CCF India LEEP Case Study 9-14-07-FINAL

8/8/2019 CCF India LEEP Case Study 9-14-07-FINAL

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PROMISINGAPPROACHESIN MF/MED SERVICESFOR VERYPOOR PEOPLE

CASE STUDYFORMAT


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TABLEOF CONTENTS

Executive Summary ............................................................................................................. i1. Context ...........................................................................................................................1

1.1. Country Socioeconomic and Poverty Data......................................................................................................................................... 12. Organizational Framework ...........................................................................................13

2.1. International Organization ..................................................................................... 132.2. Local organization ................................................................................................. 17

3. Description of Very Poor Target Group ....................................................................243.1. Individual and Household conditions

....................................................................................................................................... 243.2. Socioeconomic conditions ..................................................................................... 29

4. Poverty Targeting and Assessment ...............................................................................334.1. Poverty measurement practices ............................................................................. 33

4.2. Available Poverty Data ..........................................................................................364.3. Poverty Targeting .................................................................................................. 375. Products and Services ...................................................................................................38

5.1. Financial Products ................................................................................................. 385.2. Microenterprise Development Services ..................................................................445.3. Non-financial Services ...........................................................................................485.4. Design and Product Development: ....................................................................... 525.5. Implementation Process ........................................................................................58

6. Results ..........................................................................................................................59

6.1. Method of measuring results ................................................................................ 596.2. Impact .................................................................................................................... 606.3. Cost Effectiveness and Sustainability ...................................................................62

7. Conclusions .................................................................................................................657.1 Challenges & Pitfalls ............................................................................................. 667.2 Lessons Learned ................................................................................................... 66

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TITLE PAGE

Title of Project/Program: Livelihood and Economic Enhancement of Poor (LEEP)Organization Name(s) Christian Children's Fund (CCF)

Location Country IndiaAuthor(s) Devorah Miller, Senior MED Specialist

Guru Naik, Asia Region Technical Advisor,Sustainable Livelihoods (Former CCF-India DirectorMicrofinance and Grants)

Month/Year June 2007

SEEP Networks Poverty Outreach Working Groups MF/MED Approaches TargetingVery Poor People

Case Study No. X


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Executive Summary

Christian Children's Fund (CCF) is a child development organization dedicated to thewellbeing of children belonging to poor communities all over the world. In India, CCFworks through local NGOs, and assists them to implement its child sponsorship program.

The partner NGOs implement programs in the core areas of Health, Education,Livelihood, Emergencies and Child Protection in a defined cluster of CCF projectvillages. The livelihood program of CCF-India is known as Livelihood and EconomicEnhancement of Poor (LEEP) Program - a child centered program that focuses onenhancing the economic condition of poor families so that they will be in a position tomeet the basic and growing needs of their children. Launched in 2004, LEEP Programhas a very specific objective of moving families from Below Poverty Line (BPL) toAbove Poverty Line (APL). For LEEP, this translates into achieving a minimumstandard of Rs. 24000 net income per family per annum.

LEEP Program operates in 54 districts, covering 16 States and Union Territories of India.

The Central States where CCF primarily works are mostly rural and include remote forestareas where 75% of the tribal populations of India live. The primary target group ofLEEP Program is the 70,000 families of CCF sponsored children. The secondary targetgroup is all poor families living in the villages where CCF children live. Assisting thepoorest, especially vulnerable children, defines the organizational culture and core valuesof both CCF-India and the 74 NGO partners that implement LEEP Program as part oftheir child sponsorship activities.

LEEP Program uses both an absolute and relative measure of poverty to determineeligibility, and all LEEP participants are poor at the time of entry into the program. Theabsolute measure of poverty is the appearance of a family on the governments list as

being BPL, defined as income of less than Rs. 18000 per year. In addition, a NGOadministered Participatory Wealth Ranking (PWR) process provides a ranking of who inthe village is the poorest, in relative terms. CCF-India finds it is important to use boththe absolute and relative tools. The government BPL list is useful in identifyingcommunities with large concentrations of poor families, and helps prioritize areaselection. However, experience shows that in a given community, 60% to 70% of thepoor may not get identified through the government survey process. The PWR toolcatches those cases where a misclassification may have occurred, i.e. poor but not on thegovernment list. While it only classifies families as being BPL or APL, CCF-India andNGO staffs estimate that 30% of LEEP participants are very poor when they enter theprogram.

The LEEP approach ensures that a capacity to provide technical assistance precedesfinancial assistance. LEEP only supports a limited number of priority activities, and CCF-India takes the responsibility for doing the analysis that confirms those activities cangenerate the desired income level. Participants are only offered the opportunity to do apriority activity, which has been approved by CCF-India for their district. The focus ison the income to be earned, not necessarily the preference of the client. The lendingproduct is an individual loan. Rs 20000 40000 ($500 - $1,000). This loan size is higher

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than a typical poverty lending program; however, it is central to the approach of LEEP, asit relates back to the objective of financing an enterprise that will generate Rs. 24000 netincome per annum. Everything else remaining constant, the amount of return is related tothe amount of investment, e.g. one can not expect a large return from a small investment.CCF-India understands that offering the very poor a relatively large loan can present a

risk. LEEP addresses this by providing a comprehensive technical assistance package ofsupport to ensure clients succeed. Because each NGO partner only provides support forone or two types of businesses, they become proficient in all aspects of that specificoperation.

LEEP clients are assisted, step-by-step, through the critical aspects of business operation.Having predictable outcomes is important, and helps to keep the risk tolerance in anacceptable range. The strategic part of the business planning exercise is provided tothem, i.e. the combination of resources that will result in the target income. Clients areessentially made responsible for the production side of the business, with CCF-Indiataking the lead on orchestrating the input procurement and output marketing. At the

beginning, even the production process is carefully monitored. The strategy is to provideinexperienced clients a standardized business model that generates a predictable income.Services provided in conjunction with the loan include: 1) technical advisory services forproduction. Each NGO has a technical expert for the core activity, who maintains directcontact with each of the ~1,000 participants in his/her geographic area; 2) input supplyservices. The NGO plays a role in reducing the cost and/or improving the quality of keyinputs; and 3) marketing assistance. Even before a core activity is selected, the markethas been identified. Knowing the specifics of the market is essential to accurate incomeprojections.

