Guidelines for Funders

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, CGAP uses its convening role to build consensus, aiming to support diverse approaches and priorities within a framework of good practice principles. Most recently, CGAP has focused on guidelines for funders, in particular public and private donors and investors.

The Good Practice Guidelines for Funders of Microfinance provide operational advice for staff of funding agencies, primarily geared toward donors that manage public money. Specifically, the Guidelines address the key question: What is the best use of subsidies? To answer this question, CGAP engaged in a highly participatory process, including an 18-month period of field testing with donor staff, and review by a variety of practitioners, microfinance experts, and consultants. The resulting guidelines seek to raise awareness of good practice and improve the effectiveness of donors and investors’ microfinance operations.

Besides public donors, CGAP has also worked with the 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 US$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.

Today, microfinance 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 to microfinance. The funding landscape is changing rapidly and CGAP recognizes that good practice standards and guidelines will need to be updated more frequently to capture the latest trends and new lessons learned. In this more rapidly evolving context, CGAP plans to take a more dynamic approach with a focus on web-based guidelines and formats that will capture the latest knowledge in a user-friendly way.

Topic Contact: Mayada El-Zoghbi

Publications

02 July 2014
This Technical Guide is aimed at funders interested in analyzing their effectiveness in financial inclusion. It describes the methodology of the SmartAid Index and explains how to use SmartAid.
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English (679.26 KB)
22 April 2014
This paper seeks to explore the concept of a responsible exit along four strategic decisions: the timing of the equity sale, buyer selection, the governance and use of shareholder agreements to achieve social objectives, and how social and financial returns are balanced when selecting among bids.
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English (654.21 KB)

From Our Blog

24 April 2013
Despite evidence of financial and impact tracking, most DFIs do not disclose data on financial performance. Reporting on social impact is even harder to obtain. We are a long way from full transparency.