Foundation for International Community Assistance (FINCA)

1201 Fifteenth Street, NW, 8th floor

Washington, DC 20005

FINCA is the Foundation for International Community Assistance. FINCA's mission statement reads: “The mission of FINCA is to provide financial services to the world’s lowest-income entrepreneurs so that they can create jobs, build assets, and improve their standard of living.” Its vision statement reads: “To be a global microfinance network collectively serving more low-income entrepreneurs than any other microfinance institution while operating on commercial principals of performance and sustainability.” This approach of providing small loans to the poor to enable them to become more self-sufficient is also referred to as Grameen banking or village banking.

In 2012, FINCA disbursed more than 1.6 million loans to 990,000 clients, 60% of them women, for an average loan of $737, in 21 countries on five continents. It is in the process of transforming its 21 subsidiaries (one in each country) from credit-only providers to full-service financial institutions meeting the needs of the poor. With the planned addition of Pakistan and Nigeria, it will be providing services in 23 countries. Its loan portfolio in 2012 was $626,000,000, with the total amount disbursed being $1,191,000,000. That indicates that the loans are repaid in less than a year, so that the total loans disbursed annually exceed the balance due. Microcredit has a very low default rate (lower than traditional banking) and is largely self-financing. Donations to microcredit enable expansion (e.g., into other countries).

The Fund has previously made contributions to FINCA of $600 from the General Endowment and of $900 from the Special Endowment.

FINCA is exempt from federal income tax under section 501(c)(3). FINCA is eligible for contributions from both the General Endowment and the Special Endowment based on Bylaw 3D6, which authorizes contributions for "economic self-sufficiency of a disadvantaged group", and possibly based on other bylaws. Its financial statement is hard to read. It shows net operating income of $212,000,000, primarily interest received net of interest paid. It shows total expenses of $188,000,000, leaving net income after expenses of $24,000,000. However, it does not clearly break out fundraising or program services.

Because of the difficulty in interpreting its financial statement, I recommend that the Board categorize FINCA as “eligible but not currently nominated” for contributions from both endowments. I had hoped to be able to write a positive report rather than a neutral report. If another Trustee thinks that we should contribute, I welcome another report.

Respectfully submitted,

Robert McClenon

16 June 2014