Fondazione Cariplo: responsible impact investing through MF1
The meeting held on July 3, 2015 with Nobel Laureate Muhammad Yunus included a presentation about one of Fondazione Cariplo’s Mission Connected Investments, the Microfinanza 1 (MF1) Fund, and its performance. Established and managed by Quadrivio Capital SGR, the MF1 Fund supports the development of individual and collective micro-enterprises and small businesses. It does so largely, but not exclusively, through local financial intermediaries (micro-finance institutions) that provide financial services to low-income individuals who start a business, primarily in developing countries. Since its launch in 2010, MF1 has supported 4 million micro-scale entrepreneurs and 11,145 small and medium-sized enterprises (SMEs) in over 86 emerging and developing countries through the microfinance institutions and SME-financing banks the fund directly invests in or finances. 70% of loans have been extended to women and more than 50% to rural residents. The average value of financing to micro-scale entrepreneurs has been about €1,700. Microfinanza 1 seeks preservation of invested capital and non-speculative financial returns, ideally at least 2% above the European inflation rate. Data confirm the Fund has been growing with benefits for both investors and recipients. The Fund’s subscribed capital amounts to €84 million, of which €70 million subscribed by Fondazione Cariplo. Microfinanza 1’s year-to-date cumulative gains amount to €3.5 million, of which €1.5 million posted in the first quarter of 2015 alone. At March 31, 2015, Total Value to Paid-in Capital (TVPI) was 1.06x versus 1.03x at year end 2014.
Microfinanza 1 is an example of how an institutional investor can derive financial resources for philanthropic activities from its responsible investments.
At the meeting, Fondazione Cariplo’s President Giuseppe Guzzetti and the Foundation’s Secretary General Sergio Urbani spoke about the Foundation’s Mission Connected Investments (MCIs), which at present amount to €510 million.
“In line with its mission, our Foundation has adopted an approach inspired by social responsibility principles. This means our Foundation does not invest in financial instruments issued by governments or companies engaged in activities that adversely impact the environment or are disrespectful of human dignity, are engaged in the production of nuclear weapons or weapons of mass destruction (WMDs), and it steers clear of the related long-term financial risks.” - explained Giuseppe Guzzetti, Fondazione Cariplo’s President. “But we didn’t stop there. Banking foundations and the entire philanthropic community are undergoing a profound transformation. We are rethinking the ways in which we help and are now using investments as another lever, and a potent one, to support worthy ideas and projects.”
A modern vision of philanthropy, one combining grantmaking with investing.
“Mission Connected Investments (MCIs) are targeted socially responsible investments that yield social and environmental returns, while seeking moderate financial returns (2% above inflation). Our Foundation is joining up philanthropy and finance in its actions, multiplying the potential of both” - concluded Sergio Urbani, Secretary General of Fondazione Cariplo.
Fondazione Cariplo’s net assets currently amounts to over €8 billion (market value).