Ebay Inc. founder Pierre Omidyar and his wife, Pamela, have given $100 million in eBay stock to Tufts University in suburban Boston to create a fund that will invest in microfinance, the practice of loaning small sums to people who are too poor to qualify for traditional lending. The university says it will be converting the stock to cash over the next few weeks.
The Omidyar-Tufts Microfinance Fund will be administered by Tufts, where the couple met and graduated in the late 1980s. The Omidyars’ goal is to accelerate the growth of the microfinance sector and encourage other institutions to invest in it.
Current microfinance initiatives, which are targeted most often to developing countries, largely rely on private donations and support from nongovernmental organizations. The Omidyars want to get institutional investors involved by demonstrating that investments in microfinance can provide a competitive rate of return. Tufts will lend money to institutions offering microfinance loans, such as banks, which will in turn pay interest to the university; in addition, they will invest in institutional equity funds and loan guarantees.
via Chuck Huckaby.