Data on client income that is generated from the LEEP supported business is the primarymeasure of effectiveness and success. This relates back to the objective of LEEP to liftpoor families above the poverty line. With respect to operational efficiency, data on loandisbursements and repayments are also tracked. Aggregate statistics on movement ofLEEP clients above the poverty line is not currently available. All income and portfolioinformation is currently at the NGO level, and even there it is often in the client level datasheets. That being said, the NGO technical expert reviews all client data monthly, andknows those clients that are not progressing as expected. CCF-India is in the process ofinstalling a software package that will consolidate this data at the national level. Impactis quite quick under LEEP Program. It is expected that all clients will be earning Rs.24000 from LEEP Program alone within five years of beginning operation. Even whenthe priority activity is not the first choice of employment options for a client, what isultimately attractive is the guaranteed income that will resultLEEP Program is based on the belief that cost must be evaluated in the context of thebenefit that it generates. For example, the provision of technical assistance is the largestcost, but it also is the element that LEEP has determined is key to its success. LEEPcontrols technical assistance costs by limiting the number of core activities an NGOundertakes, most often to one. Not only does this strategy reduce staff costs, but theincreased scale of an activity also allows for the introduction of supporting activities like

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feed milling, bulk purchase of inputs, etc. LEEP has also been able to keep its costs lowby building upon the existing service delivery structure of its NGO partners. Asparticipants of an integrated program, LEEP clients have frequent contact with numerousNGO staffs, which are trained to be proficient at specific, cross-sectoral tasks.

Its 55 year history of working with very poor families has convinced CCF-India that astrategy that contributes to poverty reduction is not sufficient. Rather, it opted for astrategy that results in the poor being lifted above the poverty line. This decision meansthat a significant investment has to be made in each family. The trade-off is whether alarge number of familys economic situation is improved, or a smaller number of familiesare taken out of poverty on a sustainable basis. LEEP has opted for the later, and uses theperpetual stream of sponsorship funds to systematically introduce new families over time.

More than any other factor, what is seen as defining LEEPs success is the commitmentof CCF-India and its NGO partners to helping the most vulnerable members of acommunity. A pro-poor ethos is evident at all levels of the organizations and in printed

material. While it is the parents that participate in livelihood activities, the voices behindall program interventions are those of deprived, vulnerable, marginalized and excludedchildren. An ever present child wellbeing focus keeps the livelihood outcomes in-linewith the objective of providing economic security through a stable source of familyincome so that child needs can be met.

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1. Context

1.1. Country Socioeconomic and Poverty Data

1.1.1. National Currency Rupees Rs

Amount Year 1.1.2. Population (millions) 1.087 2004

1.1.3. Population density per square kilometre 324 2001

1.1.4. Percentage urban / rural population28.5% /71.5%

2004

1.1.5. Inflation 5.3% 2006 est.

1.1.5. Nominal Exchange Rate (current, X Currency per US$1) 40.52 2007

1.1.6. PPP Exchange rate 15.02 1993

1.1.7. HDI value .611 2004

1.1.8. HDI ranking 126 2004

1.1.9. GDP/Capita (PPP US$) $3,139 2004

1.1.10. Local currency equivalent of $1-a-day international poverty

line

16.22

1.1.11. Population below national poverty line (%) 1 28.6% 1999-2002

1.1.12. Population living below $1 a day (%) 34.7% 1990-2004

1.1.13. Population living below $2 a day (%) 79.9% 1990-2004

1.1.14. Population living below $2 a day (%)

1.1.15. Population growth rate 1.3 2004-2005

1.1.16. Life expectancy 63.1 2000-2005

1.1.17. HIV prevalence (% ages 15-49) 0.9 2005

1.1.18. Malaria cases (per 100,000 people) 7 2000

1.1.19. Population undernourished 20% 2001-2003

1.1.20. Children underweight 49 1996-2004

1.1.21. Adult literacy MaleFemale 73.4%47.8% 2004

1.1.22. Net primary enrolment ratioMale

Female9287

2000-2005

1.1.23. Net secondary enrolment ratioMale

Female5947

2000-2005

1.1.24. Physicians per 100,000 people 60 1990-2004

1.1.25. Health expenditures per capita 82 2003

1.1.26. Gender-related development index (GDI) rank 96 2004

1.1.27. Gender-related development index (GDI) value .591 2004

1The Government of India sets the poverty line on the National Sample Survey using the criteria of per capita monthly consumption expendituresnecessary to meet minimum caloric norms. In operational terms, this translates to a government Below Povery Line (BPL) threshold of Rs. 18000 annual

income. sources: http:/hdr.undp.org/statistics/data and http://delhiplanning.nic.in/Economic%20Survey.

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1.2. Local context target area

1.2.1. Briefly describe local socioeconomic conditions

1.2.1.1. Geographic reference of location and size of population

The Livelihood and Economic Enhancement of Poor (LEEP) program of CCF Indiaoperates in 54 Districts in 16 States and Union Territories (UT). Collectively, thestates where LEEP operates represent 68.9% of the population of India. A map whichshows the states where CCF India operates is included as Appendix 1. At the currentlevel of funding, each of LEEPs 74 partners serves about 1,000 participants that aretypically located in a clustered area of 20-30 villages.

State / UT Population # Districts with LEEPAs of June 2007

COUNTRY TOTAL 1,028,610,328

Orissa 26,945,829 5

Chhatisgarh 20,833,803 2

Jharkhard 26,945,829 9

Bihar 82,998,509 2

West Bengal 80,176,197 1

Uttaranchal 8,489,349 1

Uttar Pradesh 56,507,188 6

Maharastra 96,878,627 2

Madhya Pradesh 60,348,023 2

Rajasthan 56,507,188 3

Tamilnadu 62,405,679 7Pondichery 974,345 2

Karnataka 52,850,562 7

Andhra Pradesh 76,210,007 5

Total population ofstates where LEEPoperates

Estd. # families2

709,071,135

141,814,227

54 districts covered by74 LEEP partners

LEEP families: 70,000

2 Assumes an average family size of 5.

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1.2.1.2. Local population characteristics:

The communities in which CCF-India operates are predominantly rural, and includeremote forest areas. Accessibility and mobility is a daily problem, and people oftenhave to walk for 2-5 hrs before reaching a main road or small rural market.

Infrastructure like paved roads and electricity is limited in small villages. The villagesmay have a government primary school that has one/two rooms with one/two teachersfor five classes. Illiteracy is a common phenomenon in the area. Drinking water is alsoa challenge, with people using streams or earthen wells for drinking water. Most of thearea is in the water scarcity zone, and there is little irrigation water. As a result,people rely on one rain fed crop in a year, which is grown during the rainy season.Even then, the distribution of rainfall is such that most crops do not get water duringthe last growth stage and hence the productivity is reduced. The majority of peopleliving in these villages are challenged to meet their basic livelihood needs, and largescale migration is common during the summer season. Finally, there are fewgovernment health facilities at the village level, and malnourishment is common

among children.

