10 Problems. 10 Solutions. 10 Awards. Classy.
by Devin Thorpe
“About one in five people or one 1.6 billion people across the globe lack adequate housing,” says Jyoti Patel, director of capital markets for Habitat for Humanity. One of the key reasons for this is a lack of access to affordable mortgage financing for low-income families. As a result, many low-income families live in makeshift shelters even though they have income and could afford to support a small mortgage. Instead, they slowly build and upgrade their homes slowly over time.
Much of the microfinance industry that some think of as a solution to poverty focuses on short-term loans to support entrepreneurship. This creates a cash-flow mismatch when someone uses short-term microfinance loans to make permanent housing upgrades—think roof or a water tank--that will last for years or decades.
Habitat has created a $100 million “MicroBuild Fund” to finance longer-term loans to people without access to traditional credit sources so they can afford to upgrade their housing. The fund “is comprised of $10 million in equity and $90 million as a line of credit received from the Overseas Private Investment Corporation,” Patel says. Habitat is the largest equity holder. Omidyar Network and MetLife have also invested. Triple Jump, based in the Netherlands, is also an investor and also manages the fund. The money is invested with an eye toward capital preservation and a focus on both social and environmental impact.