Tufts University in Medford, Massachusetts, has announced a $100 million commitment from eBay founder Pierre Omidyar and his wife, Pam, in support of international microfinance initiatives to be funded through a unique partnership with the school.
The largest single gift in the university's history will create the Omidyar-Tufts Microfinance Fund, which will be overseen by an independent supporting organization. According to the Globe, 50 percent of the fund's returns will be reinvested in the fund to support additional microfinance programs, while the remaining 50 percent will advance Tufts-specific initiatives such as increased support for faculty, more financial aid, debt forgiveness for graduates pursuing careers in public service, and scholarships that enable economically disadvantaged students to attend summer classes.
People who receive loans from the fund, some of whom live on $1 a day or less, will apply for them through microfinance institutions in their countries. Either directly or indirectly, Tufts will provide those institutions with capital to make the loans. Over time, said Sally Dungan, the university's chief investment officer, the university hopes to achieve the same 9 percent rate of return it seeks from its endowment. "We hope to lift many millions of people out of poverty," Dungan told the Globe. "But at the end of the day, this has to earn a commercially viable rate of return."
"Microfinance has already shown that enabling the poor to empower themselves economically can be good business," said Pierre Omidyar, who co-founded the Omidyar Network with his wife and, like her, is an alumnus of Tufts. "By engaging Tufts as an institutional investor in microfinance initiatives, our hope is that the microfinance industry can better meet the demand for financial services among the world's poor, while also demonstrating its potential commercial viability to a wider institutional investor audience."