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INDIA MICROFINANCE INNOVATIONS

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Unitus Labs made a large investment in Microfinance Acceleration for over a decade. We announced in July 2010 that we would fulfill existing microfinance partner commitments but that we would not be taking on new microfinance partners or projects.

As we were winding down our engagements with existing MFI partners, the India microfinance industry ran into a crisis. We decided that we would make some final philanthropic investments to strengthen some of our MFI partners as well as the India microfinance industry. We thought the best way to do this was to identify and support innovation initiatives proposed by our MFI partners.

The turmoil in the Indian microfinance sector (starting in the Fall of 2010) had challenged traditional thinking about how organizations and industries that pursue financial and social returns should be managed. MFIs needed to improve their operations by creating robust and transparent delivery systems with a customer centric approach, in order to serve the poor better and achieve long term sustainability. Specifically, we felt that:

  1. 1. It is imperative for social organizations to thoroughly understand the capacity and needs of target clients, and assess whether they’re servicing these needs on a continuous basis.

2. Incentives that drive organizational performance need to be periodically evaluated and modified as per the industry lifecycle.

3. While traditional industries are often applauded for focusing solely on their core value proposition, social enterprises may need to approach solutions more holistically and diversify on their client touch points.

4. Finally, since socially motivated enterprises often cater to large, diverse and politically sensitive client groups, buy-in for the services being through transparent and inclusive practices is imperative for longer-term sustainability.

In the India Microfinance Innovation program, Unitus Labs supported initiatives to help MFIs mitigate political, credit and operational risks, with an eye towards scalability and replicability of these projects across the industry. We funded four innovations projects proposed by trusted MFI partner organizations to study, identify and test key customer-centric innovations. These programs have the potential to transform the way microfinance is delivered to low-income clients. A key requirement for each project was that detailed results would be published in an open source format so that other organizations could benefit.


Article by and Photo by: Shashwat Mody | UnitusLabs

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