Re-Positioning Microfinance with Impact Investors: Codes of Conduct and “Social First” MFIs
2011
Investor interest in microfinance continues despite questions raised by recent repayment issues and by more sceptical assessments of social impact, but investor scrutiny has intensified. The industry can take the opportunity to more clearly articulate its social and financial objectives and how it will achieve them. An important part of this clarification will be to acknowledge that not all investors or microfinance institutions (MFIs) share the identical mix of social and financial objectives and on occasion choices among objectives will have to be made. Tools are becoming available that can make these priorities more transparent and predictable so as to more closely match the objectives and expectations of MFIs and investors. Codes of corporate conduct and minimum standards can provide a starting point for double bottom line investors. A differentiation between “financial first” (FF), and “social first” (SF) companies can give investors greater confidence that coinvestors, directors and managers are fully aligned in pursuit of the same set of priorities. With this clarity, enhanced FF capital flows can have a major impact in achieving MF’s social objectives through expanding scale and outreach in total numbers, while enhanced SF MF will push the envelope and set the evolving standard on improving MF’s effectiveness in achieving its social objectives.
Discussions on Microfinance Investment Vehicles (MIVs) and Impact Investing: MicroCapital Monitor Interview
2010
Partner Paul DiLeo discusses Grassroots Capital Management approach to attracting private capital to the microfinance sector, creating investment vehicles to address market gaps and raising funding to support new initiatives.
Download (pdf)
Integrating Social Performance Measurement and Microfinance Investment
2009
Many socially-minded investors believe that integrating social performance into the investment process can help preserve the character of double-bottom line institutions. For Grassroots Capital Management, social and financial performance, rather than distinct or conflicting goals, are intertwined into the company’s day-to-day activities. In fact, they have created their own framework for evaluating the social impact of current and potential investee MFIs.
Download (pdf)
Characteristics and Tendencies of the Market of Microfinance Suppliers in Nicaragua
2008 | Major Characteristics and Future Trends of the Microfinance Market in Nicaragua.
How will the market of microfinance suppliers evolve? Who will be the major stakeholders? Are mergers, alliances or acquisitions possible?
Nicaragua makes an excellent case study for understanding the competitive implications of a microfinance market with high market penetration and for understanding how the different suppliers act in the market. The major findings and key aspects are detailed in this paper.
Download (pdf)
Download #2 (pdf)
The Investment Opportunity in Microfinance
2007 | An Overview of Current Trends and Issues
The microfinance industry is growing rapidly, both in clients served and the volume and types of investment it attracts. This overview provides a brief summary of available information on the industry to help prospective investors orient themselves within the market, and further refine their expectations with respect to financial and social returns.
Download (pdf)
Building a Reliable MFI Funding Base: Donor Flexibility Shows Results
2003
This case study explains how donor flexibility enabled an MFI to secure the mix of capital required for long-term growth. The flexibility of donors such as the Swiss Agency for Development and Cooperation (SDC), the Ford Foundation, and the Canadian International Development Agency (CIDA) allowed BASIX, an innovative new Indian MFI, to build a diverse and reliable funding base.
Download (pdf)
Attracting Equity to Mission Driven Development Finance Institutions
2001 | An Examination of Subsidy, Control, Growth, and Liquidity for Investors
The note draws on two sources: the 30 year experience of Shorebank Corporation, the oldest and largest community development bank in the U.S., and the results of a study of Liquidity for Investors in Community Development Finance Institutions, executed by Shorebank for the Ford Foundation in 1999-2001.
Download (pdf)
Evaluating ProFund
2001 | ProFund Plays a Unique Role in Integrating Microfinance into the Financial System
ProFund has served as a focal point in the maturation of the Latin America microfinance sector. ProFund has creatively and flexibly developed a number of sophisticated approaches to creating and supporting MFIs in such areas as mergers, bank collaborations, special purpose initiatives, and liquidity support which provide a roadmap for the initiatives that will continue to be necessary in the future.
Download (pdf)