Beyond our core business, we invest in projects that are not currently being served by conventional capital markets in order to tackle key environmental and social concerns and address global societal challenges. For example, we focus on microfinance as well as funds for deprived urban areas and clean, low-carbon technologies.
In 1997, Deutsche Bank was the first global bank to launch an investment fund for microfinance institutions. Since then, we have established a family of medium-sized funds that blend public and private capital. By the end of 2015, investment funds managed by Deutsche Bank had lent approximately US$370 million to over 140 microfinance institutions in more than 53 different countries, seeding an estimated four million loans for micro-entrepreneurs worth an estimated US$1.8 billion. These funds have proven to deliver consistent financial returns and an outstanding 96.5% repayment record.
In 2015, we began lending directly to mature, socially-motivated microfinance institutions through a US$50 million program. Alongside providing capital, we have also pioneered industry standards that promote ethical behavior and protect clients.
The Essential Capital Consortium Fund
Through the Essential Capital Consortium (ECC) Fund, we are providing loans to social enterprises that serve low-income communities around the world in the microfinance and innovative financial services, energy, and health sectors. The fund brings together mission-driven investors from both the public and private sectors. In 2015, it secured a partnership with the U.S. Agency for International Development to provide loan guarantees, which enable loans for earlier-stage social businesses.
The fund committed approximately US$28 million to twelve social enterprises across ten countries (Cambodia, Chile, El Salvador, India, Mexico, Nigeria, Peru, Tajikistan, Tanzania, and Rwanda). From the world’s leading provider of nanocredit solutions to prepaid cell phone users around the world, to high-efficiency hospitals in rural India, or off-grid solar home systems with pay-as-you-go financing in Tanzania—ECC’s portfolio companies are transforming lives around the world.
Clean Cooking Working Capital Fund
Traditional cook stoves and open fires in developing countries emit harmful pollutants responsible for over four million deaths per year. Our US$4 million Clean Cooking Working Capital Fund supports social enterprises that design, manufacture, distribute, and finance clean cook stoves. In 2015, the fund provisionally approved two investments: one to support a designer and manufacturer of improved biomass cook stoves in Latin America, Africa, and India, and the other to support a distributor of clean cook stoves and other household clean-energy products across Uganda.
In addition, we joined global banks, development finance institutions, and private investors on a steering committee to analyze the demands of the sector and to help facilitate the creation of a US $80–100 million second stage fund.
Involving our employees via Kiva
Our US employee engagement program provides each employee with US $25 to facilitate a loan on the world’s largest crowd funding platform Kiva to a micro-entrepreneur of their choice. Over 60% of employees have made more than 8,000 loans worth more than US $200,000.
We also provided a US $500,000 recoverable grant to seed fund Kiva Zip NYC, which supports small businesses and entrepreneurs in New York. Plans for a global Kiva rollout to all employees are still in development.
Investing in underserved neighborhoods, USA
We have been working for over 20 years in the USA financing community development. Our commitment to the social enterprise sector aligns to our legacy of using principal capital to invest in distressed communities, with a primary focus on New York City and its underserved neighborhoods. Deutsche Bank has consistently received the Federal Reserve’s highest rating of “Outstanding” in recognition of its strong performance under the federally mandated Community Reinvestment Act (CRA).
Our strategy has been to partner with other providers of capital, as well as local government agencies, foundations, and specialized non-profit financial institutions, to leverage and maximize the impact of our own loans and investments.
In 2015, we committed US$210 million in loans and nearly US$90 million in investments to help low- and moderate-income communities to access affordable housing, small business financing, health-care services, and improved schools. Two of the ways in which we did this:
- Self-Help Ventures Fund – Deutsche Bank provided a US$15 million revolving credit facility to the federally designated community development financial institution to fund its lending for housing, school facility, grocery store, and health center development.
- New York Business Development Corporation – Deutsche Bank renewed a US$3.8 million revolving credit facility for lending to small businesses in New York. The corporation targets those enterprises that have difficulty accessing credit from conventional sources, with a particular focus on serving minority and female entrepreneurs.
These types of investments are complemented by a coordinated program of philanthropic grants from the Deutsche Bank Americas Foundation, intended to build capacity among non-profit organizations that work to regenerate distressed communities and build opportunities for low- and moderate-income people.