annual report 2007

Microfinance opportunities 5 years

2007 marked the five-year milestone for
Microfinance Opportunities. Established The Global Financial Education
at a time when specialized service pro- Program (GFEP) was launched. MFO prepared the “Guidelines for Market Research
viders in the microfinance sector were on the Demand for Microinsurance,” geared towards
new, Microfinance Opportunities identi- donors and practitioners interested in entering the
fied an unserved niche and focused on microinsurance market.
the interests of the customer. Today
Microfinance Opportunities is widely
recognized for its innovations in financial
education, microinsurance, and impact MFO conducted two studies to
assessment. By addressing the demand assess the demand and market The Omidyar Network awarded
side of microfinance, Microfinance Op- prospects for microinsurance in MFO a grant to identify current
portunities is working to increase poor Indonesia and Laos. trends and key issues related to
people’s access to and understanding of
Monique Cohen founded the adoption and use of mobile
well-designed and delivered financial
Microfinance Opportunities banking and bank cards
services. It is committed to improving
(MFO).
the capacity of low income households,
especially women and microentrepre-
neurs, to grow their incomes, build assets
and reduce their vulnerability. 2002 2003 2004 2005 2006 2007

This timeline captures the highlights of

The “Listening to Clients”
Microfinance Opportunities’ first five
series, an audiovisual and
years. From the “Listening to Clients” Monique Cohen co-authored
interactive market research The 2006 Clinton Global
series to the Global Financial Education a groundbreaking Working
training program for Initiative recognized
Program curriculum to the “Guidelines Paper entitled “Managing Client
microfinance practitioners, MFO’s commitment to
for Market Research on the Demand for Information: Feedback Loop
was released by MFO and financial education.
Microinsurance”, Microfinance Oppor- Lessons from Latin America”.
MicroSave.
tunities’ diversified portfolio of activities
provides the knowledge and tools that
help the industry to better understand MFO, in partnership with the
and serve clients. With the support of IRIS Center at the University of
our partner organizations and donors, Maryland, launched a project
we will continue to integrate our in- funded by the Bill and Melinda
novations into the mainstream microfi- The GFEP curriculum was Gates Foundation to assess
nance industry. published by Microfinance the impact of the Foundation’s
Opportunities and Freedom innovation investments in
from Hunger. financial services.

Monique Cohen
Founder-President

 Microfinance Opportunities Annual Report 2007

 Microfinance Opportunities
GLOBAL OUTREACH

Outreach of
MFO’s work

MFO’s global outreach extends to 43 countries on five continents.


financial education
Financial education is integral to financial inclusion. By addressing the demand side of the financial access equation, financial education provides poor
people with the tools to make better financial choices and better manage risk. Governments, foundations and banks alike are increasingly promoting
financial education among low income people as a means to prevent over-indebtedness, promote savings and encourage the use of a range of financial
products. Financial education results in a win-win for both consumers and financial service providers. Led by Microfinance Opportunities and Freedom
from Hunger, the Global Financial Education Program is the first of its kind to target low income households in developing countries.

2007 project highlights

The Global Financial Education Program (GFEP) continued to scale up the
dissemination of its financial education curriculum worldwide through
training-of-trainers (TOT) workshops attended by MFIs, NGOs, banks,
training institutions and MFI networks. With the core curriculum avail-
able in English, Spanish, French, Russian, Portuguese, Arabic, and Chinese,
GFEP expanded its reach to new areas. A Regional TOT was held in Central
America, while Country TOTs were held in Russia, Pakistan, Brazil, and In-
dia. In total, 219 trainers from 145 organizations in 37 countries have been
trained since the curriculum debuted in March 2006. These trainers have
returned to their organizations to train their own staff, creating a GFEP
network 2,800 trainers strong.
The topic of financial education has garnered much attention over the past
year and the Global Financial Education Program remains the preeminent
market leader in this field. Its expertise is in high demand among MFIs,
banks, networks and government programs such as the BANSEFI Financial
Literacy Education Project and Banca de las Opportunidades. Microfinance
Opportunities and Freedom from Hunger partnered with the National Sav-
ings and Financial Services Bank (BANSEFI) in Mexico to develop a module
for the BANSEFI Financial Literacy Education Project. The module includes
an interactive DVD which can be used both as a training tool for the staff of
financial institutions on how to deliver the financial education materials to
their clients and as a supplementary learning tool for clients.

