The DB MDF is capitalized through donations and social investments from Deutsche Bank Private Wealth Management clients, other wealthy families and individuals, the Deutsche Bank Americas Foundation, and Deutsche Bank Citizenship UK. All services involved in managing the DB MDF are provided on a pro bono basis by the Deutsche Bank Community Development Group in New York. The Bank’s extensive network of offices throughout the world has further facilitated the placement of loans and the brokering of relationships with in-country commercial banks. All contributions received from donors are deployed as loans to benefit microfinance institutions.

The general terms and structure of the fund are as follows: Maximum loan amount is $250,000, with a 1- 3% annual interest rate, quarterly interest payment in US dollars (USD), and 1- 5 year maturity.

The MFIs are evaluated based on: Management capacity, portfolio quality, amount leveraged through local commercial financial institutions, social impact, and profitability and efficiency indicators.

Fulfillment of BFSD Members’ Project criteria:

• International or scalable on an international level:
With three billion people—or half the world’s population—living on less than two dollars a day, and existing MFIs reaching only 11 percent of the 500 million people who could benefit from their services, there is enormous potential for microfinance to grow as an industry. Since its inception, the DB MDF has invested nearly $ 3 million in loans to some 30 MFIs, enabling more than $42 million to be leveraged in private financing and cumulative capacity to the very poor. The DB MDF’s existing portfolio includes loans in 18 different countries, such as Albania, Benin, Colombia, Haiti, India, Mongolia, Pakistan, Samoa, Uganda, and the United States.

• Multi-cultural or adaptable for different cultures:
Historically, nearly every region and culture of the world has had informal credit networks that have recognized the potential profitability of lending to the economically active poor, such as small farmers, fishermen, street vendors, trades people and other microentrepreneurs. Only in the past 20 years has the “microfinance revolution” created methods to provide credit and financial services to tens of millions of the poor in an institutionalized and socially responsible manner, through the creation of profitable organizations.
Microfinance institutions can be – and are – replicated across geographical and cultural borders, enabling the social and economic impact in different cultures.

• Contribution to humanity / natural heritage:
Microfinance institutions provide financial services to the poor, with a particular focus on the working poor, who lack access to the formal financial services sector, such as herders, street vendors, and service providers, like drivers, cobblers, and recyclers. Loans to small businesses and individual entrepreneurs foster self-reliance and communitywide benefits, such as better healthcare and higher status for women. Originally, microfinance was defined as the provision of credit, but it has expanded to include a range of products targeting the poor such as savings, insurance and payment services. Many MFIs also provide social intermediation services such as group formation, development of self-confidence, and training. Microfinance is rooted in the principles of self-help and democratic engagement, and in a belief in free markets. It relies on the conviction that all human beings have the potential to be productive and to generate an income, if given an opportunity backed by resources. Over the past 20 years, microfinance has provided credible evidence, from all regions of the world that disproves previously commonly held views that the poor are not creditworthy or enterprising.

• Sustainable Development aspect:
The role of microfinance institutions as advisors both supports and encourages poor entrepreneurs in their bids for self-sufficiency. The nature of microcredit lending increases prosperity and stability throughout communities, not just to those who take out loans. By helping microfinance institutions reach scale and long-term viability as sustainable institutions, the DB MDF intends to have a recurring impact on the alleviation of poverty.

Participation:

• What type of collaborative effort might be possible?
Several efforts can be pursued, including collaborations for getting additional funding sources. In addition, efforts can be possible in terms of leveraging on the other members’ relationships with the objective of introducing the concept to a wider audience.

• What elements might additional partners bring?
Additional partners can bring their relationships in order to have a greater impact on poverty alleviation.

Additional Information: 

Web Link: http://www.db.com/community/

Contact Info:

Deutsche Bank Americas Foundation
Asad Mahmood                            asad.mahmood@db.com
Gary Hallem                                  gary.hattem@db.com