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Partnership Models

Written by: Grameen Foundation

Article Overview: The examples cited are just some of the models where microfinance can be used as a platform to offer and deliver integrated services to clients. Like any business model, there is no single right way to offer services.2

Partnership Models

The examples cited are just some
of the models where microfinance can be
used as a platform to offer and deliver
integrated services to clients. Like any
business model, there is no single right
way to offer services.24 MFIs can
provide additional services themselves,
partner with other social service
providers, or use service agents who will
perform certain functions on their behalf.
In today’s environment, given the
heightened awareness of microfinance
and its role in poverty alleviation, there
are many players interested in
participating, which could lead to
interesting hybrid models as well.
If organizations pursue an in-house model (i.e., they provide the services themselves),
they can either increase the scope of the existing business model to include other services (unified
approach) or build a separate arm to deliver the services in parallel with offering loans (parallel
approach). The organizational structure will depend on the resources available, their staff’s skills
and expertise, the mode of delivering the services, and the needs of their clients. A unified
approach requires a strong staff that is knowledgeable in all the products and services offered. A
parallel approach will require greater organizational capacity as well as internal coordination and
external collaboration. Regardless of which approach, MFIs ought to ensure that the delivery of
additional services does not compromise its capacity to lend and administer loans on a costeffective
and sustainable basis.
For organizations that do not have the capacity or prefer to specialize only in lending,
they can provide their clients with additional services by engaging in partnerships or alliances
(linked approach) similar to BRAC and their IGVGD Program. Each partner can provide
complementary services or they can collectively offer more comprehensive services to their
clients. It depends on what each partner brings to the table and the opportunities for shared or
leveraged resources. A key ingredient in engaging in a partnership or strategic alliance is
whether the interests of both parties align. It is critically important that both parties have the same end goals in mind and are in agreement on the roles and responsibilities of each during the
process. In this particular case, MFIs, when choosing their partners, have to keep in mind the
evolving needs of their clients and how the alliance will impact them in the short term and over
time. Because microfinance and this client segment require a high-touch, high-service level
model, the partnership has to be well developed and tested before being rolled out to an MFI’s
entire network of clients.
As the microfinance field grows, more opportunities will arise to outsource particular
functions and services. MFIs do not have to do everything themselves, particularly in the areas
of offering health, educational or other social services not within their area of expertise. They
can use a service agent on their behalf or outsource certain services. Like a partnership though,
they still have to make sure that the various parties involved are clear in the rules of engagement
and the end goal. This model is beneficial because it increases the scope of offerings to clients by
leveraging resources and providers. If it is not well managed or executed, however, it could lead
to substantial problems.
Each of these models mentioned above or a hybrid of them can help microfinance
institutions offer clients more value-added services. Organizations should develop a model that
works for them and their marketplace. The idea is for MFIs to leverage their infrastructure and
their attractiveness to potential strategic allies. Whether it is access to tangible resources (e.g.,
distribution networks and complementary services) or more intangible resources (e.g.,
organizational capacity, knowledge and skills, or even brand and reputation), organizations
seeking to partner with MFIs should put long-term business considerations above short-term
profit maximization or public relations value. We encourage organizations to look beyond the
obvious partner choice, however. It is easier to network with and collaborate with more similar
organizations such as other MFIs, foundations, and NGOs. But often, more value can be gained
when MFIs can engage and motivate other actors including businesses to see how their long-term
business goals will be realized faster if they partner with MFIs and the platform they have
created. Because poverty alleviation is a global issue, which can only be sufficiently addressed if
more parties lend a hand, we encourage MFIs to reach out to less obvious players—including
social ventures, private businesses, government organizations, and yes, even large corporations—
and serve as a platform for them to help in this important cause.

Microfinance: A Platform for Social Change
by Marge Magner
March 2007
Grameen Foundation

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Article Tags: additional services, alliances, business model, complementary services, comprehensive services, external collaboration, heightened awareness, hybrid models, ing, integrated services, internal coordination, loans, mfis, organizational structure, partnerships, poverty alleviation, scope, social service providers, sustainable basis, unified approach



Related Forum Posts
Re: looking for partner - Partnerships in business can be tricky. Most partnerships fail. Here are a few points to ponder before starting a partnership: - Should have common goal and vision - Level of commitment in business - Expectations from business and each other. - Good sense of self-worth - Financial Position – Have a good experience in related business with strong financial standing I suggest you to go on Google type “Partnership Assessment form” and Partnership Assessment Tool” You find some good results. Further apart from this forum look into on social media and business sites.


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