Case study – Media Development Loan Fund

Alliance magazine

Working in Africa, Asia, Latin America, Russia and the CIS, and the Balkans, the Media Development Loan Fund (MDLF) seeks to secure a strong and independent press in countries with a history of media oppression. It provides low-cost financing, in-depth training and long-term advice and support to independent news media in emerging democracies and thus helps news outlets committed to responsible journalism become commercially sustainable.

Despite the vital role a free press plays in social, democratic and economic development, foundations and development agencies provide relatively little support to the media, with most going to improve standards of journalism rather than the sustainability of news outlets. Indeed, MDLF’s initial challenge – and one it continues to face – was that media support is not a mainstream social cause and has not traditionally been seen as part of the social investment family.

With an outstanding portfolio of almost $30 million, mainly in loans, and planned investments of more than $9 million in 2006, MDLF has now become aware of the danger of outgrowing funding sources. It has therefore begun accessing social capital markets – both individual and institutional investors – to support continued growth. In May 2006, MDLF teamed up with Swiss private bank Vontobel and social investment experts responsAbility to launch Voncert responsAbility Media Development (Voncert).

Voncert is a structured investment product that includes a substantial social component. Twenty per cent of all money invested in Voncert is loaned to MDLF at an interest rate of 1 per cent per year. The remainder is invested in Vontobel Swap Note Open End, which offers fixed-interest returns and a five-year term to maturity. Voncert was listed on the Zurich stock exchange on 18 May. Thanks to pioneering cooperation with the Swiss Agency for Development and Cooperation, Bank Vontobel guarantees tradability at all times and capital protection at maturity.

With a volume issue of CHF20 million, MDLF will receive a low-cost loan of $3.3 million for its loan pool. As Voncerts are tradable, they are available from brokers and most high-street banks, although financial regulations prevent US, UK or Cayman Islands residents from investing.

Voncerts are MDLF’s second step into social capital markets, following the launch in late 2005 of Free Press Investment Notes (FPIN) in the US, modelled on Calvert Community Investment Notes and designed as a flexible means of social investing. Individuals and institutions in 25 US states and the District of Columbia can invest a minimum of $1,000 in MDLF’s loan pool fund, choosing the term of their investment (up to 10 years) and the interest rate (up to 3 per cent).

For more information see or contact Peter Whitehead at

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