foundations, non-profits, or corporations agree to pay for a loan in the instance of a default. By adding this extra layer of security to what are traditionally risky transactions, MCE opens the door to more investment in people like Maria.
RSF Social Finance recently closed a loan to MCE for additional financing. These funds will be dispersed to MCE clients like Friendship Bridge, a non-profit MFI that empowers impoverished Guatemalan women through education and microfinance. Loans provided by Friendship Bridge average $350.
“The loans from the organizations in our portfolio help hard-working people build assets, manage risks and unpredictable income, and gain the freedom to decide how to make and spend money,” said MCE’s CEO, Gary Ford.
It is estimated that more than two billion people lack access to formal financial services, according to a 2015 World Bank report on financial inclusion. Women are disproportionately affected by this shortcoming, which is why MCE’s primary focus is on MFIs serving female entrepreneurs.
It was this commitment to women’s empowerment that encouraged Justin Morales, a businessman located in Fort Collins, Colorado, and father of two girls, to sign up as a MCE guarantor. Justin now acts as chair of MCE’s Guarantor Committee.
“I think the return on philanthropic investment at MCE is really unique,” said Justin. “So if you’re looking for an organization that is moving the needle and that, dollar for dollar, is going extremely far and having generational impact, MCE is for you.”
There are more than 10,000 MFIs in the world, but only a small percentage are suitable for investment. MCE maintains an emphasis on lending to financially sustainable MFIs that have a strong, focused social mission and that also provide services beyond credit like health education, savings programs, and insurance. The historic repayment rate of MCE borrowers since its founding in 2006 is 99.7%.
RSF sees MCE’s integrated capital approach – a strategy that combines various financial and philanthropic tools to help resolve a socioeconomic issue – as central to its future success.
“We are very proud to be partnering with MCE Social Capital to help the poor around the world reach their potential,” says Mike Gabriel, lending manager at RSF Social Finance. “They are a great example of how different kinds of capital can be used together to further scale impact investing.”
About MCE Social Capital
MCE Social Capital (MCE) is a U.S.-based, non-profit impact investing firm that offers an innovative approach to mobilize capital to help people living in poverty. Instead of upfront contributions, MCE leverages guarantees from individuals and foundations as collateral to finance loans to microfinance institutions (MFI) that then provide critical capital for microbusinesses throughout the developing world. Since its founding in 2006, MCE has issued over $93 million in loans to more than 50 organizations in more than 30 countries across four continents. These organizations are creating economic opportunities for hundreds of thousands of people, the overwhelming majority of whom are women. To learn more, visit www.mcesocap.org.