In recent years, a number of big funders and government organizations have been building momentum behind financial inclusion in developing countries. And with good reason. Some 2 billion people around the world lack access to basic financial services. While that number does include those living in wealthy nations like the United States, the majority of the world’s unbanked, around 70 percent, live in least-developed countries. Tackling a big challenge like this requires some pretty big funding players, which is why it's so important that the Gates Foundation works in this arena.
The foundation recently awarded Business for Social Responsibility (BSR) a four-year, nearly $3.8 million grant to support the its financial inclusion work related to increasing workplace access and use of formal financial products for low-income factory workers in Bangladesh, India, and Pakistan. All three countries are among those with the highest rates of financially excluded populations.
The Gates Foundation has been making grants out of its Financial Services for the Poor program since 2005, and continues to support financial inclusion programs and projects to “help people in the world’s poorest regions improve their lives and build sustainable futures by connecting them with digitally-based financial tools and services.”
In its inaugural year, the foundation dipped its toe into the financial inclusion waters by awarding just a handful of grants, beginning with a $5.9 million grant to Freedom from Hunger in support of its work improving the commercial viability of the microfinance industry in extremely poor populations in Africa, Asia, and Latin America. While the program has since grown, this is still one of the smaller areas of grantmaking at Gates with only around 15 to 20 grants awarded annually. Of course, we’re talking about a foundation that is among the largest in the world, so even though the number of grants awarded out of the financial inclusion program is on the small side, many of the grant amounts are not.
In the late 2000s, when financial inclusion was still an emerging field in global development, the Gates Foundation awarded some massive grants in this space. A few examples include a $37.2 million gift to the German Society for International Cooperation to support the creation of a global financial policy network aimed at financial services access for people in developing countries; and a $23.8 million grant to the International Bank for Reconstruction and Development for its financial inclusion work related to the use of innovative communication technologies and information.
Even as the financial inclusion movement has grown and more big players like the MetLife Foundation and The MasterCard Foundation have taken the field, the Gates Foundation hasn’t exactly backed off from making those $20 to $30 million grants. However, those monster grants are now more of the exception rather than the norm. The majority of recent grants awarded through the foundation’s Financial Services for the Poor program tend to land at around $100,000 or less.