Grant proposals are approved by a local advisory board comprised of representatives from the private financial sector, NGOs, and donors. UNDP and the Government co-chair the board. Grants are used by MFIs to purchase fixed assets, such as computer and MIS systems, to cover a percentage of operational costs for a limited time, or as a complement to the organization's own loan funds, other donors' grants or as leverage for commercial loans. MicroStart works with a variety of institutions to establish or strengthen microfinance operations, including specialized NGOs, credit unions, banks, and multi-purpose institutions. When an organization provides other services, the microfinance services are separated from other operations and are treated as a separate cost center.
Young organizations can institute best practices from the start.
Implementation of these practices will enable young organizations to move toward self-sufficiency. MicroStart's principles of operation are methodology neutral. World-wide, microfinance institutions have been successful in reaching the very poor by lending to solidarity groups, through village or community banks and directly to individuals. Critical initial support to launch this global pilot came from the Finnish Government and UNDP's global resources. Collaborative efforts are underway with other bilateral and multilateral agencies.