Schwab Charitable Launches Microfinance Guarantee Program

San Francisco-based Schwab Charitable, a national donor-advised fund with more than $2 billion in assets, has announced the creation of a microfinance guarantee program that allows donors to set aside up to 10 percent of their charitable gift accounts to guarantee microfinance loans for the world's poorest entrepreneurs.

Loan guarantees differ from direct gifts in that the funds don't necessarily leave a donor's account. Under the program, any funds used to guarantee microloans will only be used if the microfinance program has losses in excess of reserves.

Launched in collaboration with the Grameen Foundation, the first phase of the program will make available an estimated $20 million to $30 million in guarantees, making possible as many as a 100,000 microloans. Ultimately, the program is expected to increase the availability and reduce the costs of microfinance loans in more than twenty-five developing countries.

"Historically, guarantee programs have only been open to large foundations or to the very wealthy," said Alex Counts, president of the Grameen Foundation. "This program opens up participation to a much broader range of donors, democratizing access, and building a solid base of ongoing support."

"Schwab Charitable Pioneers Innovative Microfinance Guarantee Program." Schwab Charitable Fund Press Release 09/24/2008.