Improving Flows of Foreign Capital to the Microfinance Industry Request for Proposals (RFP) Prize to be Awarded – November 15, 2008
Cambridge, MA – October 1, 2008 – The SEVEN Fund today published the next in its series of Enterprise–based Solutions to Poverty request for proposals (RFPs). The competition will award a grant of no more than $150,000 to enhance capital flows from international investors to microfinance institutions in developing countries. The award is meant to give impetus to a larger project that will improve the quality, transparency and efficiency of such capital flows to bring longer-term viability and sustainability to the microfinance industry.
Submissions are due at midnight (EST) on October 31, 2008 and an award will be made no later than November 15, 2008.
Quick Links:
• Grant Awarded to Microrate - Read Full Press Release
• Questions & Answers
• Background
• Criteria
• Qualification for Organizations Submitting a Proposal
• About SEVEN
• Evaluation Criteria & Project Eligibility
• Acceptable use of grant funds include
• Important Dates
• Application Process
• Biographies
Background
In the last five years, microfinance institutions (MFIs) have increasingly tapped foreign commercial funding sources, expanding available resources beyond those offered by international development partners. Borrowing from microfinance investment vehicles (MIVs) in particular has grown rapidly. However, funding flows through MIVs to MFIs still often do not meet the highest standard of efficiency and disclosure. Without innovative measures the microfinance industry will not become an asset class that scales up to meet the demands of hundreds of millions of micro–entrepreneurs.
With the recent growth in the visibility of microfinance, there has been an increase in funding to the sector through MIVs. While this is a positive situation in many ways, there is currently an oversupply of capital coupled with an information vacuum. Because information on MIVs is limited, microfinance is likely to face a market backlash when uninformed investment choices might result in significant losses. If this lack of transparency continues, MFI default might lead to a disproportionately negative effect on the entire industry, reversing the progress made in microfinance over the last decade.
The lion’s share of capital market investment in microfinance has been through MIVs. In 2005, the microfinance assets held by MIVs grew from $417 million to $712 million. They doubled in 2006 to $1.4 billion and doubled again in 2007 to over $3 billion¹. The share of private capital raised by MIVs has been growing rapidly and it is estimated that in 2006, private investors surpassed development institutions as the most important source of foreign funding for microfinance. While this explosion in investor demand is good news for microfinance, at the same time there is a need to ensure that investors have ready access to objective, reliable risk and return information, just as they have for other, traditional investment vehicles. In the long run, markets cannot grow and mature unless investors have access to information that allows them to gauge risk and invest wisely. In the current environment, an excess of capital is chasing a limited base of creditworthy MFIs. As such, SEVEN is inviting the submission of proposals to help develop an investor information service, such as the development of an index or rating system, to help inform investor activity in microfinance through the MIV.
Criteria
Submissions for this request for proposals will be evaluated by a panel of expert jurors. Jurors will look for the following criteria with respect to selecting the winning submission:
- Catalytic effect: Proposals should include a pilot project to test their implementation on a limited scale. A strong consideration in choosing a winning entry is whether such a pilot will be implemented and whether it is likely to eventually lead to a larger–scale program aimed at enhancing the quality and efficiency of foreign private capital flows to MFIs.
- Innovation: The proposal should result in a service or product that is either not currently available, or that is a marked improvement over what already exists.
- Sector know-how: How likely is it that the implementing organization will be able to carry out the project successfully? Does it have deep knowledge of microfinance institutions? Is it well-acquainted with the MIV sector? Is it a recognized expert in the field?
- Objectivity: Proposals that influence investment decisions must be implemented by entities that are objective and independent. Is the implementing agency free from conflicts of interest that could jeopardize this objectivity in the eyes of investors?
- Data: Does this organization have access to data and the networks of relationships necessary to obtain appropriate information from MFIs, MIVs, and industry experts?
- Sustainability: Does the proposal include a long-term plan for the financial sustainability of the effort’s
Qualification for Organizations Submitting a Proposal
- Must have extensive hands-on expertise in the microfinance industry. Deep knowledge of MFIs and of the MIVs are necessary to qualify for the award.
- Must be an objective, independent organization, without a financial interest, direct or indirect, in either MFIs or MIVs.
