sitawi - Brazil's 1st Social Fund - Launches Commitment at CGI

NEW YORK, Sept. 23 /PRNewswire-USNewswire/ -- sitawi, a Brazilian nonprofit, has committed to increase its Social Fund to US$1.5 million in the next year and provide loans to mission-driven organizations in Brazil, as part of its commitment at this year's Clinton Global Initiative.

Brazil's first Social Fund's loans range from US$50,000 to US$250,000 and include strategic advice at rates similar to the local base rate (approximately 12%p.a. rather than the market's 35-50%). Its clients are nonprofits or for-profits that have a social impact mission. Donations to the fund are 100% allocated towards loans. Once these are repaid, the resources are recycled and the social impact is multiplied. In the last two years, sitawi has lent over $500,000 with no defaults or restructuring and has impacted the lives of more than 6,000 people.

Despite Brazil's recent economic growth, significant problems and inequalities remain in the country: over 35 million people live below the poverty line, it is the 4th country with more at-risk biodiversity, 80% of the rural population do not have access to basic sanitation and it burns over 12,000 km(2) every year. Organizations that are complementing government efforts to change this situation are capital constrained: 300,000 nonprofits compete for less than US$5 billion in grants. Leonardo Letelier, CGI member and sitawi's CEO summarizes the situation "With US$17,000 per organization, per year, there is no way we will change this dire situation, but if we can tap the local credit market, 100 times larger, we have a fighting chance."

"Our success is still artisanal," he continues, "we need to provide more loans to different types of organizations in different geographies with different operating models, so we can learn what works and what doesn't both in terms of risk assessment and in terms of strategic advice. With that, we can develop a methodology that is 'plug-and-play' at the traditional banks and provide access to finance for organizations with viable models."

Solidarium, a Brazilian social enterprise, received an order from Wal-Mart to produce 30,000 ecobags (bags made out of recycled PET bottles). Without working capital for its largest order in history, it turned to its bank for a US$75,000 loan. It was offered $5,000 at 3.5% per month. sitawi stepped in and provided the full amount at 1% per month and helped 120 craftsmen (and over 350 indirect beneficiaries) to generate income. Ms. Diva, one of the craftsmen for Solidarium, commented: "with the increase in sales, we had a very different Christmas, last year."

sitawi, which means "to develop" in Swahili, refers to the organization's mission to develop financial infrastructure for the social sector in Brazil.

More information at: www.sitawi.net.

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