1.2.1.2.1. Ethnic groups

The Government of India refers indigenous peoples as Scheduled Tribes (ST), andthey constitute roughly 8% of the countrys population or nearly 68 million people.The characteristics establishing a tribal identity include language, socialorganization, religious affiliation, economic patterns, geographic location and self-identification. There are some 573 communities recognized by the government asST, who are therefore eligible to receive special benefits and compete for reservedseats in legislatures and schools. Recognized tribes typically live in hilly, remote,heavily forested regions, and speak a tribal language. Tribes tend to form self-sufficient economic units, and not be part of an integrated economic system. All ofthese factors combine to result in limited political and economic significance.Historically, the economy of most tribes was subsistence agriculture or hunting andgathering. Many STs practice shifting cultivation clearing a field with slash-and-burn methods, planting it for a number of seasons, and then abandoning it for alengthy fallow period rather than the intensive farming typical of most parts ofrural India. Land-use rights have evolved from traditional tribal procedures.

Like STs, Secheduled Castes (SCs) are communities that are accorded special statusby the Constitution of India. These communities were considered "outcastes", and

were excluded from the Chaturvarna system that was the descriptive socialsuperstructure of Hindu society in the India for thousands of years. Thesecommunities had traditionally been relegated to the most menial labor with nopossibility of upward mobility, and subject to extensive social disadvantage andexclusion, in comparison to the wider community. Lacking opportunities foreducational, social and economic growth, they could not integrate with rest of thesociety. The Scheduled Caste peoples are also known as Dalits and the scheduled-tribe people are also referred to as Adivasis.

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http://en.wikipedia.org/wiki/Castehttp://en.wikipedia.org/wiki/Caste


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Roughly 75% of the total ST population lives in the Central Indian States where CCFIndia works, with the major concentration of tribal people living in Maharashtra,Orissa, and West Bengal. The State-wide statistics in the following table understatethe participation of STs and SCs in CCF Indias program. The poverty that minority

groups experience as a result of social and economic exclusion makes them morelikely to live in the vulnerable communities that CCF targets.

State / UT % of ScheduledTribe population

% of Scheduled Castepopulation

COUNTRYTOTAL

8.2% 16.2%

Orissa 22.1% 16.5%

Chhatisgarh 31.8% 11.6%

Jharkhard 11.8% 26.3%Bihar 0.9% 15.1%

West Bengal 5.5% 23.0%

Uttaranchal 3.0% 17.9%

Uttar Pradesh 0.1% 21.1%

Maharastra 8.9% 10.2%

Madhya Pradesh 20.3% 15.2%

Rajasthan 12.6% 17.2%

Tamilnadu 1.0% 19.0%

Pondichery 0.0% 16.2%

Karnataka 6.6% 16.2%

Andhra Pradesh 6.6% 16.2%

1.2.1.2.2. Most important economic activities

The main economic activities in the target area are:

Seasonal subsistence agriculture food crops

Rearing and selling/eating of small livestock (chicken, goat, sheep etc.)

Collection and selling of minor (non-timber) forest products

Daily wage labor in agriculture, government construction and other unskilled

work

A much smaller number of individuals are engaged in local government jobs(teaching, health care posts, etc.) and the military. LEEP would not reach theseindividuals because even though their annual income is small, it would still placethem above the poverty line (APL) and make them ineligible.

1.2.1.2.3. Cultural and religious background

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LEEP serves all members of poor communities, without consideration of religiousbackground. The major religious groups in India are:

Hindu 82%

Muslin 12%Christian 2%Buddhist


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women associations offer accidental death, life or asset protection insurance. In thehealth sector, some States have expanded community programs to establishpartnerships with public and private insurance companies.

1.2.2.2. Policies aimed to integrate the very poor, such as anti-discrimination and

affirmative action laws.

The policy of affirmative action in India is based on a reservation system that usesquotas to assure diversity in the educational system and certain sectors of theworkforce. While the policy of reservation in favor of the Scheduled Castes and Tribesis in place, the same arrangement was not made for the Other Backward Castes(OBC)s because the Constituent Assembly could not decide on whether the criteria fordefining backwardness should be class or caste. This has called into question thelegitimacy of Indias reservation policy in general. In some cases, it has broughtbenefits to members of groups with considerably weaker cases for preferentialtreatment than the Scheduled Castes and the Scheduled Tribes.

To a large extent, the reservation policy has succeeded in providing opportunities topeople who did not have them. But in judging who should be eligible for reservation,the focus has been placed on caste, and this has meant that many of the benefits ofreservation have gone to economically well-off groups. Furthermore, little effort hasbeen made to supplement reservation policy with an improvement of basic facilitieslike good primary schools, better health facilities, and training programs. Neither theConstitution nor public policy has been able to dramatically address inequality. Thishas led to increasing resentment against beneficiary groups by more-advantagedgroups, whose members have traditionally enjoyed exclusive access to such positions.

1.2.2.3. Property and land rights.

Inheritance laws in India give supremacy to males a fact that is true across all castesand classes. Women typically become married, live in their husbands house andhence dont have any right over the property of their parents.

Land rights for tribes remain a contentious problem. Large areas of India came underthe ownership of non-tribals in the early 1900s when the government promotedhomestead-style settlement. Immigrants received free land in return for cultivating it.The notion of individual ownership of land was foreign to most tribal people, and theydid not perceive the importance of protecting their land access rights. Generallyspeaking, tribals were disadvantaged in dealing with the government officials whogranted land titles. By the time the need for legal ownership was recognized, they hadlost the right to claim. As a result, many tribal people became landless in the 1960sand 1970s. Particularly tribals living in reserve forest areas dont have land rights.The government is typically the owner of these forest lands, and allows occupants tostay there. However, without legal title, they could be displaced at any time.

1.2.2.4. Local government and non-governmental development programs.

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The Government of India (GOI) runs several poverty eradication programs, and is thebiggest development agency in terms its infrastructure, outreach and its financialoutlay. There has, however, been criticism of its efficiency. The current five year planof the GOI is for the period 2002 2007, and includes the following objectives:

To achieve an overall target growth rate 7 percent per annum.

To reduce the poverty through income and employment generating programs.

To increase the literacy rate to 75 percent within the plan period.

To improve the health parameters - birth rate, death rate, infant mortality rate andmaternal mortality rate and reduce the gap between the State and national averages.

To bring down the population growth rate to 1.62 percent by 2011.

To provide potable drinking water to all villages in the State.

To ensure social, economic and political empowerment of the weaker sections of thesociety.

To increase the agricultural production through extensive and intensive cultivation.

To expand the existing irrigation facilities and conservation of water resources.

To improve the physical infrastructure like power and roads.