Participating organizations have already “Financial education has
reached 124,000 clients through class- taught me to live a simple,
room trainings. More impressive still, yet fulfilling life. I have no
GFEP’s key messages have reached more debts any more and have
than 6.7 million clients through adapta- begun realizing my dreams.”
tions to a variety of delivery channels. Sylvia Nakibule, GFEP client
The Microfinance Support Centre Ltd (Uganda) (MSCL) sponsored a num-
ber of radio talk shows on the topics of Savings, Debt Management and
Budgeting. The interactive programs engaged listeners with lively question
and answer segments. Attracting an estimated 300,000 listeners, MSCL
demonstrated the potential of radio to simultaneously target rich and poor,
urban and rural, literate and illiterate populations. Moving forward, GFEP
will leverage these successful adaptations to scale up the dissemination of
its financial education curriculum.
 Microfinance Opportunities Annual Report 2007
Banca de las Opportunidades, a program funded by the government of Co-
lombia to promote access to financial services among low income people
through a network of banks, cooperatives, NGOs and credit unions, en-
listed the support of Microfinance Opportunities to disseminate financial
education on a national level. The project included a GFEP TOT workshop
for selected members of the Banca de las Oportunidades network, as well
as market research support and adaptations of the GFEP curriculum to
the Colombian context. Banca de las Opportunidades will in turn create a
program that can be disseminated nationwide.
Responding to client demand for additional information, GFEP is develop-
ing new modules on four themes: youth, consumer protection, risk man-
agement and insurance, and remittances. Both the youth module and the
remittance module were pilot tested in 2007.
Intended to prepare young people to understand and use financial services
more effectively, the youth module was originally developed with the Binti
Pamoja Center, a reproductive health and women’s rights center for girls
in the Kibera slum of Nairobi, Kenya. The module was subsequently pilot
tested by five financial service providers.
GFEP had a chance to highlight the role that financial education can play in
expanding economic options for young people and preparing them to face
future household financial responsibilities during their presentation at the
first ever Youth Microenterprise Conference.
Remittances are a life line for many low income households in develop-
GLOBAL FINANCIAL EDUCATION PROGRAM:
USE OF TECHNOLOGY FOR ACCESSING
FINANCIAL SERVICES
With support from the Omidyar Network, Microfinance Opportunities
recently launched a financial education program focused on the use of
technology-based financial services, specifically mobile banking and bank
cards. The goal is to support uptake and usage of these technologies in
accessing financial services. The program will expand the dissemination
of financial education by using a variety of delivery channels and
engaging regulatory agencies and other public bodies to advance an
agenda for extending financial education.
Photo: Danielle Hopkins, MFO
ing countries. Recognizing the importance of this income, GFEP’s new
module, Remittances: Make the Most of Them!, will help receivers better
manage their remittance. Seven financial service providers pilot tested
the generic module. In addition, Habitat for Humanity and FEDECACES
adapted eight key messages from the remittance module into a brochure
for their clients.
In October 2007, GFEP began a series of outcome assessments designed
to assess the robustness of change in selected indicators of knowledge,
attitudes, behaviors and financial well-being of individuals before and
after exposure to financial education. GFEP designed several quantita-
tive and qualitative assessment tools, including pre- and post-test, focus
group discussions and Participatory Rapid Appraisal (PRA) tools. These
tools help GFEP improve the content and delivery of financial education
as well as evaluate client level outcomes.
GFEP conducted initial outcome assessments with three partner organi-
zations in 2007: Pro Mujer (Bolivia), SEEDS (Sri Lanka) and TSKI (Philip-
pines). Preliminary results across all three institutions are very favorable:
clients improved their knowledge on key concepts of debt management,
budgeting and savings. As a result of attending a training on savings, 97%
of participants from Pro Mujer recognized they could use a formal saving
product to achieve a long-term financial objective, compared to only 65%
who understood this concept prior to the training.
For more information on GFEP’s dissemination, innovation, and evalua-
tion efforts, subscribe to the Financial Education Update. This quarterly
newsletter is read by more than 660 subscribers. To start receiving the
newsletter, visit www.globalfinancialeducation.org and click on Listserv
Sign-up under Our Partners.
The newsletter features FEP’s dissemination, innovation and
evaluation efforts, highlighting recent TOTs, partner institu-
tions, new modules and more. To receive Financial Education
Update, sign up for the Financial Education Listserv by emailing

