The Brief | March 20, 2019

Microcredit in New Jersey, NESsT’s impact loans, breaking the impact logjam

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Greetings, Agents of Impact!

Featured: ImpactAlpha Original

Grameen tests the impact of an anti-poverty approach designed in Bangladesh – in New Jersey. Grameen America has disbursed more than $1 billion since 2008 in short-term loans to 113,000 women in 14 U.S. cities, making it by far the largest nonprofit microlender in the U.S. A year ago, Grameen America, the U.S. affiliate of Muhammad Yunus’ Grameen Bank, raised an $11.5 million Social Business Fund to help finance its expansion. A repayment rate of 99%, along with a 20% first-loss guarantee, made the fund a low-risk, if low-return, financial investment. Each $1 million invested allows Grameen to lend out $12 million to low-income women. As Grameen America raises its second fund, it is setting out to demonstrate the social impact of such loans.

“Income inequality, particularly as it relates to women not having access to capital, is as exaggerated here as many other parts of the world,” Grameen America’s Andrea Jung told ImpactAlpha. Microcredit “is a very powerful, programmatic way to put capital into the hands of low-income women and their families.” In Grameen America’s relationship-based model, women borrow in groups of five and support each other as they start restaurants and food trucks, nail salons, bakeries, cleaning companies and shops. The new study will track the progress of nearly 1,500 women in 300 loan groups in Union City, N.J. One of the most promising findings: after a year, 78.3% of borrowers had obtained a credit score, compared to 56.3% of a control group. “The formal capital system would assume them credit unworthy,” says Jung. “But they really are some of the most credit worthy members of society.”

Keep reading, “Grameen tests the impact of an anti-poverty approach designed in Bangladesh – in New Jersey,” by Carol Clouse on ImpactAlpha.

Dealflow: Follow the Money

NESsT raises $3 million toward an impact loan fund for Latin America. The social enterprise incubator is raising a flexible loan fund for early-stage businesses seeking up to $200,000 in debt. NESsT has supported more than 185 enterprises working to alleviate poverty in Europe and Latin America. After nearly 20 years in the incubation business, it is raising its first impact fund to address persistent gaps in working capital, inventory loans and other financing for the entrepreneurs its network. “Our aim is to push the boundaries of impact investing,” NESsT’s Loïc Comolli told ImpactAlpha. “We’re developing deal flow in indigenous communities, spaces of high biodiversity and post-conflict areas.” NESsT said it has secured $3 million towards a $20 million goal from the Tides, Woodcock and Swift foundations, as well as a grant from Citi Foundation to provide business support for borrowers. Learn more.

Singapore’s CXA Group secures $25 million to make health benefits affordable. Diabetes, heart disease and other chronic ailments are rising in Asia faster than anywhere else in the world. The Singapore-based insurance brokerage CXA Group is trying to improve health and lower healthcare costs – and lower employers’ insurance premiums – by coupling insurance packages with incentives for employees to focus on wellness. CXA, which has 400,000 users in 600 companies, raised $25 million in a bridge funding round from B Capital, Singapore Economic Development Board’s investment arm EDBI, Openspace Ventures, and corporate backers. It is seeking to expand to small and mid-size firms and launch in North America and Europe. Here’s more.

Signals: Ahead of the Curve

Five ways to break through the impact investing log-jam. Lingering skepticism about impact investing is keeping many investors on the sidelines and slowing the flow of capital. Longtime impact investing advocate Antony Bugg-Levine, CEO of Nonprofit Finance Fund, offers five ways investors can move from curious to committed. A few pointers:

  • Agree on why. Develop consensus on why impact investing can help achieve goals other programs and strategies cannot.
  • Reset the default. “We always hold new ideas to a higher level of scrutiny than business as usual,” Bugg-Levine writes. Organizations should consider whether they would change to a conventional investing approach in a world where impact investing was the norm.
  • Listen to a friend. Ask peers about their experiences. Bugg-Levine suggests that advocates should bring investees to meet investors or organizations’ boards. “Nothing cuts through the skepticism and stereotypes as effectively as seeing impact investing in action.”

Most importantly, get started. “As soon as you start making investments,” Bugg-Levine writes, “you will unleash the cycle of learning and experience and socialization that will break the logjam.” Read the full post.

Agents of Impact: Follow the Talent

Maria Santos Valentin, ex- of Soros Economic Development Fund, joins Rockefeller Foundation as general counsel… Ivan Frishberg becomes Amalgamated Bank’s first director of impact policy… Neighborworks America seeks a director for its work on race, equity, diversity and inclusion… Phenix Capital is hosting its 5th annual Impact Summit Europe in The Hague, April 2-3… TBLI Group is hosting its 35th Europe conference in Zurich, June 12-13. ImpactAlpha subscribers get a 25% discount with the code Europe2019MediaPartner.

March 20, 2019.