To develop information technology and biotechnology.

These objectives often translate into local or state programs, to which CCF-Indiaattempts to facilitate linkages. Livelihood enhancement may mean getting the malehead of household temporary employment through a government program while his

wife pursues a longer-term activity. For example, in road construction, LEEP seeksways to include the unemployed in poor communities on local work crews. Mostoften, facilitation efforts involve providing information and encouraging self-helpgroups to collectively express their demands to local or state governments. It has beenLEEPs experience that local government and state governments can make servicesavailable, and it is an issue of influencing their priorities. Successful group petitionexperiences shared by the SHGs interviewed as part of this case study include openingprimary schools and/or placing qualified teachers in the neighborhood so youngchildren did not have to travel, utility connection, street light installation, and openinga milk collection site in the community which put poor communities in the nationalproduction grid.

There are many NGOs working in India, and they tend to coordinate village coverage.As a result, other NGOs are not present in the villages CCF-India serves, or they areimplementing different types of programs.

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1.2.2.5. Other

1.2.3. Brief profile of microfinance environment.

1.2.3.1. List microfinance institutions (other than subject of case study) and other

financial institutions/services accessible by the poor.

In India there is a large network of some 33,000 branches of Regional Rural Banks(RRBs) that serve rural areas. The performance of these banks has been dismal andhighly subsidized. For the very poor, who typically seek loans of less than Rs. 25000,MFIs have emerged as key providers of financial services. The majority of IndianMFIs are not-for-profit organizations that facilitate the formation of self-help groups(SHGs) and link them with formal banks. The National Bank for Agriculture andDevelopment (NABARD) has promoted this model, which now accounts for 70percent of microfinance in India. Sa-Dhan, the largest network of Indian MFIs,estimates that there are over 1,000 NGOs and MFIs engaged in microfinance activity.

While the number of MFIs in India is large, these agencies put together may onlycover less than 5% of India. At the end of the day, a large majority of people living inrural areas depend on the local money lenders or family for their financial needs.

Microfinance programs have rapidly expanded in recent years. Some examples are:

Membership of Sa-Dhan has expanded from 43 to 96 Community DevelopmentFinance Institutions during 2001-04. During the same period, loans outstanding ofthese member MFIs have gone up from US$15 million to US$101 million.

The CARE CASHE Program works with small NGO-MFIs and communityowned-managed microfinance organizations. Outreach has expanded from 39,000

to around 300,000 women members over 2001-05. In addition to the dominant SHG methodology, the portfolios of Grameen

replicators have also grown dramatically. The outreach of SHARE MicrofinLimited, for instance, grew from 1,875 to 86,905 members between 2000 and2005 and its loan portfolio has grown from US$0.47 million to US$40 million.

The impressive accomplishments of MFIs and their clients in one State AndhraPradesh provide a glimpse as to what is possible country-wide. In 2000 threeleading MFIs SHARE, SKS and Spandana reached fewer than 100,000families. These three organizations now serve more than 1.5 million families.

Most MFIs in India focus on providing financial assistance. The major exception tothis rule is BASIX, the program after which LEEP is modeled. Established in 1996,BASIX provides integrated financial services and technical assistance to over190,000 poor households in 44 districts and eight states.The geographic distribution of MFIs in India is focused in the south, which has about60% of the outstanding portfolio. Sa-Dhan has identified one of the great challengesof microfinance in India is to bring microfinance services to the currentlyunderserved, poor districts. Using a child focused ranking process that identified the150 most backward districts in India, in 2004 CCF India realigned the areas in which

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it operates. As a result, LEEP is providing financial services in districts in the centralregion, where concentrations of poverty are the highest.

1.2.3.2. Describe dominant microfinance models and services.

1. The SHG Model

The micro-finance scene in India is dominated by Self Help Groups (SHGs). A SHGis a small voluntary association of poor people, preferably from the samesocioeconomic background. They come together for the purpose of solving theircommon problems through mutual action. The SHG promotes small savings among itsmembers. The savings are kept in a consolidated, commercial bank account under thename of the SHG. Usually, the number of members in one SHG does not exceedtwenty. The SHG provides a platform for an NGO facilitator to build a strong socialand financial entity. The SHG is strengthened to provide its members with financialservices, and the NGO provides them with the support services, training, systems, and

linkages to external finance sources.

2. The SHG Federation Model

A variation of the SHG model is the Federated SHG approach. In federations there isa three-tier structure where the SHG is the basic unit, the SHG cluster is theintermediate unit and an apex body or federation represents the entire membership.The federation approach allows SHGs to access external funds, promote the formationof new SHGs, expand products offered, i.e. insurance, and facilitate inter-groupexchange (both financial and non-financial). Federations promoted by DhanFoundation, PRADAN, Chaitanya, and SEWA are examples of this approach.

3. The Grameen Bank Model

The Grameen methodology has had exceptional success in India. SHARE MicrofinLtd., Activists for Social Alternative (ASA) and CASHPOR Financial and TechnicalServices Ltd. have adopted this methodology with little variation. The core of thedelivery structure is homogenous, affinity groups of five members. Eight groupsaffiliate into a centre, which meets every week. Group discipline is enforced throughpeer pressure.

4. The Co-operative Model

The leading proponent of this model has been the Cooperative Development Forum(CDF) in Hyderabad. CDFs approach has relied on a credit union model involving asavings first strategy.

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5. Non-Banking Finance Company Model

This is the legal form increasingly used by MFIs who want to go the for-profit route,as it is the best way to operate in the capital markets. The best example of this modelis BASIX. However, it is recognized that it is not viable for a NBFC to invest indeveloping a customer base which is the task to be taken on by the NGO.

1.2.3.3. Demand versus supply of microfinance services.

With 75 million poor households potentially requiring financial services, themicrofinance market in India is among the largest in the world. Estimates ofhousehold credit demand vary from a minimum of Rs. 2000 to Rs. 6000 in rural areasand Rs. 9,000 in urban settings. Given that 80% of poor households are located inrural areas, the total credit demand ranges between Rs. 255 billion and Rs. 500 billion.Supply of microfinance services, however, falls significantly short of demand. Planet

Finance reports that in 1997-98, banks disbursed Rs. 97 billion in credit to the poor,while MFIs and NABARDs SHG Bank-Linkage program disbursed Rs. 1.4 billion covering only 20 percent of estimated demand. The annualized credit usage of a poorfamily (rural and urban) is estimated at Rs. 6000 Rs. 9000, of which 80% is met byinformal sources. It is further estimated that in 2003, SHG member householdsreceived an average of Rs. 1766 in credit. Hence, not only is there an unmet demandfor loans, existing borrowers received smaller loans than they required.3 Additionally,microfinance services remain predominantly in the form of credit and do not addressthe poors need for savings and insurance services.

