Two of the challenges facing microenterprise development programs in the United States are to increase their size and efficiency. As of 2004, there were an estimated 20 million microenterprises in the U.S.; FIELD estimates that about half of these, or 10 million, face difficulties accessing capital and business assistance through traditional sources. Although the microenterprise development industry has grown in the U.S., as of 2004 it served an estimated 175,000 to 250,000 individuals, around  2 percent of the microentrepreneurs in its target market.

Meeting the needs of this market will require moving the field from a structure of small, individual programs to one that enables growth in client numbers, greater efficiency in service delivery, as well as demonstrated effectiveness in business development. Since inception, FIELD has supported and explored leading efforts to increase the scale of service delivery in the United States. These efforts include current work focused on developing a Scale Academy for Microenterprise Development. Completed work includes research on Models for Increasing Scale, research and small grant support for Scaling up Microenterprise Finance in the United States, and grantmaking and documentation of earlier growth initiatives with its Achieving Scale grant cluster.

Scale Academy for Microenterprise Development

FIELD, in partnership with the Association for Enterprise Opportunity, launched the Scale Academy for Microenterprise Development in Spring 2007. Envisioned as four-year program offering comprehensive services to organizations seeking to dramatically increase the numbers of entrepreneurs assisted, it is designed to include financing, technical assistance and training, documentation and tools development for organizations at different stages of institutional capacity related to scale.

Its first project will support up to eight high-potential programs that are poised to achieve significantly greater scale in their operations with technical assistance and capacity building grants of up to $35,000 for one year to address key organizational, technical or methodological challenges they face in scaling up services. Grantees also will participate in a peer-learning process. In addition, depending on performance and future funding commitments to the academy, organizations will be eligible for grants in future years along with additional training and technical assistance. The academy is supported by the Citi the Charles Stewart Mott foundations. To learn more about the academy, click here.

Models for Increasing Scale

Precursor work to the Scale Academy included research, done with the Association for Enterprise Opportunity, to look at new models for increasing the scale of microenterprise programs and services in the United States. This project, funded by the Citigroup Foundation, included several key components:

• A review of literature and writing on scale in the microenterprise and broader community development fields. Click here to read the literature review.

• A survey of AEO members to gain their perspectives on the challenge of scale. Click here for a summary of the survey findings.

• Detailed telephone interviews with 31 microenterprise organizations and other providers currently engaged in efforts to scale-up.

• A June 2006 convening of 14 microenterprise practitioners engaged in scale.

The final product from this project was a set of recommendations to the Citigroup Foundation and other funders regarding how they can best support the industry's efforts to achieve greater scale. The Scale Academy for Microenterprise Development is the first program developed based on those recommendations.

Scaling up Microenterprise Finance in the United States

In this project supported by the Ford Foundation, FIELD explored ideas and directions holding promise for increasing the scale of microlending to U.S. entrepreneurs. These ideas emerged, in part, from the findings of FIELD's initial work around achieving scale, as well as ongoing interactions with microenterprise practitioners. Specifically, FIELD is examined ways to:

• Expand the level of market research and market information regarding the supply of and demand for microenterprise financing in the United States.

• Support the development of credit-scoring models for loans to low-income entrepreneurs.

• Identify strategies for improving the credit scores of low-income entrepreneurs.

As part of this project, completed in 2006, FIELD has:

• Convened a group of the U.S. microlenders, along with experts from the private sector, to discuss key issues involved in achieving greater scale in microlending.  Key issues and conclusions from this discussion can be found in FIELD’s summary meeting report.

• Commissioned a study to look at trends in microlending among for-profit financial institutions.  Key findings from the “market scan” are available here.

• Provided grant funding to ACCION USA to support its efforts to analyze loan data from ACCION USA and ACCION New York, with the goal of moving toward a credit-scoring model. A paper describing the results of these efforts is available here.

