Tufts University received $100 million from alum Pierre Omidyar, the founder of eBay, on Nov. 3. The donation, the largest endowment gift in Tufts' history, is remarkable not only for its size but also for its unusual stipulations.
Guidelines surrounding the donation require that the $100 million be invested in microfinance initiatives through the Omidyar-Tufts Microfinance Fund, which will be controlled by an independent board of trustees, according to Tufts' official announcement.
Ultimately, the donation will be "invested entirely in international microfinance initiatives undertaken by banks" that make "small loans to poor, predominantly female heads of households," Kim Thurler, associate public relations director at Tufts, wrote in an e-mail to The Herald.
These microloans usually average $600 but can be as low as $40, Thurler said. "Areas in which such loans are made include Asia, Africa, Central and Latin America and Eastern Europe," she said.
There are two sides to microloans in developing countries.
"There is clear evidence that these are good ways of targeting development resources in the sense that they help to build small-scale business ownership in targeted groups," Andrew Foster, professor and chair of Brown's economics department, wrote in an e-mail to The Herald. On the other hand, he continued, "It is not clear that microloans help the poorest of the poor" and they are "less effective for long term investments or to meet seasonal needs."
Tufts will only begin to see financial returns once the money has been invested. At that point, "Tufts will retain 50 percent of the investment income to use for its own programs, while the other 50 percent will be reinvested in the fund pool," Thurler said.
Tufts expects the money to be fully invested within three years, at which point the endowment return should be 9 percent annually, she said.
Tufts already has plans for the endowment gift. In his public statement regarding the donation, Tufts' President Lawrence Bacow wrote, "We expect to use the returns generated by the Fund to create a loan forgiveness program ... (as well as) a funded internship program for students working in the non-profit sector and to support additional investments in financial aid."
Thurler also added support for faculty and summer school scholarships to economically disadvantaged students to the list of uses for the donation.
At Tufts, there is a general excitement among the student body regarding the recent endowment gift. "This is a good opportunity to use money towards a good purpose," said Tufts junior Benjamin Bornstein. "We really appreciate the eBay guy," he added.
Omidyar - "the eBay guy" - was born in Paris and moved to the United States at the age of six. He graduated with a B.S. in computer science from Tufts in 1988 and went on to found eBay in 1995, according to the New York Times.
Since the company went public in 1998, Omidyar has become renowned for his philanthropy. To date, he has donated $143 million to Tufts alone.