The above national demand estimates reflect LEEPs potential. In the communities it

serves, as high as 80% of the families have indicated they want a loan. Credit iscurrently being rationed because of the limited availability of loan funds and capacityto provide complimentary technical services. During its pilot years, LEEP has focusedon establishing systems and procedures. With these tasks now accomplished, the legalformation of LEEP India will allow for rapid scale-up through the use of commercialcapital. (Note: While a program operates under the legal umbrella of CCF, Inc. itsability to access commercial loan funds is restricted.) Currently, CCF-India funding iscovering both loan and technical assistance costs, but in the future it can focus ontechnical assistance.

1.2.3.4. Depth of microfinance outreach.

Based on an average loan size of Rs. 1766 per family under the SHG-Bank Linkageprogram, which represents 70% of the microfinance market in India, there is gooddepth of microfinance outreach. MFIs and SHGs are reaching the poor; the challengeis the magnitude of the demand.

3 India Microfinance Investment Environment Profile, Slavea Chankova, NathanelGoldberg, Genevieve Melfore, Hind Tazi, and Shane Tomlinson.

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1.2.3.5. Existing MF/MED initiatives (other than case study) aimed at the very poor.

The major microfinance initiative of the GOI is the SHG Bank Linkage Programimplemented by NABARD the apex bank formed to promote and develop

agriculture, small scale and cottage industries, and handicrafts in rural areas. Since its1992 pilot linkage project, NABARD has provided 16.7 million families with financialservices through the formation and credit linkage of over one million SHGs.

The work of NABARD is supported on the policy front by the Reserve Bank of India(RBI) who continues to encourage significant expansion of bank branches in ruralareas. RBI requires commercial banks to direct 40 percent of their lending to poorermembers of society and to priority sectors such as agriculture. These priority targetshave served to motivate banks to invest in microfinance. The linkages program hasbeen successful mainly due to promotion of SHGs by a large number of NGOs. Therelatively expensive cost of group formation and training has thus far been subsidized

by the NGOs through grants.

In absolute terms, the outreach of SHG-bank linkage may seem impressive, but in thecontext of the magnitude of poverty in India it represents less than 5% of the bankingsystems disbursements for agriculture and related activities.

1.2.4. Poverty

1.2.4.1. Existing poverty data and geographic areas of the country where extremepoverty is most concentrated.

The poorest areas in India are those clustered in the Bimoru States, whose populationsare highly represented by indigenous tribes. The following table provides poverty datafor the states in which LEEP operates:

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India Poverty Data

State / UT % of ruralpopulation belowpoverty line

2004-2005

# Districts withLEEPAs of June 2007

COUNTRY TOTAL 28.3%

Orissa 46.8% 5

Chhatisgarh 40.8% 2

Jharkhard 46.3% 9 districts with 11partners

Bihar 42.1% 2 districts with 3partners

West Bengal 28.6% 1

Uttarakhand 40.8% 1

Uttar Pradesh 33.4% 6

Maharastra 29.6% 2

Madhya Pradesh 36.9% 2 districts with 5partners

Rajasthan 18.7% 3 districts with 7partners

Tamilnadu 22.8% 7

Pondichery 22.9% 2

Karnataka 20.8% 7 districts with 12partners

Andhra Pradesh 11.2% 5 districts with 6partners

Source: http://planningcommission.gov.in/news/prmar07.pdf

1.2.4.2. Does the target area fall within these extreme poor regions?

Traditionally, CCF-India has worked, with the exception of the North East andKashmir, all over the country. In July 2004, CCF India undertook a major study, e.g.Identification of Backward Areas in India, to help it identify those districts most inneed of interventions. District level analysis was chosen over State-wide, to allow fora more precise identification of target areas. Identification of backward districtsassured that a poor district would not be excluded on the grounds that the State it was

in is relatively more developed. The exercise was also useful in identifying clusters ofbackward districts that are spread across more than one State, making operations moreefficient for CCF.

Consistent with CCFs child centered focus, the ranking methodology selectedindicators that could provide insights into the capability deprivations that are centraldeterminants of the status of people and especially children. The following are the

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indicators CCF-India used to develop an index of development and subsequently rankthe 225 poorest districts in the country.

Health Infant survival rate.Education Female literacy rate

Income Monthly per capita expenditureSocial Status Sex ratio among children;% of Scheduled Caste /Scheduled Tribes

Access to facilities/markets % urbanization

The study revealed that nearly three quarters of the most backward districts (54 out of75) are in the three Bimoru States of Madhya Pradesh, Orissa, and Uttar Pradesh. IfRajasthan is added, two thirds of the backward districts are covered. Finally, ifChhattisgarh and Jharkhand are added, 144 of the 150 most backward districts arecovered. The resulting rank order of backwardness was used to cluster districts intooperationally manageable units. At the end of the process, CCF- India and by

relation LEEP, identified 122 districts or 54% of the total 225 most backward aspriority districts for program intervention.

1.2.4.3. If known, what is the proportion of population in the target area living below$1-a-day and/or within bottom 50% of people living below the national poverty line?

Only state wide data, provided in section 1.2.4.1, is available for those falling underthe national poverty line.

1.2.4.4. Main determinants of poverty.

Traditional poverty indicators tend to focus on income or financial deprivation. CCFsDEV (deprivation, exclusion and vulnerability) framework considers the broaderrange of social and economic factors. Within the poor communities where CCF-Indiaworks, the factors used in the PWR process to indicate poverty include: # of children,# of disabled/chronically ill dependents, size of land parcel owned, female head ofhousehold, attendance of school aged children, quality of home. If one looks at thedeterminants of poverty, the focus shifts to issues of land ownership, lack of water,social status in a rigidly stratified, caste based society, low levels of education thatlead to high levels of illiteracy, limited access to markets, information and socialservices, high population growth rates, and dependence on the agriculture sector whichhas low returns.

2. Organizational Framework

2.1. International Organization

2.1.1. Name and type of the organization (INGO, multilateral agency, foundation, other)

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Christian Children's Fund (CCF, Inc.) is an international, nonsectarian NGO founded in1938 that assists over two million children in 33 countries worldwide, assisting more than10.5 million children and families regardless of race, creed, or gender.

Headquartered in Richmond, Virginia, CCF operates with an annual budget of over $205

million, which is drawn largely from private contributions and government grants. CCFpartners with and supports over 970 affiliated projects that are community designed,managed, and run. The projects that implement CCFs child sponsorship programs hiretheir own staff and are registered as local NGOs. CCFs microfinance programs typicallybegin as units under the national office, that ultimately spin-off as autonomous MFIs.

