I had the opportunity recently to interview program officers and funders in the field to get their perspective on the current funding climate and, specifically, what they are looking for from grantees during these difficult times.  I have to admit, I had trouble keeping up with them - they had a lot to say!

We're honored to be working with two start-up MDOs, Rocky Mountain MicroFinance Institute (RMMFI) in Denver, CO, and Rising Tide Capital in Jersey City, NJ.  They have impressed us as wise students of the field, embracing the lessons learned by the rest of us, and building them into their programs.  Here's why we believe they have the "right stuff":

• Tie Services to Stages of Business Growth: RMMFI guides clients through the stages of business growth - Business Curious (planning) to Business Serious (results) to Business Capable (success), and provides relevant and targeted services at each stage.  Clients demonstrate competencies in certain areas before moving to the next step.
• Entrepreneurial Coaching: RMMFI offers both group-based business coaching and individual coaching.  "Through coaching we can ensure that the business owner puts the correct systems in place to grow sales and manage the costs in their business," according to Rob Smith, Executive Director.   "We also stress mutual accountability, which is essential for coaching to work," says Brendan Landry, Director of Programs.
• Build Business Credit: RMMFI's Credit Builder loan program (up to $2500 over 4-6 months) is aimed at building/repairing credit scores and making the client comfortable with a financial obligation.  Clients are  eligible for a Business Growth loan (up to $20,000 over 1-4 years) when they demonstrate they can handle a financial obligation. 
• Broad-Based Development Strategy: RMMFI knows that fundraising is about building strong relationships, and with the Board's active involvement, is putting in place the systems and plan to make sure it does not place "all of our eggs in one funding stream basket," says Stacey Sagesse, Development Director.

 In only seven months of existence, RMMFI has served over 100 clients!  

• Establish a Strong Value Proposition: RTC publicizes the actual market price of its services compared to the small fees charged to demonstrate the tremendous value clients are getting.  "We learned that people take our program more seriously when they have to pay a small fee, and it builds in mutual accountability, said Alfa Demmellash, CEO.
• Demonstrate and Communicate Results: Alex Forrester, COO told me that "we distinguished ourselves early with funders and local stakeholders by committing to outcome measurement as a core value."  RTC invested in Outcome Tracker by VistaShare, and conducts an annual client survey.  
• Use Adult Learning Methodology:  "No talking heads allowed in class," says Alex.  RTC incorporates adult participatory learning practices into its program design to assure that individuals can learn by doing and fully assimilate their learning. 
• Walk the Walk!: As former and current business owners, RTC's instructors and coaches know what it takes to run a successful business!

Successful Practices in Portfolio Management

• Communication: Loan officers must never suggest to their borrowers that it is easy to extend or restructure the note.  Frequent concessions can become common knowledge among the borrowers and, in turn, increase requests.
• Getting Real: Restructuring and extensions mark a violation of the borrower's promise to repay the loan. The borrower must understand the gravity of the situation.
• Underwriting: You must do a full underwriting analysis to determine whether to restructure or extend the terms of a loan.  Focus on whether the cash flow will be sufficient to repay the loan.  If the answer is "no," do not change the loan terms.
• Promissory Note: A new promissory note must be drawn up with the terms and conditions.
• Additional Security: It is appropriate to request additional security, such as a cosigner or collateral, at this time. You must not release cosigners or collateral, unless the borrower (or cosigner) makes a significant payment that reduces the amount at risk very significantly.
• Technical Assistance: We recommend you use the opportunity to call for a meeting between the client and business development staff to develop a technical assistance plan to map out strategies to help the borrower stabilize and strengthen the business.  Now is the perfect time to take advantage of your network of volunteer and/or contract business consultants.