Dalio Says This Microfinance Lender Can Fix ‘Issue of Our Time’

  • Grameen America lends to women, who then monitor each other
  • Transparent approach could serve as public policy, Dalio says

On his first Saturday night as an Amazon best-selling author, Ray Dalio headed to one of Manhattan’s most famous party spots -- the Temple of Dendur at the Metropolitan Museum of Art.

Ray Dalio and Muhammad Yunus

Photographer: Amanda Gordon/Bloomberg

The majestic setting is where Katy Perry once sang for the Costume Institute ball and Henry Kravis granted a leadership award named for himself. For Dalio, the ancient Egyptian temple was the place to be honored alongside Nobel Peace Prize winner Muhammad Yunus at the first gala for Grameen America, a microfinance nonprofit that helps low-income women entrepreneurs.

Dalio, the founder of Bridgewater Associates, the world’s largest hedge fund, was one of Grameen America’s earliest supporters, about 10 years ago, and was instrumental in recruiting former Avon CEO Andrea Jung to become its leader in 2014. He said he likes the group because it addresses “the issue of our time” -- a wealth gap that’s left millions of Americans struggling -- and because “the money goes so far.”

The Temple of Dendur set for Grameen America’s first gala

Photographer: Amanda Gordon/Bloomberg

“You donate a dollar and not only does that dollar get lent so somebody can do things -- they buy a rug-cleaning piece of equipment and then they’re in the rug-cleaning business -- that dollar comes back and is used an average of 12 times over five years,” Dalio, who before writing his new book generally shunned the spotlight, said in an interview. “It just keeps going.”

Dalio is giving Grameen America all of the proceeds from the book, “Principles: Life and Work,” published on Sept. 19. The tome explains the culture of radical transparency that he seeks to instill at Bridgewater, his investment firm.

Read more: Dalio says he’s ready to give away Bridgewater’s secrets

Andrea Jung, center, with her daughter Lauren Christensen, left, and Devin Walsh

Photographer: Amanda Gordon/Bloomberg

Jung said that by its 10th year, Grameen America will have turned $100 million into $1 billion loaned, with a payback rate of more than 99 percent. Philanthropic funds help branches get started, and they typically break even in about five years.

At the gala she announced Grameen America is now seeking an additional $250 million to turn into $5 billion in capital loaned by 2028. It will open more locations and, after recent hurricanes, it’s accelerating plans for expansion in Houston and Miami to help small businesses get back on their feet. Financial institutions including Citigroup, Wells Fargo, JPMorgan Chase and Capital One have been supportive. The event on Saturday raised $2.2 million.

Dalio said the group is growing at just the right moment and could serve as a model for national policy.

Ray and Barbara Dalio with Paul Dalio and Kristina Nikolova

Photographer: Amanda Gordon/Bloomberg

Think of the U.S. as two economies, he said. People in the top 40 percent are doing well, while those in the bottom 40 percent are struggling. “That other economy is having terrible problems, death rates are rising, income rates haven’t gone anywhere,” he said. “How that’s dealt with is a major issue, particularly if we have a downturn.” Donald Trump’s presidency already has brought the issue to the fore, he said.

Some of the key tenets in Dalio’s business philosophy -- feedback and evaluation -- happen to be part of Grameen. Borrowers typically form a five-member consortium, enroll in financial training and meet weekly while overseeing each others’ loans and payments. If one member of the group defaults, it affects funding for the others. The repayment rate suggests that even for philanthropic recipients, radical transparency has some merits.

At the gala itself, however, it wasn’t the theme.

“I don’t get valuable feedback from gala speeches,” Dalio lamented in the interview. “You know how this goes, they say nice things about you, they don’t say critical things.”

Book Season

Maria Arboleda and Kevin Lugo of Who’s Papi? Tires by Papi.

Photographer: Amanda Gordon/Bloomberg

His company at the gala’s Tiffany blue tables included leaders from business and other spheres -- Jim Tisch, John Megrue, Melanne Verveer and Bob Annibale -- as well as Maria Arboleda, a shop owner from the Woodside neighborhood of Queens who used a Grameen loan to expand into used tires. Dalio also was accompanied by his wife, Barbara, and filmmaker son Paul, the one who gave him Joseph Campbell’s studies in comparative mythology that inspired the hedge fund investor to pen a work of his own.

Yunus, then a Bangladeshi economist, began pioneering the international microlending movement in the mid-1970s, when he took $27 from his own pocket and loaned it to a group of bamboo-stool makers to help them buy materials. His Grameen model has since spawned organizations around the globe. His latest book, “A World of Three Zeros,” comes out this week.

Bridgewater’s Ray Dalio discusses his book "Principles: Life and Work" with Bloomberg’s Erik Schatzker.

(Source: Bloomberg)
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