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A Powerful NGO Model Everyone Should Know About

Published on October 21, 2010

by Anjum Khalidi

I recently came across an article in the online Harvard Business Review titled “The Most Powerful Green NGO You’ve Never Heard Of.” The title itself was enough to pique my interest but most exciting was to learn about the parallels that exist between MFTransparency’s business model and that of the Carbon Disclosure Project (CDP). The article states, “the UK nonprofit began in 2000 with a simple idea: ask the world’s largest companies to publicly share information about their carbon emissions and the actions they’re taking to manage them.”

Across the ocean, Chuck Waterfield had a similar idea in 2008 when he founded MFTransparency. His idea was to ask microfinance institutions around the world to publicly share information about the prices of their microfinance products and the practices they have put in place to promote responsible finance and protect their clients. Two years later, MFTransparency (MFT) is working in 13 different countries on four continents with government regulators and hundreds of microfinance institutions.

CDP faces similar questions that MFT staff face when teaching others about our philosophy for the first time. The article explains, “some corporate executives might find it unwise to share so much data, why do they answer CDP when it comes calling? Well, it’s not just CDP that’s asking. CDP ‘s “members” include 534 of the world’s largest banks and institutional investors, representing $64 trillion under management.” Similiarly, it is not just MFTransparency who is asking MFIs for their data. Regulators, donors, investors, and other microfinance stakeholders are also interested in the data and see the sector-wide benefits of good governance and consumer protection that MFTransparency’s Global Transparent Pricing Initiatives bring. In other words, all stakeholders and actors in the microfinance industry can benefit from a more open microfinance market. Accurate information is particularly relevant in India’s microfinance sector today as regulators and other government officials are increasingly concerned with MFIs that may practice unethical behavior towards their clients.

Christiana Figueres, the UN’s Climate Secretary, described CDP’s critical role in driving transparency on carbon emissions worldwide by saying “CDP is to the future of business what the X-ray was to the then-future of medicine — without it, we would never have seen the insides of the patient’s health.” I believe that MFT is playing this role in the microfinance industry globally, in order to serve as a vehicle for microfinance institutions to demonstrate their commitment to transparency and social responsibility as well as financial sustainability.

The innovative model of CDP and MFT is working to address the global challenges of climate change and poverty alleviation. The success of the model speaks to the power of open, accurate information for informed decision making from the level of the client, to the institution, as well as policymaker.

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