MICROCAPITAL BRIEF: Rating Initiative to Stop Subsidizing Microfinance Institution Social Ratings, Will Shut Down Over Two Years

The Rating Initiative (RI), a Luxembourg-based program that supports the use of ratings that include financial and social criteria, is transitioning into a two-year exit phase that includes terminating its subsidies for social ratings of microfinance institutions (MFIs). RI already had stopped co-funding financial ratings as of April 2011. In its exit phase, it will place more emphasis on mobilizing investor and donor interest in microfinance ratings. It will also reach out to the four specialized rating agencies, Planet Rating, MicroFinanza, M-CRIL and MicroRate, to encourage them to use the Responsible Finance Rating (RFR) product, which incorporates both financial and social risk criteria in an analysis of institutional risk.

In addition to offering workshops and promotional documentation, RI regularly releases studies that focus on microfinance ratings such as the “Rating Market Review”, which provide a general overview and analysis of the microfinance rating market.

About the Rating Initiative
Located in Luxembourg, the Rating Initiative was launched by Nonprofit Appui au Développement Autonome in collaboration with the government of Luxembourg, the Microfinance Initiative Liechtenstein, the Swiss Agency for Development and Cooperation, Oxfam Novib Fund, Oesterreichische Entwicklungsbank, the Interchurch Organization for Development Co-operation, the Principality of Monaco and BlueOrchard. By researching and evaluating microfinance ratings, with a particular emphasis on social ratings, the Rating Initiative aims to improve the transparency of microfinance institutions (MFIs) for donors, investors and MFIs themselves.

By Ariana Malushi, Research Associate

Sources and Additional Resources:

The Rating Initiative: “Closure and Co-Funding and Transition to the New Phase”
http://www.ratinginitiative.org/

MicroCapital.org Story, January 27, 2011, “MICROCAPITAL BRIEF: The Rating Initiative Presents the Microfinance Rating Market Review 2010”
https://www.microcapital.org/microcapital-brief-the-rating-initiative-presents-the-microfinance-rating-market-review-2010/

MicroCapital Universe Profile: The Rating Initiative
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=rating+intiative

Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/

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