Fondation Demeter

44, rue Vaneau
75007 Paris
France
pascal@fondationdemeter.com
Year founded: 1995

Founded in 1995, Fondation Demeter is named after the Greek goddess Demeter who is credited with teaching humans how to grow and preserve the fruits of the soil. The foundation aims to help charities improve their operating processes and governance principles so as to make the best use of their resources and to become self-sufficient. It focuses on supporting organisations across the globe that are involved in humanitarian, social, and economic work. To date, the main area of funding has been sponsoring new and innovative microfinance institutions in India, Africa, and Latin America. In 2007, Fondation Demeter started to focus its programmes towards at-risk youth.

Applied venture philanthropy
Demeter provides financial support in the form of interest-free loans and grants to cover part of the organisation’s start-up costs until self-sufficiency is achieved. Additionally, relationships with beneficiaries range between five and seven years, usually beginning with advisory services provided during the first six to twelve months. A funding is made thereafter in the form of interest-free loans and grants. Typically, 80% of the investment comprises an interest-free loan to support operating programmes and 20% comes in the form of a grant to cover part of the overhead or start-up costs. Annually, Demeter invests between €3,000-20,000 per programme over a three year period. The Foundation is exclusively financed by its founders, who see themselves as risk-takers focussed on assisting committed organisations/entrepreneurs to develop new initiatives and innovations in their domain. To date, Demeter has directly or indirectly supported around 40 non-profit organisations.

In addition to financial support, Demeter provides non-financial services. Demeter works actively with the organisation as an advisor to management and/or active Board member. Demeter professionals include people working in finance, consulting, industry and media, who help social entrepreneurs target the development of their income generating activities. Funding recipients are also given access to classes and training when necessary so that the social entrepreneur has the necessary skills to develop the business plan. Additionally, Fondation Demeter has been active in helping organisations to set up systems of corporate governance and an infrastructure to provide ongoing reports. Included in an investment contract is a statement that Demeter intends to exit the investment within a certain period of time, usually three years after the investment period. An exit strategy could be refinancing of the ‘investee’, purchase of the loan portfolio, or an instalment-based repayment scheme. Exits take a further three years to occur after the end of the investment period. Demeter expects portfolio organisations to return the funds within the following three years, or six years after the original investment.

The main investment criterion is the potential social impact of the funded programmes, which are being assessed on the ground by tracking social data as applicable, such as school attendance, vaccination rates and nutrition, or housing quality. Such social data is analysed during the pre-investment phase. Demeter seeks to back social entrepreneurs/ leaders who are ‘utopian but pragmatic enough to execute, and who are both amenable to and capable of change’.

Selected social entrepreneurs are expected to report their progress to Demeter on a monthly or quarterly basis, and are also expected to provide services to other organisations within the portfolio that might need help. As an example, a CEO of one of the microfinance programmes spent three weeks in India to share his experiences, which was found to be mutually beneficial to both organisations. Over the years, beneficiary organisations have included:

• The Florence Trust, based in London, which offers young painters and sculptors ten-month internships in its premises, during which period the artists prepare exhibitions. In addition to providing funds, Demeter provided expertise and assistance in developing new income-generating programmes.
• Fondo de Inversion Social (FIS), based in Buenos Aires, Argentina. Demeter’s investment helped them to set up operations in urban slums, offer additional products and services (such as solar panels), measure social impact, and create a governance structure.
• Massard, based in Bangalore, which is an NGO active in education and nutrition programmes for slum and street children in order to enable it to build microcredit loans to women.
• Interrupción, in Argentina, which creates micro-enterprises in marginalised communities and generates work by empowering, training and investing in individuals to become entrepreneurial, capable suppliers. The organisation works with existing producers of farm-fresh agricultural products in rural Argentina and runs a responsible consumption campaign. Fondation Demeter provided an interest-free loan of US$30,000 for two years, as well as active support in fundraising.

Engaged partnership: Fondo de Inversion Social (FIS)
In 2003, FIS was about to expand from a rural 300 client microcredit activity within a NGO to a urban microfinance corporation in Argentina´s largest city (Greater Buenos Aires, with a population of 12 million people). Prior to expansion, FIS received refundable interest-free loans from Demeter. Additionally, Demeter assisted with the consolidation of FIS’s Advisory Board, and then creating a Board of Directors to offer important advice, strategic vision and access to networks. Management coaching was delivered in the form of monthly meetings and learning opportunities through travelling experiences and formal training. This included sending one of the management team members to graduate school for an international MBA in order to develop his skills to take the company to the next level. As of 2007, FIS scaled to serve nearly 5,000 clients, with three branches and seven agencies, as well as four product ranges (group and individual loans, home improvement loans as well as solar panel financing in the rural branch), and a distressed portfolio with a default rate under 2%. Following Demeter’s investment, FIS went on to raise 1 million Euros in from Ford Foundation, Unitus, Oikocredito and over one hundred private Argentinean investors.