Donors Succeed by Making Themselves Obsolete: Compartamos Taps Financial Markets in Mexico

This paper describes how the support of international and Mexican donors helped Financiera Compartamos grow from a small NGO to the largest MFI in Latin America.

The paper details the development of Compartamos, and the various kinds of donor funding that nurtured it. It describes how Compartamos built capacity and tapped financial markets through equity funding, issuing bonds and balancing growth, profitability and client interests. The paper presents the following advice to donors:

• Understand an MFI's goals;
• Help strengthen the management;
• Keep contracts simple;
• Have concise and focused reporting requirements;
• Do not require specific consultants;
• Ensure that the MFI can run a consistent and profitable core business, then help it access commercial funding.

The paper states that donors looking to support a success story like Compartamos must plan on making themselves obsolete from the outset. Compartamos has proven that it is possible for a financial institution serving poor people to do so profitably and also remain true to its mission.