In India, CCF is registered as a Foreign Company under the Companys Act of 1956,and its national office is referred to as CCF-India. CCF-India has 4 offices, the countryoffice in Bangalore, and zonal offices in Hyderabad, New Delhi and Kolkata.

2.1.2. Organizational background

2.1.2.1. Mission and vision

CCF Mission Statement:

Too many of the worlds children suffer the debilitating effects of poverty andviolence.

Children have the right to experience life with as much joy and hope as possible.Christian Children's Fund creates an environment of hope and respect for children inneed in which they have opportunities to achieve their full potential, and provideschildren, families and communities with practical tools for positive change.

CCF Beliefs:

all children deserve an environment of hope, respect and understanding;

that poverty is a personal experience for every child and this insight andsensitivity guides all of our actions;

it takes a global perspective and collaborative effort in order to substantiallyimpact the issues of poverty that are facing children today;

we must work together to create an environment of understanding towards allchildren embracing cultural and religious differences;

that all our actions must be guided by the utmost integrity and transparency; that we are accountable for all funds we receive, and we will always be upfront

and honest with our donors and stakeholders and use these funds in the mostefficient and productive manner.

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2.1.2.2. Brief history

CCF emerged from a Richmond ministers 1938 response to help thousands ofChinese children left orphaned and homeless by the Japanese invasion. In the 1940sand 1950s, as funding grew, so did the number of countries receiving aid. Work

expanded from China to other developing countries, and subsequently the name waschanged from Chinas Children Fund to Christian Childrens Fund. During this sametime period, CCF developed its child sponsorship program, through which a donorcould sponsor an orphan for $2 a month. In response to direct mail and radio ads thatfocused on connecting to an individual child, sponsors quickly signed on. In the1960s CCF moved away from support of orphans to helping vulnerable children staywithin their own families. Sponsorship became a practical method for inter-culturalunderstanding, and for fund-raising to address the problems of children in poverty andneed. This child-focused approach remains at the center of all CCF, Inc. programinterventions.

Today, CCF, Inc. works in 31 countries, serving over 13.7 million children and theirfamilies. CCF, Inc. is a founding member of the ChildFund International, a globalnetwork of 12 child development organizations who provide more than $391 millionin assistance to children and families in 55 countries.

2.1.2.3. Type of support: funding, capacity building, technical assistance, directservice provider, other

CCF is known for its Child-Focused Development approach that combinesinterventions in core areas including:

Early Childhood Development Education Livelihood/Microfinance Health , Nutrition, Water and Sanitation HIV/AIDs Nutrition and Food Security Emergenc y Response Child Protection

CCF is recognized as a leader in child protection and psychosocial interventions withchildren in conflict and natural disasters. CCF recognizes the importance ofgrassroots development by engaging parents, children, youth and local volunteers inprogram decisions affecting their communities. CCF works in a highly participatory,integrated, and community-based programming manner. It envisions empowered,self-reliant, and resilient communities that receive appropriate government supportfor meeting children's basic needs.

For each core program area, CCF, Inc. has a senior technical specialist that guides theagencys programming. MED became a core program sector for CCF in 1999, whenit launched an initiative to improve the quality of its lending programs at the country

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http://www.christianchildrensfund.org/content.aspx?id=145http://www.christianchildrensfund.org/content.aspx?id=150http://www.christianchildrensfund.org/content.aspx?id=160http://www.christianchildrensfund.org/content.aspx?id=166http://www.christianchildrensfund.org/content.aspx?id=169http://www.christianchildrensfund.org/content.aspx?id=145http://www.christianchildrensfund.org/content.aspx?id=150http://www.christianchildrensfund.org/content.aspx?id=160http://www.christianchildrensfund.org/content.aspx?id=166http://www.christianchildrensfund.org/content.aspx?id=169


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level. As of March 31, 2007, the 74members of the CCF MFI Network have 74,000outstanding clients, and an outstanding portfolio of $17 million. CCF microfinanceprograms are recognized for the capacity to work in challenging environments, i.e.post-conflict and disaster. In addition, the majority of CCF country programs areimplementing a variety of livelihood programs that do not include microfinance,

including vocational skills training for youth.

2.1.3. Development intervention approach

2.1.3.1. Primary target group and development focus

Children are the target population of all CCF programs. Since improved familyincome is so central to child wellbeing, the MED target group is families living inCCF supported communities, especially mothers. CCFs approach to MED is tostrengthen parents income-earning capacity through some combination of micro-credit, technical assistance, and skills or business training. CCF focuses on fostering

family self-reliance, responsibility, and creating a sustainable livelihood capacity.

The following key principles guide CCF microfinance programs:

Target services to the poorest and most vulnerable, focusing particularly onwomen.

Use mutual guarantees rather than physical collateral for loans.

Expect full and on-time repayment of loans.

Offer initial loan sizes that are appropriate to the borrowers capacity and needs.

Microfinance activities achieve full financial sustainability in less than 7 years,and spin-off from CCF to become autonomous MFI partners.

Maximum integration of MED with other sector programs such as HIV/AIDS andemergency response programs.

Establish systems to monitor the impact of MED on families, especially children.

2.1.3.2. Specialized in MF/MED or multisectoral

CCF, Inc. does not advocate a single/preferred microfinance methodology orapproach. The role of the international organization is to provide quality standardswhich all MED programs are expected to meet.

4 CCF MFI Network members include: Afghanistan, Guatemala, Sierra Leone, Senegal,Sri Lanka, Thailand and Timor Leste. CCF policy requires that all microfinanceactivities ultimately spin-off into autonomous MFIs who maintain a programmaticrelationship with the CCF National office that founded them. The current membership isa mix of CCF housed programs and independent MFIs. LEEP India will be added to thereported numbers as soon as their new MIS permits consolidation of data.

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Some CCF programs focus exclusively on microfinance, others do only non-financialservices, and yet others do a blend. The subject of this case study, LEEP India, is anexample of a blended microfinance and non-financial services approach.

2.1.3.3. MF/MED model

CCF programs do not follow one specific lending methodology, and experiences varywith local context, i.e. solidarity lending (Afghanistan, Sri Lanka, Thailand and SierraLeone), self-help groups (Timor Leste and India), village banking (Guatemala), andcredit unions (Senegal).

2.1.3.4. Other sectors

Core program sectors of CCF, Inc. are livelihoods/MED, Health, HIV/AIDS, EarlyChildhood Development (ECD), Education, Emergency Response, Nutrition and FoodSecurity, and Child Protection.

