Frequently Asked Questions
- How does Shared Interest assist South Africans of color?
Shared Interest provides low-income South Africans of color with access to credit to launch small businesses, create jobs and build secure new communities. Shared Interest borrows money in the U.S. to build its fund to guarantee loans for South Africa’s township and rural borrowers and its budding financial institutions.
- How is the guarantee fund used?
As a pool of money that secures South African bank loans, Shared Interest’s guarantee fund is used to move the country’s major banks to extend credit to communities and institutions they would otherwise consider too costly or too risky to serve. With the help of Thembani’s technical assistance and monitoring, Shared Interest partially guarantees mainstream bank loans to community development financial institutions (such as micro-finance institutions and community trusts) that lend to low-income people of color. Shared Interest guarantees also back bank loans to black-owned cooperatives and other small and growing businesses. Frequently the guarantee convinces a bank that its new borrower is credit-worthy, enabling that organization to obtain future credit without a guarantee.
- Who benefits from Shared Interest's guarantees?
Low-income South Africans of color. A majority of them women who were prohibited from doing business outside of their racially prescribed areas under apartheid and who continue to remain officially unemployed.
Emerging South African community development financial institutions serving low-income communities. These institutions are similar to community development loan funds and credit unions in the United States. Emerging institutions that require additional capital to enhance and expand their services allowing them to become increasingly self-sufficient.
Cooperatives and other small and growing businesses owned and operated by South Africans of color – primarily in rural areas.
- Is Shared Interest successful?
Shared Interest's guarantee fund currently stands at $12.4 million. Since its inception, Shared Interest has helped South Africans create more than 80,000 new small businesses, 1.6 million jobs and 101,000 safe, affordable homes. For every $1 in guarantees Shared Interest has issued, more than $8 to low-income South Africans.
- What are some of the tangible results?
Having established his reputation as a contractor with a Shared Interest-guaranteed loan to build 40 homes, Nicodemus Phori is preparing for a provincial government contract to build 300 houses near Lydenberg.
Mamohale Mathipo of the Mosabe Center in the Sekgopo village bought two pigs with her first loan. She not only has a whole stock of pigs for herself, but she lets others who only have one pig breed with her pigs to increase both of their stock — bringing the impact of these loans to the entire community.
Teba Bank, which during its 100-year old history had never extended credit to low-income communities or their organizations, made its first three such loans during the past year with the help of our guarantees and Thembani’s technical support.
In collaboration with the Home Loan Guarantee Company, Shared Interest has established a program that will provide both credit and care to low-income homebuyers with HIV/AIDS.
- What is Shared Interest's own repayment record?
Since Shared Interest began, none of its lenders has lost any interest or principal as a result of a loan to the organization.
- How does Shared Interest protect its lenders’ capital?
First, Shared Interest requires that other parties to its guarantees (the banks and borrowing institutions) also take a share of the risk of any given guarantee. At the same time, it maintains a reserve fund for the purpose of protecting its own lenders from losses that might occur as the result of a default in South Africa. Shared Interest maintains this reserve fund at the level of at least 5% of its outstanding guarantees. However, it increases the level of coverage in response to risk ratings that Thembani conducts and reports quarterly on outstanding guarantees. Should a potential guarantee require protection that exceeds the level Shared Interest is able to provide, the guarantee is not issued. In the event that the Shared Interest reserve fund is exhausted, Shared Interest will draw on a pool of subordinated loans before utilizing investors’ principal. The layer of (subordinated) risk protection includes the commitment of $3 million facilitated by the overseas Private Investment Corporation.
- What are the minimum amounts and term for loans to Shared Interest?
Loans to back Shared Interest’s guarantees begin at $3,000, and mature at least three years after they are received. (There are no maximums.) Investors can also place funds (at a minimum of $20) by visiting www.microplace.com. For more information, or to receive a copy of the organization’s confidential private offering memorandum, please contact Shared Interest by email at info@sharedinterest.org or by phone at 212-337-8547.
- Where does Shared Interest get its money for the guarantee fund?
People just like you lend money to Shared Interest. The money is invested and remains in a designated Shared Interest account in the United States. The securities in the account serve as collateral for South African bank loans to low-income borrowers, their institutions and communities. At the same time, the securities earn interest. Twice a year, lenders receive interest payments from their loans to Shared Interest. They are encouraged to donate a portion of this interest back to the organization to help cover the costs of risk management and technical assistance in South Africa.
- How does Shared Interest pay for the cost of running the guarantee fund?
Shared Interest covers the cost of our programs in two ways. Investors donate back a portion of the interest earned by investments in the guarantee fund, or individuals, foundations, and corporations donate money outright to support the work.
- How can I help Shared Interest and South Africa’s people?
You can learn more about the challenges and opportunities in South Africa. You can invest in Shared Interest’s guarantee fund. You can participate in Shared Interest in your area and you can donate to Shared Interest and its programs.
- Can I visit Shared Interest projects in South Africa?
Yes! Every two years Shared Interest takes a delegation to visit the partners, businesses and communities that have benefited from Shared Interest’s guarantees. Contact us to learn more about the next scheduled trip.
- Why is South Africa important?
Since 1994, South Africa has undergone a tremendously successful process of democratization – focusing on economic stability and human rights - serving as a model for the world. Prior to 1994, black people were forcibly removed from areas whites sought to restrict for their own use and relocated to economically and environmentally unsustainable settlements. In fact, 87 percent of South Africa’s population was relegated to 13 percent of the country’s land, the most unproductive and undesirable land in the country. Black South Africans were further denied the right to own land beyond their designated traditional “homelands” and barred from operating businesses outside these areas.
Since apartheid was abolished in 1994, South Africa has enshrined both social and economic rights in its constitution. The democratic government has sought to address the country’s stark economic disparities by a variety of proactive policies and programs. These include initiatives encouraging black South Africans to start their own businesses, subsidies for low-cost housing and public facilities in township and rural areas, and the provision of land to some low-income communities through a complex process of land restitution. Despite these efforts, the unemployment rate (officially 23 percent) has been estimated to approach 29 percent, if people too discouraged to seek work are also counted. An estimated 1.8 million families are living in shacks. Today, South Africa’s banks still fail to serve nearly half of the country’s potential customers. Supporting economic human rights in South Africa is essential not only for the success of South Africa’s democracy; but for the country’s stability and that of its neighbors.
As South Africa develops strategies rooted in a commitment to reconciliation and designed to address deeply entrenched inequalities from the perspective of human rights, it can provide important lessons for its supporters in the U.S. and around the world.
- How is Shared Interest’s Charities Navigator rating formulated?
Charities Navigator is an independent evaluator of charities that rates the financial activities of nonprofit organizations in the United States. A charity watchdog is welcome and necessary, but the organization’s methodology uses a broad approach that does not reflect Shared Interest’s mission as a social investment fund.
Shared Interest is a social investment fund that accepts both donations and investment funds. The Charities Navigator tracks only the donations raised by Shared Interest, failing to include new investment capital that we raise — $1.5 million in 2008 alone. As a result, the Charities Navigator rating for our fundraising efficiency does not reflect the fact that our fundraising activities generated investment capital that exceeded our charitable contributions. Secondly, the rating does not take into account the funds raised for grants that went directly to our partner organizations in South Africa or the value of the services we contributed to assist them in their fundraising efforts.
In sum, Charities Navigator uses a one-size-fits-all approach to rate all charities that does not accurately reflect the efficiency of our fundraising or our organization.
Annual Reports