 Client Assessment
The microfinance industry has recently attracted much interest and praise as a strategy to alleviate poverty in the developing world. However, studies
have shown that microfinance programs tend to reach households which are just above or below the poverty line, rather than those who are extremely
poor. Equally important, the studies suggest that there is scope for increasing the impact of financial services through innovations and improvements
in products, services, and delivery systems. By applying its expertise in market research and impact assessment, Microfinance Opportunities is en-
abling financial service providers to better serve their low income clients.

2007 project highlights

2007 marked the first full year of work for Microfinance Opportuni-
ties under the “Assessing the Impact of Innovation Grants in Financial
Services” project supported by the Bill and Melinda Gates Founda-
tion (BMGF) and in conjunction with the IRIS Center at the University
of Maryland. The objective of the project is to assess how different
business models supported by the BMGF grants can alleviate poverty
while being sustainable and scalable. The approach taken by the MFO
Impact Assessment team emphasizes the generation of qualitative
data using innovative techniques, among them the tracking of house-
hold financial transactions using a Financial Diaries methodology.

The Impact Assessment team made field trips to Malawi and Peru to
complete two Baseline Financial Landscape Studies. Financial Land-
scapes takes a broad look at financial service provision in the target
areas for the Gates-funded innovations. Qualitative data generated
by focus group discussions was used to gain insight into poor people’s
financial behaviors. Microfinance Opportunities will return to con-
duct Financial Landscape studies in another two to three years. They
will also evaluate how the product innovations are used.

In late October, Microfinance Opportunities staff visited the pilot site In December of 2007, MFO and IRIS launched the project website,
for the Aga Khan microinsurance product innovation in the Northern Areas accessible at www.fsassessment.umd.edu. This site will be kept current
of Pakistan. This site visit provided the basic data necessary to design an throughout the project with reports on the research conducted.
impact assessment of the microinsurance innovation.

 Microfinance Opportunities Annual Report 2007

microinsurance
Poverty and vulnerability are deeply intertwined. If the poor are to move out of poverty they must be able to protect their assets against unforeseen
risks. Financial services for the poor play an important role in managing risk and addressing poverty. Microinsurance in particular is growing in popu-
larity as a viable way to reduce vulnerability while at the same time helping low income households to build and accumulate assets. Rates of adoption
and usage, however, remain low. In order for microinsurance to succeed, products and services must respond to the needs of poor people. Arriving at
the appropriate design requires understanding both the demand and supply of microinsurance. Microfinance Opportunities is a leader in the area of
demand for microinsurance and has conducted assessments in Southeast Asia and East Africa.
2007 project highlights Microfinance Opportunities conducted another qualitative research study
Microfinance Opportunities conducted ground-breaking policyholder satis- assessing the demand for health financing services among FINCA Uganda
faction studies on microinsurance in Uganda and Zambia. The objective of clients. The study found that FINCA Uganda clients would benefit greatly
the studies was to develop a client satisfaction from a health financing product, despite a lack of
measurement protocol and to gain an under- expressed demand or understanding of formal-
standing of the policyholders’ receptivity to ized health insurance. Malaria, HIV/AIDS, and
microinsurance products. In Uganda, Micro- tuberculosis are prevalent in Uganda and the
finance Opportunities partnered with two financial impact of medical costs and productiv-
health insurance providers, Save for Health ity losses that accompany sickness and disease
Uganda and Microcare. The study explored increase a household’s vulnerability. Respondent
issues such as: affordability, product require- tactics for managing the high costs of medical
ments, understanding of product terms, and treatment are usually reactive, inadequate, and
satisfaction with the claims process. Finding costly. This study identified two products that
a generally poor collective understanding of would aid in the reduction of health-related finan-
insurance in Uganda, the report called for a cial shocks for FINCA Uganda clients.
comprehensive client education program ad-
Combining its expertise in financial education and
dressing the importance of risk management
microinsurance, Microfinance Opportunities is
and the general concept of insurance and the
currently developing a new financial education
terms, processes, benefits and exclusions of
module, titled “Risk Management and Insurance:
the specific product.
Protect Your Family’s Future,” designed to im-
Microfinance Opportunities presented these prove the capacity of low income households to
research findings at the 2007 Microinsurance mitigate the impact of potential crises.
Conference in Mumbai. For Microfinance Op-
portunities, the Uganda and Zambia studies
open an important new area within the topic
of microinsurance.
Photo: Monique Cohen, MFO

