Social Impact

Breaking Poverty Cycles With Sustainable Microfinancing

How Oliver Wyman helped VisionFund design a new fee structure and cost calculation tool to improve lives via microloans and microfinance

VisionFund International (VFI) was established in 2003 by World Vision as a wholly owned subsidiary to oversee World Vision’s microfinance work. VFI provides microfinance services in developing countries with the goal of supporting impoverished households and laying the groundwork for thriving local economies. VFI has improved the lives of 4.7 million children through its microloans to 1 million people, focusing on rural agriculture, women’s empowerment, innovation, and fragile contexts such as disaster recovery and refugee support.

Microfinance is a crucial tool in helping families break free from the cycle of poverty, with loans from as little as $20 helping families generate their own income and securing their livelihoods. Every 60 seconds, through VFI, a family receives the resources they need to start overcoming poverty – from loans to insurance and savings groups. 

Developing new structures and tools to ensure sustainable growth

While the operating expenses of VFI’s global center are covered by a one-size-fits-all partnership fee structure from local microfinance institutions, VFI is currently experiencing an operation loss. We were tasked with designing a new partnership fee structure, including creating a cost allocation calculator tool to effectively allocate operating expenses. During the initial four weeks, we conducted peer interviews with other microfinance organizations and held discussions with VFI and local microfinance institutions to understand the industry best practice and VFI’s future vision. This helped us to propose a new methodology to enable sustainable operation for VFI’s global center.

Over the following six weeks, based on the internal data received, we explored different simulations to fine-tune the cost allocation methodology and analyzed the associated impacts via iterative discussions with VFI. After these refinements, we delivered a cost allocation calculator tool. We also proposed a new fee structure to help their sustainable growth.

By designing the cost allocation methodology and cost allocation calculator tool, we made it easier for VFI to provide sustainable operations, helping them continue to unlock the economic potential that will let impoverished communities thrive. Our simulation results show that VFI has a potential to reduce operating loss by 80% and this will navigate VFI for their sustainable operations as well as further growth in the long-term perspective.

Having an opportunity to work with VisionFund International was a rewarding experience that enabled us to help them achieve their mission. I am truly excited to see their journey towards serving more communities and fostering further growth
Yuichi Kuriyama, Consultant, Oliver Wyman