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$100 Million Puts Tufts On Cutting Edge

$100 Million Puts Tufts On Cutting EdgeTufts graduates Pierre and Pam Omidyar gave $100 million to their alma mater – the largest gift in the University’s history -- to create a microfinance fund that will drive entrepreneurship in developing countries and enable Tufts to explore innovative investment opportunities.

Medford/Somerville, Mass. [11.07.05] Tufts graduate and trustee Pierre Omidyar (A’88), founder of eBay and co-founder of Omidyar Network with his wife, Pam (A’89), gave $100 million to the University last week. The gift, the largest in Tufts’ history, will underwrite a unique microfinance investment fund that positions the Omidyars and the University as pioneers in this growing field.


Related Coverage:

A Perfect Partnership


“We expect Pierre’s innovative idea to empower millions of people in developing nations - and to generate significant income to Tufts as the microfinance investments produce returns,” Tufts University President Lawrence S. Bacow said in a statement released to the Tufts community.

The $100 million will be invested solely in microfinance initiatives to help poor people in developing countries build and sustain their own businesses. Tufts will reinvest half of the fund’s earnings in microfinance initiatives and use the remaining 50 percent for faculty and student support, including financial aid, and debt forgiveness for graduates pursuing careers in public service.

The announcement of the gift sparked news headlines and led some media outlets to suggest that microfinance may become the latest investment trend in higher education. BusinessWeek even pondered whether or not microfinance investment is the “trend of the decade.”

Through this new fund, the Omidyars hope ''to generate capital to empower people to lift themselves out of poverty throughout the world, while at the same time generating investment returns to support the university's key priorities,” Bacow said in a front-page article in The Boston Globe.

Omidyar, who, according to the Globe, “has been called one of the most innovative philanthropists, for his belief that for-profit business can provide sustainable social benefit,” is looking to Tufts to demonstrate the viability of this type of investment. The University’s success, he hopes, will then attract more institutional investors.

"By connecting with an institutional investor like a university, we would like to increase the level of professional investor involvement in this sector to try to stimulate more commercially viable investment products," Omidyar said in BusinessWeek. "If people can earn significant returns from microfinance, investment will flow to it,” Bacow added in the article.

For Tufts – and the rest of the higher education world - this type of investment is a foray into uncharted territory.

Sally Dugnan, Tufts chief investment officer, told The Chronicle of Higher Education that she “was not aware of another university that had ‘put this kind of focus’ on microfinance.” Likewise, General Counsel of the American Council on Education Sheldon Steinbach told the Globe that, in his 30 years of following higher education, “he had heard of no other university gift like this.”

In the article in BusinessWeek, Bacow, an economist, recalled past examples of investors taking risks on new opportunities such as “the rise of venture capital in the 1960s, mortgaged-backed securities in the '70s, and emerging-markets funds in the '80s and '90s.” The Chronicle explained that “the largest university endowments are well known for being at the cutting edge in asset allocation.”

“It took pioneering investors to document and establish the kind of returns that are possible,” Bacow told the Globe. “It is our hope that the same thing will happen here.”

The New York Times pointed out that “at a time when universities are competing for maximum investment returns, the approach required by this donation is rare.” But Omidyar told the newspaper that eBay, the online auction block he created in 1995 that has become “a source of ‘individual self-empowerment’ for three-quarters of a million people who make a living on it,” has proven that it’s possible to turn a profit while making the world a better place.

“Business can be a force for good, and you can profit for doing good,” Omidyar said in an article in the Times. “That view is really informed by my experience with eBay, and its social impact.”

Bacow echoed Omidyar’s belief in an article in USA Today. He summed up Tufts’ partnership with the Omidyars as “a classic case of being able to do well by doing good.”


Past E-News Coverage: Omidyars Invest In Active Citizenship, Public Service At Tufts

Omidyars, eBay Founder, Invest $10M in New Tufts University Program

"From Self to Society: Citizenship to Community for a world of change"

Omidyars To Deliver Commencement Address

 

 

 

 

 

 

 

 

 

 

 

 

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