Research

MCE is committed to researching, demonstrating, and sharing the power of loan guarantees and alternative financial instruments to drive social impact in developing countries.

Constant Research to Bridge Private Capital and the Development Industry

In 2006, after extensive research of poverty alleviation policies, MCE pioneered the use of loan guarantees from private individuals and foundations to create social impact in developing countries. Loan guarantees – where a third-party pledges to assume the debt obligation of a borrower – have helped people access otherwise unobtainable capital since at least early Roman times.

The open-source model has been replicated, for example by Arrow Global Capital and Principium.

In 2013, MCE launched a new program centered on socially-impactful businesses and began researching agriculture value chains and clean energy in Sub-Saharan Africa and Latin America. The program revolves around:

1) Demonstrating the viability of financing small firms working along the agriculture and clean energy value chains with small debt amounts (from $150,000 to $300,000). If the result of the research and impact evaluations are positive, the program will qualify as new product for loan guarantees in 2017, with the aim of producing a demonstrable effect for for-profit, socially-minded US investors looking to expand internationally.

2) Researching the link between the money invested in those companies and a) jobs created and b) subsequent income increases at the farmer and household-level. Research data is being gathered through various pilots in the program, and a full report will be published at the end of 2016.

In 2014, MCE launched a new program that allows private wealth managers / asset managers to invest in risk-free notes for their clients who are interested in socially-minded investments.

Through constant research into the most effective methods of bridging private investors and the development industry, MCE has been able to create sustainable financial products to push further into new areas and diversify the tools for poverty alleviation in the developing world.

Graph Rsearch Cycle

Current Research

Phase 5 Programs (Pilot):

  • Microfinance and Health Protection program in Ecuador, in partnership with Freedom From Hunger and Fundación Alternativa. Link to full report in English and Spanish.
  • Social Ventures Program, seeking to design custom financial products for agriculture value chains in Sub-Saharan Africa and Latin America. Link to current projects here.
  • Partnership with the Financial Access Initiative at the NYU Robert F. Wagner Graduate School of Public Service to produce and distribute papers, presentations, videos, and/or other materials that draw operational lessons from the myriad of academic studies on microfinance. This initiative helps practitioners and funders move beyond the “poverty impact of microcredit” conversation to innovation in products and operations based on evidence.

Phase 2 Programs (Define Research Scope and Resources):

  • Beyond the Grid: how to catalyze solar energy to provide households and businesses in developing countries with clean, affordable electricity, a healthy substitute for fossil fuel that also reduces carbon impact.
  • Haiti research trip (2017): Fonkoze, a NGO in Haiti, one of the poorest countries in the world, has developed an innovative model to reach the “ultra-poor”. The MCE team, including Board Members and Guarantors, will visit the organization in January 2017 to gather additional data and research the potential for replication in other geographies. Find the description here.
  • How to mitigate the adverse effect of currency fluctuations? With the rise of the US Dollar, combined with lower commodity prices, providing capital to developing economies has become very risky. MCE is committed to exploring options to mitigate currency risk so that private capital can still be safely invested where it is needed most.

Discontinued Research Pieces

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