CRS Microfinance Principles
Catholic Relief Services' microfinance practitioners agreed upon six principles that guide the development of CRS' microfinance programs. These principles describe the values underlying our current programming and provide guidelines for the development of future programming. In 1999, the principles were updated as follows to reflect lessons learned from our experiences:
Serve the poorest clients
Reflecting CRS' goal to promote social and economic justice, we target our services to the poorest communities and entrepreneurs. Women make up the majority of our clients as they generally have the least means and access to credit.
Link loans to savings
We connect the size of a client's loan to the amount of that client's savings to ensure that they are building wealth as they borrow.
Use solidarity guarantees
Group-guaranteed loans replace collateral. Solidarity guarantees work by linking new loans to on-time repayment of past loans. A self-selected group of clients guarantee each other's loans with the understanding that no one in the group will receive a new loan until each member's previous loan is repaid.
Practice participatory management
Clients are directly involved in the management and administration of the services they receive, from voting on loan applications to collecting payments from other borrowers. In this way, CRS guarantees the inclusion of those most affected by these major decisions.
Invest in scale and self-sufficiency
Investing in research, design, staffing and training from the beginning of a program, and throughout later stages of growth is crucial to successfully moving a project from start-up to formalization. Achieving scale (i.e., reaching at least 5,000 clients per partner) advances our mission to serve the poor. We achieve self-sufficiency through efficient operations and by charging interest at market rates.
Plan for permanence
Prior to launching a new microfinance project, CRS plans the project's evolution into a sustainable resource for the poor. Permanence may include creating a formal financial institution, helping partners transform programs into specialized microfinance institutions or consolidating pilot activities into larger local entities.