The Gumball Fund supports many organizations that share a passion for local and global entrepreneurship. A primary use of these funds are microloans to developing-world entrepreneurs. It also provides Gumball Capital a way to engage its audience with microfinance as a powerful example of innovative thinking about social impact. Here’s how it works:
- Teams participating in The Gumball Challenge direct their revenue to the Fund.
- The Fund then allocates the revenue either to an organization that shares our passion for entrepreneurship and microfinance, or as a loan to an individual entrepreneur through Kiva or Wokai, organizations that lets people make low interest microloans to the working poor in developing countries. Most of the fund goes through Kiva and Wokai.
- Kiva and Wokai work with microfinance institutions (MFIs) to distribute those loans to entrepreneurs.
- Loan recipients pay back their loan within the specified period (usually around 1 year).
- We loan the capital out again to a new entrepreneur.
To choose who we loan our money to, let us give you a brief background on how Kiva rates different Field Partners (banks located in their respective countries). They use a delinquency rate, which relates the percentage of loans that are repaid on time, and they use a default rate, which is the percentage of people that default on their loans. Often when natural disasters or political turmoil occur (among other things), these two numbers increase.
When we choose an entrepreneur, we make sure the delinquency rate and default rate are extremely low. Overall, we try to diversify our entrepreneur portfolio by spreading out our loans among different trades (food, education, health, etc) and geographical areas. To get a sense of who we fund, you can stay updated on the Gumball Fund loan portfolio by visiting our Kiva profile page. We’ve currently lent to over 415 entrepreneurs!
