Recommendations on Donor Guidelines To Support Microfinance Associations

This paper provides donor agencies with recommendations for supporting and funding microfinance associations (MFAs). It defines MFAs, operating alliances and apex institutions and provides examples of each.Discussing the role of MFAs within the microfinance industry, the paper:

• Identifies their target membership:
  • MFIs and sub-national MFAs form the core membership of national MFAs;
  • Membership criteria are based on the mission and goals of the MFA and its role in the microfinance sector.
• Lists the services provided, including:
  • Services that benefit the microfinance industry and reflect the stated mission and goals;
  • Seeking out efficient and effective strategies for service delivery.
• Explores their financial viability, stating that:
  • MFA business activities include strategies to achieve financial viability;
  • Core services are financed by members' contributions and voluntary participation;
• Discusses their institutional capacity and credibility and points out that:
  • At the board and executive levels, MFAs should be led by strong and effective leaders and practitioners with the capacity to represent the sector;
  • MFAs should have enough human resource capacity to deliver demand driven services to members.

Finally, the paper recommends strategies for donor support, performance assessment and funding, which include:

• Working with MFAs to develop realistic goals and expectations in line with vision, mission and stated objectives;
• Providing long-term funding support and encouraging a diversification of funding sources.