MICROCAPITAL BRIEF: US Agency for International Development (AID), CGAP (Consultative Group to Assist the Poor), The Mastercard Foundation Award $1m to ideas42 for Financial Management Tool for Microentrepreneurs

The US Agency for International Development (AID), a government agency that provides international economic and humanitarian assistance, and CGAP (Consultative Group to Assist the Poor), a US-based, nonprofit that aims to facilitate the expansion of financial access, and The Mastercard Foundation, a Canadian nonprofit that aims to promote youth learning and financial inclusion in emerging markets, recently awarded approximately USD 1 million to ideas42, a US-based nonprofit consulting and behavioral design firm, for the implementation of a SMS text-messaging “push” notification system and voice-based platform that is intended to help microentrepreneurs better manage their finances. It is unclear whether the USD 1 million is to be repaid over time. In the Dominican Republic, ideas42 has already tested the type of “rule-of-thumb” training that the SMS and voice-based notifications will provide.

Marinia Dimova, the Vice President of ideas42, stated that, “Our common intuition is that complex situations require complex and very nuanced solutions. But knowledge alone is often not enough to ensure making the right choices. The benefits of financial heuristics are not only that they reduce complex information to a simple and manageable set of choices, but also that they help microentrepreneurs turn an intention for improved financial management of their businesses into a realized action.” The pilot program is expected to launch in late 2015 and end in March 2017.

As of 2013, USAID had a total of USD 60.6 billion in budgetary resources. CGAP reported operating expenses of USD 9 million as of 2013. As of December 2013, ideas42 reported net assets of USD 3.1 million. As of 2014, The MasterCard Foundation reported approximately USD 9 billion in assets.

By Ananya Tiwari, Research Associate

About CGAP (Consultative Group to Assist the Poor)

CGAP (Consultative Group to Assist the Poor) is a US-based nonprofit policy and research center dedicated to increasing financial access to poor people worldwide. It is supported by approximately 40 development agencies and private foundations in its mission to provide market intelligence, promote standards and offer advisory services to governments, microfinance providers, donors and investors. CGAP reported operating expenses of USD 9 million as of 2013. CGAP is co-located with the offices of the World Bank Group in Washington DC.

About ideas42

Ideas42 was founded in 2008 by Antoinette Schoar of the Massachusetts Institute of Technology, Eldar Shafir of Princeton University, Jeffrey King of the Brookings Institution, Michael Kremer of Harvard University, Sendhi Mullainathan of Harvard University, and Simeon Djankov of the International Finance Corporation (IFC) as a “think tank” geared towards solving social problems via the application of behavioral economics. As of December 2013, ideas42 reported net assets of USD 3.1 million.

About United States Agency for International Development (USAID)

The United States Agency for International Development (USAID) is a government agency that provides international economic and humanitarian assistance. It focuses on areas such as economic growth, agriculture, trade, health, democracy, conflict prevention and humanitarian assistance. Under the Development Credit Authority (DCA), it provides credit guarantees that cover up to 50 percent of defaults on wholesale loans made by private financial institutions to institutions that lend on a retail basis to under-served borrowers. USAID had a total of USD 60.6 billion in budgetary resources in 2013.

About The MasterCard Foundation

Based in Canada, The MasterCard Foundation is a private foundation with the goal of enabling people living in poverty to improve their lives with increased access to microfinance and education. The foundation was established in 2006 by a gift of shares from US-based payment processor MasterCard Worldwide during the company’s initial public offering. As of 2014, The MasterCard Foundation reported approximately USD 7 billion in assets and operates with partners in 49 countries.

Sources and Additional Resources

[1] ideas42,  http://www.ideas42.org/financial-heuristics-press-release/

MicroCapital, October 13, 2014, Global Innovation Fund (GIF) Receives $200m from Omidyar Network; Governments of Australia, Sweden, UK, US, https://www.microcapital.org/microcapital-brief-global-innovation-fund-gif-receives-200m-from-omidyar-network-governments-of-australia-sweden-ukus/

MicroCapital, July 24, 2014, CGAP (Consultative Group to Assist the Poor) Transfers Management of French-language Training to Luxembourg-based ADA, Cote d’Ivoire-based Africa Microfinance Network (AFMIN), https://www.microcapital.org/microcapital-brief-cgap-consultative-group-to-assist-the-poor-transfers-management-of-french-language-training-to-luxembourg-based-ada-cote-divoire-based-africa-microfinance-network-afmin/

MicroCapital, December 20, 2013: “US Agency for International Development (USAID), NetHope Announce 3 Grants Totaling $42k to Support Electronic, Mobile Payments”
https://www.microcapital.org/ microcapital-brief-us-agency- for-international-development- usaid-nethope-announce-3- grants-totaling-42k-to- support-electronic-mobile- payments/

MicroCapital Universe Profile: CGAP (Consultative Group to Assist the Poor), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=CGAP+%28Consultative+Group+to+Assist+the+Poor%29

MicroCapital Universe Profile: United States Agency for International Development (USAID): https://www.microcapital.org/ microfinanceuniverse/tiki- index.php?page=United+States+ Agency+for+International+ Development+%28

MicroCapital Universe Profile: ideas42, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=ideas42

MicroCapital Universe Profile: The MasterCard Foundation, http://www. microcapital.org/ microfinanceuniverse/tiki- index.php?page=MasterCard+ Foundation

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