Guidelines for Funders

Financial inclusion attracts funding from a range of funders, including bilateral and multilateral agencies, development finance institutions, foundations, social and commercial investors, and international NGOs, all with very different objectives and approaches. Over the last 30 years, we have learned a lot about what works and what doesn’t in increasing poor people’s access to financial services. To help translate these lessons into good practice standards for funders, CGAP uses its convening role and works closely with its members and other partners committed to financial inclusion.

A Market Systems Approach to Financial Inclusion: Guidelines for Funders provides overall guidance for funders of financial inclusion. It encourages funders to help develop the market systems around the delivery and use of financial services. Rather than a narrow focus on institution-building, this approach to financial inclusion aims to change the dynamics of financial services markets system to the benefit of the poor. As its predecessor, the Good Practice Guidelines for Funders of Microfinance (2006), the new funder guidelines aim to capture a broad consensus of what is considered good practice. To write the guidelines, CGAP consulted with global experts on the market systems approach and solicited feedback from over 50 representatives of organizations that fund financial inclusion, both in-person and through an online collaborative platform. The resulting guidelines seek to raise awareness of good practice and improve the effectiveness of donors’ and investors’ microfinance operations.

Additional CGAP publications hone in on different aspects of developing inclusive financial markets. The Focus Note Facilitating the Market for Capacity Building Services looks at what it takes to facilitate a sustainable, commercially viable market for capacity building services delivered to FSPs. Facilitating Market Development to Advance Financial Inclusion provides the conceptual framework for applying a market systems approach to financial inclusion.

CGAP has also worked with the private investors’ industry to develop guidelines. More than half of the total funding for microfinance is now managed by specialized Microfinance Investment Vehicles (MIVs). MIV investment levels quadrupled between 2006 and 2008, and today more than 100 MIVs manage total assets of around $7 billion. Working with leading asset managers, industry experts, and investors’ associations such as IAMFI and CMEF, CGAP has developed standards for MIV financial performance reporting and environmental, social and governance (ESG) disclosures. Published in 2010, the MIV Disclosure Guidelines aim to improve MIV transparency and help define and benchmark the performance of microfinance investments.

In addition, CGAP has also developed a savings resource guide for funders. Supporting savings mobilization is fundamental to building inclusive financial systems and many microfinance funders have long recognized the importance of savings services for poor people. The savings guide covers the issues funders need to consider when focusing on the expansion of voluntary savings mobilization, and is meant to be a reference document for donor and investor staff that design, implement, and monitor programs and investments.

Contact: Barbara Scola


23 October 2017
Despite significant funding for financial inclusion efforts worldwide—an estimated US$34 billion was committed as of 2015—approximately 2 billion adults remain excluded from the formal financial system. How do funders of financial inclusion programs know if and how development programs are making a difference?
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English (120 pages)
17 January 2017
The paper reviews how USAID, through two programs and in partnership with a series of market actors, helped change the microfinance market dynamics in the Philippines—from a specialized activity with limited outreach and highly dependent on subsidized credit, to a more inclusive and robust market-driven segment of the financial sector.
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English (27 pages)

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1 comment
A market systems approach to financial inclusion seeks to identify the root causes that prevent low-income people from accessing and using financial services. The program diagnostic process should be designed and implemented through a systems lens.
22 March 2016
What does it mean to take a systemic approach to financial inclusion? Learn more from these selected resources on market systems development.