As the first semester comes to a close, we wanted to update everyone on all of the exciting things that have taken place with Microlumbia since we inherited the Co-President reins from Danielle Noto and Dan Ko last March.

After many months of correspondence with the IRS and tireless work by prior generations of Microlumbia management teams, counsel and accountants, Microlumbia was delighted to finally receive the good news on May 28, 2009 that we were officially approved by the IRS as a tax-exempt 501(c)(3) organization. The effective date of our exemption is listed as January 30, 2008, meaning that all donations received from that date forward are fully tax-deducible. We are absolutely thrilled with this development and would like to thank Danielle Noto and Dan Ko in particular, as well as Howard Finkelstein, of The Law Offices of HJF; Eric Olson of Akerman Senterfitt; our accountant Tamie Kranis and of course the Microlumbia Founders who got this process off the ground almost three years ago!

Microlumbia has also made big changes this year in our team structure, as we work toward fulfilling our goal of providing every interested Columbia Business School student with the opportunity to get concrete experience in the microfinance world.  We have added a new group, called the Events and Research team which focuses on organizing events and partnering with active microfinance organizations (including networks, funds and MFIs) to provide relevant and innovative research support.  We currently have three teams working on research projects, and have already had multiple requests for research projects for next semester.

We have also reorganized our Consulting and Investing groups into a combined Sourcing and a Transactions team.  Realizing that there was considerable overlap in sourcing projects for the consulting and investing teams last year, we have decided to create a dedicated a team which is responsible for sourcing all Microlumbia projects (both consulting and investing).  This team is organized by geographic region.  When the sourcing team finds a potential investment transaction, the head of the Transactions team will staff a deal team and move forward with the deal.  Effectively, the Transactions team covers active deals, while the Sourcing team finds investment candidates and consulting projects.  This new structure allows us to maximize our sourcing resources, and hopefully allow for as much involvement as possible from every Microlumbian.

With that new structure in place, Microlumbia successfully recruited a new team of 2010 and 2011 MBAs earlier this semester.  We brought on 31 new students to staff our Marketing, Education, Sourcing, Research and Transactions teams, and are delighted with the incredible level of interest and aptitude each new member brings to the table.  Our new Microlumbians come from NGO, diversified finance and marketing backgrounds (and about every other industry in between!), and have already proven that they are committed to being active and contributive Microlumbia members.

We are also pleased to announce the addition of a new member to our Board of Directors, Michael Rauenhorst. Michael graduated from CBS in 1993 and brings extensive experience in the microfinance investment arena to the Microlumbia board. Michael has more than 20 years of international experience in banking, law, and micro-enterprise development. He currently serves as the Chair of MGR Foundation and is also a Managing Director and Senior Investment Officer for Minlam Asset Management. Prior to Minlam, he worked in the Deutsche Bank Microfinance Funds Group, where he co-developed innovative commercial microfinance investment funds and supervised over 50 microfinance investments in dozens of countries. Last but not least, Michael is also the founder of Micro Credit Ltd, a successful MFI in Jamaica. Below, you will hear about some of Microlumbia’s exciting plans to collaborate with Micro Credit Ltd in the future. We are delighted to welcome Michael to the Board and very much look forward to working with him and learning from his wealth of experience. Michael joins our other dedicated Board Members which include: David del Ser, founder of Mircolumbia and Chairman of the Board, Katie Leonberger (co-founder), Josh Siegel (co-founder), Brad Swanson (founder of Developing World Markets) and Philip Browers (Managing Director at Bentley Associates).

As this letter goes to the press, the Investment Committee of Microlumbia is reviewing the final documentation for Microlumbia’s first loan, which we expect will be disbursed in the last few days of 2009. Microlumbia’s inaugural investment will be in the Ruhiira Millennium Savings and Credit Cooperative (RMSACCO), a savings and loan cooperative located in Ruhiira, Uganda which serves approximately 890 members with approximately $50,000 in total portfolio outstanding. Microlubia is providing RMSACCO with a 1-year loan of $10,000 which carries a quasi-commercial rate of interest. Founded as an informal women’s saving and loan institution in 1994, RMSACCO has been operating in collaboration with the Millennium Villages Project (a division o of the Earth Institute at Columbia University) since July 2007. MVP, a multi-sector project that aims to halve extreme poverty in Sub-Sahara Africa by 2015, provided the MFI with initial seed capital in 2007.  Microlumbia’s loan to RMSACCO would constitute the institution’s first source of external financing. Microlumbia Investment Team members have been working with RMSACCO for the past year to conduct due diligence (including a visit by Microlumbia team members to Uganda in May 2009), assemble the documentation and agree upon key terms. We look will continue to work closely with RMSACCO from both the investment side as well as the consulting side going forward.

As we work toward finalizing our RMSACCO loan, it is important to note where we stand on our crucial fund-raising drive this year.  As of this writing, we have raised approximately $27,000 this semester, largely from board members, faculty supporters, alumni, and current students.  This terrific outpouring of support for Microlumbia and its mission only pushes us to continue the fundraising drive into next year and next semester, as we work toward our goal of raising $50,000 by the end of the year.  While the money raised from the Board will assist us in covering operational expenses, such as the upcoming spring Microlumbia conference, the generous donations of our other supporters will go directly toward funding investments and consulting projects with our Microfinance clients.  We are truly appreciative of everyone’s support so far.

Finally, looking toward next semester, it is clear that our work is just getting started.  We are focused on doubling the current total of funds raised in order to meet our investment goals.  We have already identified and begun due diligence on our second investment in an MFI in Jamaica, and are planning to send a team of Microlumbia students to visit the institution and meet with Management during the spring semester. We have also committed to delivering 5 high quality consulting projects during the Spring semester, and we hope to initiate 2 new investments in small MFIs in the developing markets.  We will continue to expand our research efforts, and aim to collaborate with 2 new research partners, as we work toward our goal of being a relevant and innovative provider of Microfinance research.  We must also begin our career services effort, so that interested Microlumbians can have the opportunity to connect with potential employers in the microfinance space.  And finally, we remain dedicated to our most crucial goal of ensuring that every Microlumbia member gets the broad and deep exposure to the microfinance sector during their MBA experience.

From where we sit as as Co-Presidents, this has already been an exciting and rewarding academic year, and we are optimistic that are many great things to come during the second half of the year. Thank you to everyone for all their hard work and we look forward to a terrific spring semester.