Modern microfinance, a movement that began about thirty years ago to provide financial services to the poor as a means to address poverty, has grown into a diverse...More >>
Modern microfinance, a movement that began about thirty years ago to provide financial services to the poor as a means to address poverty, has grown into a diverse sector. Microfinance now serves more than 130 million clients through institutions ranging from large for-profit, regulated commercial banks to small unregulated non-profits. However, what began as the darling of the development community has evolved into a more complex narrative where success has been tainted by doubt about impact, accusations of profiteering and client abuse, and the inability of some financial institutions to weather the financial crisis. Nonetheless, microfinance institutions (MFIs) represent some of the earliest and arguably most successful examples of social enterprise. Similarly, investment in the sector represents some of the earliest and most successful examples of impact investing.
The goal of this course is twofold. First, you will learn about the legal and business issues that arise in the creation, operation and financing of MFIs and the key challenges that MFIs face when seeking financing. We will analyze various financing structures (and related legal documentation) used to finance MFIs, including loans, guaranties, off-balance sheet financing, private equity and public offerings, and the legal and business issues that these financing techniques raise for all microfinance participants. Second, drawing heavily from the experience of the microfinance sector, we will explore the legal and business issues that arise when structuring cross-border "impact investments" and when forming and financing social enterprises. The seminar will be organized around a series of case studies and role playing exercises through which students will develop negotiating and contract interpretation skills necessary to advise both entrepreneurs and investors in the social sector. Guest speakers active in the field will join us from time to time and the schedule will be adjusted as necessary to accommodate these presentations. Grades will be based on class participation, including presentations, and a 12-15 page research paper.