Improving Effectiveness from Within: SmartAid for Microfinance Index

This paper describes SmartAid for Microfinance Index, a tool that measures funders internal management systems.SmartAid was developed to help development institutions and donors measure their capabilities in designing, implementing and monitoring microfinance programs and investments. SmartAid consists of nine indicators based on five elements that funders consider important to effectiveness. These include strategic clarity, staff capacity, accountability, knowledge management and appropriate instruments. An expert review board assesses documentation supplied by funders and applies scores to the nine indicators. Each funder receives a SmartAid report including comments on strengths, weaknesses, and recommended improvements, as well as quantitative scores.As a result of their experience with SmartAid, funders are making significant improvements in their systems. Changes range from reorienting strategic focus, upgrading staff skills to revamping monitoring and evaluation systems. SmartAid helps funders:

• Identify priorities for change;
• Improve how they work in microfinance;
• Develop transparency and learning;
• Develop a healthy sense of competition and provides incentives to improve;
• Connect to others that have complementary strengths, thus facilitating collaboration.