 2007 Financial information
STATEMENT OF UNRESTRICTED OPERATING ACTIVITIES
Functional Expense Allocation

Grants & Contract Income....................................................308,049 12% 2%
Other Income (Interest and Miscellaneous).........................121,142
Net Assets released from Restrictions...............................1,760,015
TOTAL REVENUE & SUPPORT...................................................2,189,206
6%
UNRESTRICTED OPERATING EXPENSES
Community & Outreach........................................................28,173
Financial Education.............................................................932,388 57%
Client Assessment...............................................................366,555
Risk Management Innovations..............................................99,735
Grant Development.................................................................9,026
Management & General......................................................187,899
TOTAL EXPENSES......................................................................1,623,776

CHANGE IN UNRESTRICTED OPERATING NET ASSETS............................565,430
23%

NET ASSETS, beginning of year...............................................................429,870

NET ASSETS, END of year........................................................................995,300

STATEMENT OF FINANCIAL POSITION

ASSETS Communications & Outreach
Cash And cash equivalents.................................................2,379,012
Receivables.........................................................................1,672,886 Financial Education
Property & Equipment............................................................21,017
Other Assets..........................................................................870,399 Client Assessment
TOTAL ASSETS..........................................................................4,943,314
Risk Management Innovations
LIABILITIES & NET ASSETS
Current Liabilities.................................................................441,787 Administration & Fundraising
Unrestricted Net Assets.......................................................645,300
Board Designated Reserve...................................................350,000 2007 was a turning point for Microfinance Opportunities as an institution. We received the
Temporarily Restricted .....................................................3,506,227 official determination of our non-exempt status by the Internal Revenue Service. We were
TOTAL LIABILITIES & NET ASSETS...........................................4,943,314 able to create a reserve to insure the stability of the organization. And we were still able to
devote 88% of our operating expenses to program services.

 Microfinance Opportunities Annual Report 2007

 Funding Board of leadership
Partners Directors *

Banca de las Opportunidades Deborah Burand, Chair Monique Cohen

BANSEFI/USTDA
Bill and Melinda Gates Foundation
Caribbean Microfinance Network
Citi Foundation
Grameen Foundation Founder-President
Stephen Rattien, Vice Chair Liz McGuinness
Retired, formerly of Rand Corporation Senior Project Manager
Michael J. McCord, Secretary Danielle Hopkins
The MicroInsurance Centre, LLC Manager of Financial Education

FINCA Patricia Davis, Treasurer Jennefer Sebstad

Davis Financial Services Senior Advisor
FSDUganda
Kathy Reynolds Doherty, Director Kelly Gardner
Microfinance Centre, Poland Media and Communications Consultant Director of Finance and Administration

Omidyar Network Charles Raymond, Director

Hudson Height Partners
World Perspectives Inc.
Paul Rippey, Director
Consultant

Namrata Sharma, Director

Forum for Women, Law
and Development

Monique Cohen, President

Microfinance Opportunities
* as of 12/31/07

Microfinance Opportunities
1701 K Street NW Suite 650
Washington, DC 20006
tel: 202-721-0050
email: info@mfopps.org
www.microfinanceopportunities.org