Microfinance Board Criteria - Spring 2010

Over the past two weeks OxyIF's Microfinance Board has had two very productive meetings. As of our last meeting the board has finalized their loan criteria for the current lending period. We have decided to release this criteria to inform our donors what it is we value as an organization and to ensure transparency throughout the lending process. The criteria are as follows:

- Higher Interest Rate - We prefer to invest in institutions with higher interest rates ideally around 3% in order to keep pace with inflation

- 1 Year Maturity - Considering this is our first pilot loan we want the principle to be returned within one year in order to have fully completed the loan process before we lend the majority of our funding next year.

- Diversification - We would prefer a geographically diversified portfolio in order to have an impact across multiple continents while benefiting from security diversification provides.

- Sustainability - It is very important that the MFI we lend to is sustainable. This can be demonstrated by either complete financial self reliance, or if the MFI does rely on donors, donations must account for less than %30 of the MFI's income and their donor base must be diverse.

- Rural Lending - With a large portion of microfinance occurring in urban areas we have decided to focus on MFIs that service rural areas. We have done this in an effort to provide microfinance services to the full spectrum of individuals in developing societies.

- Extremely Poor - Given the limited size of our pilot loan ($500) we have decided to maximum impact by attempting to impact the largest number of individuals. As a result, we have decided to focus on "extremely poor" borrowers, defined as individuals that are only eligible for microloans under $1000.

- Microsavings - While not required, we would like to support an MFI that has a microsavings program that works in conjunction with their microlending program. Our desire for this stems from recent research that states that entreprenures are more successful in escaping poverty given access to both a microlending and microsavings program.

Going forward OxyIF's Microfinance Board will use this criteria to evaluate potential MFI's. Check back in a few weeks time see our final lending decision.