2.2. Local organization

2.2.1. Organizational Development

Table 2.2. Institutional Background

CurrentFuture for

microfinance

2.2.1.1. Name of the organization orinstitution

CCF-IndiaLEEP India

2.2.1.2. Geographic area of operation16 States and UnionTerritories of India

16 States and UnionTerritories of India

2.2.1.3. Legal structure PVOSection 25 not forprofit

2.2.1.4. Registration status Foreign Company Pending

2.2.1.5. Regulation status

2.2.1.6. Date established 1951 Upcoming

2.2.1.7. Specialized (MF/MED) or

multisectoral

CCF ismultisectoral, childsponsorship agency.Livelihood andMED activities areconducted under theLEEP program.

LEEP India will bespecialized inmicrofinance, withCCF Indias partnersproviding thecomplimentary TAservices.

2.2.1.8. Start of MF/MED activities 2004 2008

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CurrentFuture for

microfinance

2.2.1.9. Core business (f.i. credit, savings,)

CCF Indias corebusiness is childdevelopment. LEEP

programs corebusiness is familylivelihoodenhancementthrough credit andtechnical assistance.

LEEP Indias corebusiness will bemicrocredit. TA

will continue to beprovided by partnerNGOs supported byCCF-India.

2.2.1.10. Business modelEnhance livelihoodof CCF India targetfamilies

Lending to SHGgroup members.

2.2.1.11. Target market MF/MED

Primary target:Families of CCF

Indias enrolledchildrenSecondary target:All poor families inthe villages whereCCF Indias enrolledchildren live

Primary target:Families of CCF-

Indias enrolledchildrenSecondary target:All poor families inthe villages whereCCF-Indiasenrolled childrenlive

2.2.1.12. Number of clients/participants MF/MED

Primary clients:70,000Total clients:

350,000

Primary clients:70,000Total clients:

350,000

2.2.1.13. Number of staff

2 staff at CCF level.162 NGO staff in thefield (3 staff each in69 projects). LEEPis also assisted bythe NGO field staff.

2 staff at LEEP-India level. 222 staffin the field (3 staffeach in 74 projects).LEEP is alsoassisted by the NGOfield staff.

2.2.2. Organizational Development

2.2.2.1. Mission and vision of CCF-India

CCF-India is a partnership-based child development organization representing thevoice of deprived, vulnerable, marginalized and excluded children in some of theremote and hard-to-reach places in India, regardless of religion, race, creed andgender. CCF-India strives to improve the well being of vulnerable children by

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empowering the community to undertake and manage holistic child developmentprograms and by networking with other stakeholders.

The following is the vision and mission of CCF-India, which currently houses LEEP.As CCF-India implementing partners will be share holders of LEEP India, these child

centered values will be reflected in its mission statement as well.

Vision: An India where the disadvantaged, discriminated and excluded child issupported and enabled to grow up playing an active and positive role within family,community and nation.

Mission: To place the child at the center of its activity ensuring that the programswhich surround the child are of the highest quality and that recordable difference ismade to the quality of life of a large number of children. The programs to be of suchquality that they can serve to inspire others including the Government to improve theimplementation of child centered development initiatives.

All programs, including MED, must make a direct link to child wellbeing. Thisemphasis is reflected in the goal of the Livelihood and Economic EnhancementProgram (LEEP):

Livelihood and economic enhancement of poor families for improved wellbeing

of their children.

2.2.2.2. Brief history

CCF started its operations in India in 1951 when the nation was celebrating itsnewfound independent status. The focus of CCF during this early period was toidentify needy children and provide direct and individual support, which helped thefirst generation children of post-independence get a quality education. This approachhas evolved into a community empowerment process, reflecting a conscious shiftbased on CCF-Indias understanding that the child lives in a context and is molded bythe circumstances that it lives in.

CCF-India is an implementing NGO and it views is 745affiliated NGOs as itsimplementing partners. CCF-India commits to raise child sponsorship funds for itsaffiliated NGO partners, who in turn implement CCF programs in their defined CCFproject areas. CCF-India currently reaches over 220,000 children and their families insome of the poorest 1,600 communities in 14 States and one Union Territory.

5 Of these 74 partners, 69 are currently implementing microfinance/MED programs. Allare eventually expected to do so.

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2.2.2.3. Objectives

CCF-India's comprehensive community development approach helps families

improve their economic status and cope with emerging health and survival

challenges.

CCF-India's program focus areas include:

Health: Interventions related to reproductive and child health, nutrition,

HIV/AIDS, tuberculosis, malaria, disability, water and sanitation.

Education: Ensuring universal primary education for all children under 14

years of age in communities where we work, and early childhood education.

Livelihood: Target families to increase their income through investment and

support services. Microfinance, combined with extensive technical assistance, is

an integral part of addressing these challenges.

Emergency Response: Because children are the worst victims and most likely

to be exploited during an emergency, CCF-India responds to both localized

emergencies in CCF communities like house fire and death, as well as Nationaldisasters like the Tsunami, earthquakes, cyclones, etc.

2.2.2.4. Organizational culture, leadership, innovation

All LEEP activities are implemented by the network of 74 NGO partners throughwhich CCF-India implements its child sponsorship programs. As part of a strongcommitment for accountability to the sponsors of some 70,000 children, these partnersare carefully selected and held to high project implementation standards. Thecommon vision and mission across all partners is the upward mobility of all membersof the society. Universally, partners target the poorest and most vulnerable membersof the community. Assisting the poorest, especially vulnerable children, defines theorganizational culture and core values of both CCF-India and its partners. Livelihoodprograms fit into the partners integrated programming approach, as enhanced familyincome is seen as key factor that enables families to care for their children. In the caseof LEEP, replicable and fairly rigid program standards are provided to the partners byCCF-India, i.e. if they decide to implement a livelihood program, it must be doneusing the LEEP model. As it enters its third year of implementation, the focus hasbeen more on ensuring that the program delivers the desired outcome of at last Rs.24000 in annual income for each participating family. During this period, theopportunities for partner innovation have been limited. Ongoing feedback is providedto CCF-India, who makes necessary modifications that all partners then implement.

2.2.2.5. Organizational structure, roles and responsibilities

All LEEP activities are implemented by the NGO partners as part of the package ofmulti-sector services delivered to CCF sponsorship communities. Projectadministration of LEEP uses the established organizational structure and proceduresalready in place for these other sector projects. From the partners perspective, LEEPis treated as another technical project, i.e. health, education, etc., that they implement

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in a CCF community. A prerequisite to implementing LEEP (and livelihoodenhancement is one of the most demanded types of interventions in CCF-Indiacommunities) is the hiring of a technical expert for the core economic activityselected, i.e. a veterinarian for dairy. (Note: As will be described in section 5, acritical design element of LEEP is that each partner selects one or at most two

economic activities from the approved LEEP list of activities that have proven theirpotential to generate the desired level of income.) At the NGO partner level, threestaffs implement LEEP with support from CCF-India staff. The Technical Specialistmost often serves as the LEEP Manager and reports to the NGO Program Director.

