2010 SEEP Annual Conference: Capacity gains and capital stability – non & for-profit partnerships

SEEP Session: Obstacles to Financial Inclusion in Sub-Saharan Africa: A Partnership Approach

Irina Ignatieva (CONCERN Worldwide), Rebecca McKenzie (Agora Microfinance Partners LLP) and Maluba Wakunguma (AMZ Ltd) discussed both the challenges of doing business in Sub-Saharan Africa as well as the unique concerns that have to be addressed with for-profit/non-profit partnerships.

Based on a successful model that began in 1993 in Cambodia, the partners are launching the Agora Microfinance Zambia (AMZ) that will combine the capital infusion benefits of a for-profit with the social impact mission of a non-profit. The panelists focused on some of the benefits of collaboration that quickly had an impact on both organizations. Previously dependent on donations garnered through active fundraising, CONCERN would spend almost nine percent of their fundraising goals on the fundraising itself. The guaranteed capital provided by Agora allowed CONCERN to reduce staff time dedicated to fundraising, shifting almost 25% of time back to operations and allowing them to focus on expanding microfinance access.

On the for-profit side, Agora gained access to CONCERN’s field expertise, stakeholder knowledge and existing in-country administrative capacity that reduced entry cost to new markets. Maluba shared cost savings estimates of a traditional MFI versus the partnership model, showing over 50% savings across almost all startup costs.

The organizations started their partnership by developing a memorandum of understanding. This led to the development of shared five-year goals and a business plan that guaranteed that the social mission was embedded within the larger project goals, thereby reducing potential conflicts.

Overall, this partnership and the issues surrounding it may not be all that different than traditional mergers. However, this example calls attention to the significant groundwork needed to ensure consensus between for-profit and non-profit organizations.