• Developed a case study of a microenterprise program – MicroBusiness Development Corporation – that has used both merger and acquisition as tools to expand the scale of its lending efforts.

• Provided funding to five microenterprise programs to conduct market research related to trends in private-sector microenterprise lending in their local markets. FIELD forum Issue 18 describes these market research efforts and the findings they generated; click here to see copies of the tools used in these market research efforts.

Achieving Scale

From 2000 to 2002, FIELD made grants to eight organizations that pursued strategies to expand outreach and generate significantly higher numbers of clients over time. FIELD's aim was to learn more about both the potential for greater scale in the U.S. and practical methods to help the industry provide services to those most in need.

Key Findings
The Achieving Scale cluster was designed to answer the question: What organizational structures and methods produce the greatest level of outreach and impact at the lowest costs?

To answer this question, FIELD supported six implementing organizations and two intermediary organizations, providing financing for their scale-up initiatives and documenting their progress. In pursuit of greater scale, the grantees used two types of structures and a variety of methods, documented in FIELD's monograph, Scaling up Microenterprise Services. In brief, it has been learned that organizations interested in scale:

• develop boards and executive leadership committed to this goal;

• engage in market research and marketing to better identify who their target clients are, what products and services they seek, and what the best methods are of communicating with them;

• develop products and services that make sense to these customers and are feasible for the program to deliver with volume;

• build staff capacity in advance of the demand they're trying to stimulate, and develop methods of deploying staff and functions that are highly efficient. This involves investments in management information systems and other technologies that support rapid decision-making and product delivery.

• focus on resource development and develop a sustainability plan that matches their methodology. They think "outside the box" of nonprofit structures and look to private sector models for examples. Detailed examples of this learning are included in the monograph.

The experience of the two intermediary organizations funded under this cluster begin to show the potential for this type of organization to generate new resources for local programs and to promote scale-up through capacity building and incentives. The experience is still too new, however, to determine whether these efforts can produce the high gains that a single focused, strong organization can produce, as demonstrated by the implementers in the group.

FIELD also identified a set of lessons regarding the importance of market research and marketing in scaling up microenterprise programs to serve more clients. These lessons are including in FIELD forum Issue 13 - Marketing Strategies for Scale-up: FIELD's Grantees Share Their Experiences. The first message is that practitioners must build market research and marketing activities into programs as part of the normal course of doing business. This involves investments of staff time and other resources, but these investments will make a difference in getting the word out about program services to a broader market. The second lesson concerns the knowledge that programs must have about their potential clients — their needs, their preferences, and how best to communicate with them. The forum documents and evaluates the range of marketing strategies tested by grantees, and the most important ones are discussed at greater length. The piece also documents negative experiences with mass media and discusses why this strategy appears to be less effective than working through community-based partnerships.

Publications
FIELD issued three publications and products based on this work. These publications detail the strategies used by the individual grantees, draw common lessons regarding the organizational capacities required for scale-up and identify areas for future exploration.

Scaling up Microenterprise Services. This monograph documents the range of marketing strategies and new products and services developed by the eight organizations in this cluster as they tried to increase their scale of operations. Contents include: a detailed summary and analysis of the grantees' experiences, articles written by staff of each program that describe the tools and methods used in their efforts, and a set of important lessons for others interested in the issue of scale-up. Available in print, $25.

FIELD forum Issue 13 - Marketing Strategies for Scale-up: FIELD's Grantees Share Their Experiences. This publication examines the market research and marketing strategies used by eight organizations trying to achieve breakthroughs in outreach, delivery methods, financing and institutional alliances.

FIELD forum Issue 5 - Achieving Scale. Written at the outset of the Scale learning assessment, this publication describes the eight participating organizations, the strategies they intended to employ and why increasing scale matters.

Learning Cluster Members.
The eight organizations awarded grants to explore methods for achieving scale are briefly described.

Learning Evaluation
The learning evaluation for this cluster had two components, which are detailed here.