Seventeen years after Tufts alumnus Pierre Omidyar (LA '88) graduated, he has changed the world not once, but twice. First, Omidyar founded eBay - the popular Internet auction site - and now he has made the largest financial gift in University history: $100 million.
"May you do as well after you graduate," University President Lawrence Bacow said Thursday afternoon.
Omidyar and his wife, Pam (J '89), completed the donation on Tuesday, Nov. 1 - coincidentally, the same day as the birth of their third child.
Bacow and representatives from the University held individual meetings - both in person and on the phone - with the Daily, the New York Times, USA Today, the Chronicle of Higher Education and the Boston Globe, among others, this week. The information was embargoed until 9 p.m. Thursday, when Bacow sent a University-wide e-mail about the donation.
The Omidyars are also the co-founders of Omidyar Network - a mission-based investment group committed to self-empowerment on a global scale.
The donation, which will be factored into the University's endowment, is unique. The $100 million will be invested in international microfinance initiatives through a partnership with the University. The gift is also the largest private allocation of capital to microfinance by an individual or a family.
The gift will launch the "Omidyar-Tufts Microfinance Fund." A separate and independent organization, steered by a board of trustees, will uphold the fiduciary responsibility for investing the funds with risk-appropriate returns.
Bacow explained that "microfinance" is the act of "extending small loans to entrepreneurs in the developing world, designed to help and empower them to start businesses." Another term for microfinance is "banking for the poor," as the goal is to relieve people from a world of poverty.
An average loan may range from $300-500 - maybe less - Bacow said. The majority of the loans will likely be administered to women, will have a relatively short duration - three to four months - and a "substantial repayment rate." (The default rate is less than that of a typical credit card.)
Bacow gave an example of a handicraft worker in a developing country who could use the loan toward buying a new sewing machine, or whatever supplies are needed, with the aspiration that the new resources will help the handiworker operate independently.
A main point of microfinance is the recycling of loans. When a loan is repaid, the money is recycled as another loan, multiplying the value of each dollar in defeating global poverty.
The areas of the world that will receive financial support from the Fund include India, parts of South Asia, Africa and South America.
The loans will not be doled out by the University, Bacow said. Instead, the Fund will coordinate with banks - "typically undercapitalized banks" - around the world to distribute the $100 million. The University will then invest in the banks, similar to how the University would if it were purchasing bonds. The main difference here, Bacow said, was that the transactions with the banks will be conducted through "lenders who are lending with microfinance."
"This will be profitable for the University," Bacow said. "But more than that, it will help the flow of capital into the developing world."
With this gift, Bacow said the University's endowment threshold will be right up to the $1 billion mark.
One-half of the earnings from the Fund will be reinvested for additional microfinance programs, and the other half will go toward Tufts-specific programs of utmost importance at the moment.
Although currently these ideas are in the planning stages, some examples of such important Tufts programs include: a loan forgiveness fund for graduates in public service, a funded internship program in the non-profit sector for undergraduates, financial aid, recruitment of new faculty, support for existing faculty, equipment and resources requested by faculty members for new initiatives and scholarships for economically-disadvantaged students to attend classes during Summer Session.
In a press release given to media representatives on Thursday - different from the e-mail sent to the Tufts community Thursday night - Pierre Omidyar said this partnership with the University was ideal on several accounts: "The University has not only demonstrated leadership in educating active citizens, but Tufts also has consistently engaged in seeking practical solutions to real world issues around the globe."
Pierre Omidyar also said that past examples of microfinance have "shown that enabling the poor to empower themselves economically can be good business."
"It's a great gift for a lot of reasons - for the University and the rest of the world," Bacow said. "We can take great pride in that Tufts is a forward-looking institution that values global citizenship. This gift really speaks to that."
The Omidyars previously established themselves as active and generous members of the Tufts community in 1999, with the founding of the University College of Citizenship and Public Service (UCCPS) with a total of $18.2 million in financial support. The college focuses on public service values, skills and learning opportunities for students.
Earlier this semester, the Omidyars announced a $25 million donation for undergraduate financial aid, with the first $5 million donated in mid-September.
Previous to this $100 million donation, the largest single gift in Tufts' history was the $50 million donation from real estate developer, former trustee, philanthropist and alumnus William Cummings (LA '58) toward the newly-renamed Cummings School of Veterinary Medicine. Cummings' donation was announced in September 2004.
