community-managed loan strongfundsstrong which ones work.pdf

FocusNote NO. 36 MAY 2006 COMMUNITY-MANAGED LOAN FUNDS: WHICH ONES WORK? Government and donor projects that deliver microfinance—that is, credit and other financial services for poor and low-income people—usually involve microfinance insti- tutions (MFIs) with professional staff.1 However, an increasing minority of microfinance The authors of this Focus Note projects rely instead on community-managed loan funds (CMLFs). In CMLFs, credit are Jessica Murray, consultant, to the members of a small group is managed by the members themselves, with no profes- CGAP, and Richard Rosenberg, senior advisor, sional management or supervision of the approval, disbursement, and collection of loans. CGAP. The authors thank These funds are referred to by a variety of names, including revolving funds, self- Hugh Allen, Jeffrey Ashe, managed village banks, accumulating savings and credit associations (ASCAs), and Tamara Cook, Malcolm Harper, Elizabeth Littlefield, community-based finance. Anne Ritchie, Stuart This Focus Note presents conclusions from a performance review of dozens of Rutherford, Ousa Sananikone, CMLF projects established or supported by donors and international nongovernment and especially Heather Clark for their generous and organizations (NGOs) over the past 15 years. It turns out that success is strongly useful advice. linked to the source of funding for the loans group members receive. ■ Externally f