- May be a private, public, academic, or non–profit organization.
- Must be able to demonstrate that they could implement the project and are capable and willing to scale up a project such as this to meet global investor needs.
About SEVEN
SEVEN (Social Equity Venture Fund) is a virtual non–profit entity run by entrepreneurs whose strategy is to markedly increase the rate of innovation and diffusion of Enterprise Solutions to Poverty. We do this by targeted investment that fosters thought leadership through books, films and websites; supporting role models – whether they are entrepreneurs or innovative firms – in developing nations; and shaping a new discourse in government, the press and the academy around private–sector innovation, prosperity and progressive human values.
Questions & Answers
Does SEVEN have a preferred philosophical or scientific agenda?
We see a number of experts who opine about poverty and prosperity: i.e., macroeconomists, businessmen, educators, political scientists, social scientists, etc. We rarely see enough integration, where the experts of one domain borrow insights from another, and attempt to create an even more robust intellectual framework. We intend to foster this kind of integration at the level of thought leader and practitioner.
Who might receive SEVEN grants?
Anyone may submit a proposal in order to compete for a SEVEN RFP grant as long as the proposal reflects the scope and guidelines stated in the call for RFPs. The winning parties will be required to enter into a contract with SEVEN prior to final award. We expect applicants to be Think–Tanks, Economists, Professors from Business Schools as well as other departments, Researchers, Entrepreneurs, Business Experts, Strategy Experts, Graduate and Post–Graduate Student Researchers, Economic Development Experts, Business Strategists, Non–Governmental Organizations, etc
How and when do we apply?
You enter into the RFP competition by completing a proposal, as well as a proposal submission form and proposal budget (available for download at the bottom of this page, or by emailing Elizabeth Hooper at ehooper@sevenfund.org). The CV of the Principal Investigator must be attached. Submission deadline for this RFP is October 31, 2008. Everything should be submitted at the following page, in a single zip file. http://sevenfund.org/microfinance-form.php
Download Forms
What kinds of programs and requests are eligible for funding?
The competition will award a grant of no more than $150,000 to enhance capital flows from international investors to microfinance institutions in developing countries. There is no geographic or other limitation on who may compete for these funds – anyone may compete for these funds.
What is your policy on overheads?
The highest allowed overhead rate is 20%.
How will proposals be judged?
All Full Proposals will undergo a competitive process of a confidential jury peer review. An expert panel of jurors from various fields will evaluate and rank the proposals according to the criteria described in Evaluation Criteria & Project Eligibility. The winning parties will be required to enter into a contract with SEVEN prior to final award.
Is there a fixed amount of funding?
The grants under this RFP call shall not exceed $150,000 to be used during a period of no longer than 12 months.
Can you give me any guidance on my research proposal, and on whether or not our project fits within the funding vision?
Occasionally, SEVEN may provide limited advice during the preparation of the Full Proposal. Please keep in mind that however positive SEVEN may be about a proposal at any stage, it may still be turned down for funding after peer review.
Can I submit multiple proposals?
We can invite at most one Full Proposal from each PI or closely associated group of applicants.
What if I am unable to submit my application electronically?
Only applications submitted via our online form are accepted. Please visit the form at http://sevenfund.org/microfinance-form.php. If you encounter problems, please contact Elizabeth Hooper at SEVEN at ehooper@SEVENfund.org.
What are the reporting requirements?
Grantees will be asked to submit quarterly progress reports. Quarterly payments will be contingent on satisfactory demonstration in these reports that the supported research is progressing appropriately, and continues to be consistent with the spirit of the original proposal.
What are the qualifications for a Principal Investigator?
Since this is a program run by both practitioners and academics, SEVEN may be a bit more flexible than traditional funding agencies in the definition of a Principal Investigator; thus, we may accept applications from non–academics as the PI or a co–investigator if his/her experience and background warrant it. (This is ultimately up to the jury.)
My colleague(s) and I would like to apply as co–PIs? Can we do this?
At this time, the online application form only allows for one PI. Please choose one investigator to be the primary contact; on the application form, designate this individual as the "PI", and all other individuals as "co-investigators." Then, please include a sentence in your project summary specifying your wish for certain individuals to be officially considered as co-PIs.
