Guidance for Funders

Photo Credit: Wim Opmeer

Improving the responsibility and effectiveness of funding.

Commitments from international funders to support financial inclusion remain strong, stabilizing at $31 billion by the end of 2014 after years of steady growth. Donors—bilateral agencies, multilateral organizations, and foundations—typically support financial inclusion as a means to reach higher development objectives, such as economic development and poverty alleviation. Investors, including development finance institutions, institutional investors, and microfinance investment vehicles, expect both social and financial returns from their investments in financial service providers that serve the poor.

In recent decades, technical and financial assistance from international funders was a major force in creating strong microfinance institutions worldwide. Today, donors and investors are expanding their priorities and seeking opportunities to address the remaining barriers that prevent poor people from accessing and using financial services. Beyond building strong financial service providers, achieving financial inclusion requires developing financial services markets that really work for the poor; markets that are resilient, self-sustaining, and inclusive. Donors and investors can add significant value by catalyzing responsible market development, which begins by identifying market barriers that prevent financial systems from serving the poor.

alt text Photo Credit: Chetan Soni

CGAP is working with donors, investors, and implementation partners to distill and share emerging practices in how to facilitate and measure the development of inclusive financial markets. Our work to achieve effective and responsible funding for financial inclusion focuses on the following:

  • Supporting funders’ ability to play a catalytic role in the development of inclusive financial markets. Facilitating peer learning on the evolving role of funders on frontier topics in financial inclusion. Supporting funders in strengthening and adjusting their measurement systems to better capture the impact of their market development interventions.
  • Tracking and analyzing trends in funding for financial inclusion.
Photo Credit: Aj Ghani

FY2015 Highlights/Outputs

Much of the work in FY2015 was targeted to developing “A Market Systems Approach to Financial Inclusion: Guidelines for Funders” (September 2015), which is the successor to the “Good Practice Guidelines for Funders of Microfinance” (2006), and provides lessons on how funders can facilitate the development of inclusive financial services markets. The publication was developed through a consultative process, including the following work:

  • Consultation event with funders held in November 2014.
  • An online discussion hosted on CGAP WorkSpace to solicit feedback from broader audience on draft guidelines.
  • Draft version disseminated at the FY2015 Council of Governor’s annual meeting.

To help funders and program implementers strengthen their measurement systems, CGAP is developing a Measuring Market Development Handbook. In FY15, this work included:

  • Several learning events, including one with the World Bank, J-PAL, and IPA for the release of six new impact evaluations on microcredit and one with funders and measurement and evaluation experts.
  • Quarterly working group calls with funders to inform the development of the Measurement Handbook.

Other work included the following:

  • “Spotlight on International Funders’ Commitments to Financial Inclusion” (March 2015). View Posts View Interactive Dataset View Infographic
  • “Facilitating the Market for Capacity Building Services.” Download
  • SmartAid Index collaboration page (invitation only).
  • “Getting Smart about Financial Inclusion: Lessons from the SmartAid Index” (October 2014). Download
  • Published three blogs on industry data gaps.
    • “Four Mobile Money Trends from the IMF Financial Access Survey.” View Article
    • “Mapping Financial Inclusion with FSP Maps and MIX FINclusionLab.” View Article
    • “10 Insights on Financial Inclusion from the 2014 Global Findex.” View Article