Jean-Philippe De Schrevel of BlueOrchard Finance, a microfinance asset management company, has hit the bull’s eye when he explains in the current Asian Development Bank newsletter how the financing of microfinance institutions (MFIs) should be left to the capital markets, rather than donations or public funds. Public and charitable funds should be re-directed to:
1) Auditing and regulatory standards 2) Strong financial infrastructure such as supervisory authorities and research institutions 3) Credit rating agencies and standards
4) New financial products, such as those that hedge foreign exchange or political risk
5) Subordinated tranches of investment funds, while leaving the senior tranches to private investors.

Overall, governments and non-profits should not give away their money to MFIs, but responsibly fund the infrastructure for an emerging market and asset class.
Additional Resources
1) Newsletter: “Finance for the Poor," Kathryn Imboden2) Subscription only: "Building Inclusive Financial Sectors: the Road to Growth and Poverty Reduction." Journal of International Affairs. Spring 2005. Vol 58, Issue 23) Subscription only: “Crawford’s Minifund for Microlenders.” Institutional Investor. Feb 2004. pg. 14) Subscription only: “Microfinance Break.” Latin Finance. Feb 2005. pg.1