EBay founder starts $100 million microfinance fund

NEW YORK: EBay Inc. founder Pierre Omidyar and his wife Pamela on Friday said they gave $100 million in eBay stock to Tufts University to create a fund that will invest in international microfinance, or lending to people who are too poor to qualify for traditional loans.

Tufts will keep 50 percent of the fund's income, while the other 50 percent will be reinvested in new microloans.

The stock in the online auctioneer will be sold incrementally over time, according to a spokeswoman for Omidyar.

The couple expects the Omidyar-Tufts Microfinance Fund, in addition to supporting their alma mater, to spark a cycle of investment that could exceed $1 billion over the next decade, as loan capital is repaid with interest and lent out again.

"Microloans enable the poor to lift themselves out of poverty through entrepreneurship," said Omidyar in a statement, adding that "the microfinance industry can be a profitable business."

The Omidyars are trying to boost investment in microfinance by showing institutional investors how profitable it can be.

Microfinance loans average $600 and are typically used by struggling entrepreneurs to sustain and grow their businesses.

The couple founded its investment group, the Omidyar Network, in June 2004, to invest in areas such as microfinance, open source technology and transparency in government.