Global Partnerships has lent $232 million to more than 100 microfinance institutions and other social enterprises in 14 countries since 2005, and hasn’t missed a quarterly payment to investors.
Its clients have delivered finance, solar energy and agricultural inputs to millions of customers, whom are mostly women, rural and poor.
How does Global Partnerships do it? A new case study details the nonprofit fund manager’s use of donations, junior debt tranches, and limited recourse notes (which give holders rights to only specific cash flows) to reduce risk and produce stable returns for investors, who receive fixed-income returns of 3 to 4 percent.
The case study from Convergence, a platform for such blended-capital deals, says the approach lets Global Partnerships maintain its commitment to marginalized households.
Caveat: The small size of GP’s six funds (the biggest is $75 million) and comparatively low returns limits interest from institutional and purely commercial investors.
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