Were credit guarantees, in partnership with the International Finance Corporation (IFC), the right path for Water.org to scale its water-related microfinance initiatives in emerging markets?
In 2019 Water.org, a global nonprofit organization with a mission to improve access to safe water and sanitation, was considering a partnership with the International Finance Corporation to use credit guarantees as a means of scaling its microfinance initiatives in emerging markets. Since its founding ten years prior, Water.org had catalyzed financing of more than 5 million loans totaling $2.1 billion through 129 microfinance financial institutions, serving over 25 million people in 13 different countries. The IFC credit guarantee would offer the opportunity for significant market reach via funding from commercial banks, a channel the organization had not yet tapped into. However, the IFC proposal raised important questions for Water.org President Jennifer Tisdel Schorsch, who was concerned, among other things, that banks might get hooked on the guarantees and refuse to offer future water loans without them. This case provides background on the importance of global clean water initiatives, Water.org’s unique microfinancing program (WaterCredit), and its fund for impact investors (WaterEquity)—and asks students to consider whether credit guarantees presented the best path to the organization’s expanded reach.
Case ID: 200307