I have a proposal for my usual, relatively mainstream research program that I may able to neatly repackage as an appropriate proposal for SEVEN. Sound OK?
SEVEN is very sensitive to the problem of "free money," the re-casting of an existing research program to make it appear to fit the overall thematic nature of this Request for Proposals. Such proposals will not be funded, nor renewed if funded initially.
How is SEVEN financed?
This call to RFP is supported initially by a grant from the John Templeton Foundation. SEVEN intends to run multiple RFP competitions annually.
What sort of legal organization is SEVEN?
SEVEN is a non-profit corporation under the laws of the Commonwealth of Massachusetts.
Who is SEVEN? How is SEVEN administered and run?
SEVEN is primarily managed by three people, Andreas Widmer, Michael Fairbanks, and Elizabeth Hooper (bios attached). They are co-directors with different experiences in the high-tech industry, development, and operations respectively. They founded and ran the only venture-backed firm in the USA to focus on selling software and strategic consulting services to developing nations. There is a board of advisors, and a board of directors with vast experience in global markets, advisory work, and enterprise solutions to poverty.
Important Dates
- Deadline for Proposals: Midnight EST October 31, 2008
- SEVEN Grant Award Announcement: November 15, 2008
- Earliest Start Date for SEVEN Grants: November 20, 2008
Evaluation Criteria & Project Eligibility
In this RFP competition, SEVEN will award a grant of no more than $150,000 to enhance capital flows from international investors to microfinance institutions in developing countries. Further investment is a possibility upon completion of the first phase of the project.
Researchers in academic and other non–profit institutions may apply for projects up to one year in duration, beginning as early as November 20, 2008. Grant applications will be subject to a competitive process of confidential expert review similar to that employed by similar grant funding agencies. The competition Proposals will be evaluated according their relevance and impact, and the specific criteria described above. Additionally, we will ask the jury to consider:
- Cost effectiveness: Tight budgeting is encouraged in order to maximize the research impact of the project as a whole, with emphasis on scientific return per dollar rather than per proposal
Acceptable use of grant funds include:
- Student or postdoctoral salary and benefits for part of the academic year
- Summer salary and teaching buyout for academics
- Support for specific projects during sabbaticals
- Salaries of consultants or staff required to execute the project
- Assistance in writing or publishing books
- Modest allowance for justifiable equipment, computers, publication charges, and other supplies
- Modest travel allowance
- Development of workshops, conferences, or lecture series for professionals
- Justified overhead of at most 20%
Application Process
Applications will be accepted electronically through a standard form on our website http://sevenfund.org/microfinance-form.php, and evaluated as follows:
Full Proposal - Due October 31st, 2008 –it must include:
- A 200 word project abstract, suitable for publication in an academic or professional journal
- A project summary not exceeding 200 words, explaining the work and its significance to laypeople
- A detailed description of the proposed research, not to exceed fifteen single-spaced 11–point pages, addressing the key points raised in this RFP
- A detailed budget over the life of the award, with justification and utilization distribution
- Evidence of tax-exempt status of grantee institution, or if it is not tax-exempt, a full description of the entity and its purpose/focus.
- Project timeline with clearly defined and objectively measurable quarterly deliverables
- Curriculum Vitae for all project senior personnel, including:
- Education and employment history
- A list of references to five previous publications relevant to the proposed research, and five additional representative publications
- Full publication list
Full proposals should be submitted as a single zipped file. Completed Full Proposals will undergo a competitive process of external and confidential expert peer review, evaluated according to the criteria described in above. A review panel of scientists in the relevant fields will be convened to produce a final rank ordering of the proposals, which will determine the grant winners, and make budgetary adjustments if necessary. Award announcements will be made on November 15, 2008.
Biographies:
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12007 Microfinance MIV Survey
Entrepreneurs create products, services and jobs. They expand economies, improve people's lives, provide employment (high and rising wages) and bring about competition. A competitive environment, in turn, gives rise to efficiency, meritocracy and further innovations and entrepreneurial drive.
The potent combination of entrepreneurship and technological innovation can forge an environment that is conducive to further enterprise, involving even government policy in supporting entrepreneurship and innovation.