CCF-India organization structure is shown in the following diagram. LEEP activitiescome under the general supervision of the CCF-India Program Director. Themicrofinance coordinator is currently focused on the installation of the federation wideMIS system, but his TA visits also fill a major monitoring role. The LivelihoodCoordinator provides the policy guidance and partner coordination of LEEP activities,ensuring they achieve the desired increases in family income.

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2.2.2.6. General qualifications and profile of field staff

Each NGO partner typically has three full-time LEEP staffs:

One Technical Specialist: Either a veterinary doctor, an agriculture specialistor a marketing specialist, depending on the core activity being undertaken.Most often this individual also serves as the LEEP Coordinator for the NGO.The Technical Specialist spends 80% of his/her time in the field interactingwith clients. The transfer of technical expertise to clients, which in turnguarantees the profitability of their enterprise, is a key responsibility. Whileeach has an advanced level of education, many prefer a salaried staff positionthat does not require the development of a private client base. Also, thoseinterviewed during the preparation of this case study sited the satisfactiongained from using their professional skill to serve a humanitarian purpose. Atthe NGO level, it is the Technical Specialist who is responsible for analysis of

the business plan, monitoring cash-flow of businesses, and risk management.He/She is supported by the CCF Livelihoods team.

One SHG Coordinator: Responsible for group formation, training andmonitoring.

One LEEP Accountant: Responsible for management of LEEP loans and theclient income tracking software.

Part-time SHG coordinators who each cover 10-20 groups.

With guaranteed grant funding from CCF to implement their projects, the NGO LEEPimplementers are able to offer competitive salaries in their region of operation, andcan attract and maintain staff.

Normally the SHG coordinator is a female. Other positions could be male or female.

2.2.2.7. Training/sensitization (of staff, managers, board) on mission and povertyoutreach

No specific staff training or sensitization on poverty outreach is required because it isthe mission of the NGO. CCF-Indias strategic plan is based on a commitment towork in the poorest districts in India, which were identified in a study itcommissioned. Once the priority districts were selected, CCF-India searched forpartners who had a presence in the target districts, and were capable of implementing

its programs. Poverty is the key criterion that identifies 1) the poorest communitieswithin the district and 2) poor families within those communities.

CCF undertakes a regular induction program of its partners, where poverty criteria areexplained, along with how to use tools to identify poorer members of the community.CCF area field staffs monitor the families/children actually enrolled for thesponsorship program to verify application of the poverty outreach policy.

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2.2.2.8. Incentives for poverty outreach

There are no specific incentives for reaching the poor. All entrants to LEEP, bydefinition, are BPL. Because of the funding relationship between CCF-India and the

NGO, no tensions exist between achieving financial and social performance targets.Profit maximization or full cost recovery is not an objective. Rather, the objective isto use a perpetual stream of sponsorship funding in a manner that maximizes theincome of poor families. The NGO is held accountable for: 1) maintaining highrepayment rates on the loans given under LEEP and 2) delivering quality technicalsupport that is ultimately reflected as income generated by the supported enterprise.While it has not happened to date, an NGO partner can be denied future funding forlivelihood programs if they do not meet the performance expectations. As fundingfrom CCF is often the major source of support of their activities, NGOs are unlikely toallow this to occur.

2.2.2.9. Governance

At this point in time, there is no board of directors for LEEP. The NGO partners serveas implementers, agreeing to follow the program conditions that accompany grantfunding. In the future, as the loan operation of LEEP-India transitions to a for-profit,Section 25 Company, the NGO partners will have a role in governance. The loancapital that has been provided through LEEP related grants will be used to purchaseequity shares in the new company. Subsidized technical assistance will continue to beprovided under the existing grantee relationship.

2.2.3. MF and MED services for the very poor

(Section 2.2.3 was not completed, as there is no distinction made between the poor andvery poor, e.g. everything described in Section 5 applies to both groups.)

2.2.3.1. MF model and products/services.2.2.3.2. Description of main target group (if not the very poor).2.2.3.3. Selection and/or eligibility criteria2.2.3.4. Use of poverty assessment tool

2.2.4. Resources and external assistance

All of LEEPs activities are currently funded through the allocation of donated funds thatare mobilized in support of CCF-Indias child sponsorship program. In FY 2006, CCF-India provided more than $15 million in services to 1.02 million children and theirfamilies. About 46% of these funds came from child sponsorship donations. At $4million or 26% of total expenditures, livelihood is the largest program expenditure. Dataon the outstanding loan portfolio is only available at the NGO level, as the MIS programthat will consolidate this information is not yet operational. The same is true for portfolio

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at risk. LEEP partners charge 9% per annum on their loans, and all interest payments areretained by the NGO for on-lending. When LEEP-India is formed, the loan fund assetsand administration responsibility will be transferred to it, along with interest incomeearned.

2.2.5. Relationships (networks, partnerships, other institutions)

2.2.5.1. Networks

CCF-India is an active member of Sa-Dhan, the largest network of microfinanceinstitutions in India. Sa-Dhan was primarily created to represent the voices andconcerns of the NGO MFIs with the Government. Recently, Sa-Dhan has beeninstrumental in influencing formulation of an upcoming microfinance bill and incoordinating the input of major MFIs.

2.2.5.2. Partnerships

LEEP is based on a partnership model. Within the priority districts that CCF-India hasidentified as being the most backward or in need, local NGO partners who shareCCF-Indias mission are identified. The scale of CCF-Indias operations, e.g. serving1.02 million children, makes the use of partnerships a necessity. It allows for qualityprogramming in the context of intimate familiarly with the local context. Managementand accountability are decentralized to the local level. Partnerships are entered intothrough an elaborate process of screening and negotiations. Partners not only benefitfrom the funding, but the relationship strengthens their organizational capacity. ForLEEP, partners are rated as category A, B or C, each of which has its owndevelopment challenges and needs. It is the long-term plan that all partners becomeA category implementers. The partnership/grant model is sustainable in the sensethat CCF-India has been working for 55 years, and the level of sponsorship funding isa reliable source that continues to grow.

2.2.5.3. Other institutions

The primary service provider to the poor in CCF communities is the government.Unfortunately, the quality of services can be poor. CCF-India maximizesopportunities to support and build public service providers, especially health facilitiesand community schools. In livelihood programs, LEEP has worked to link withgovernment funded milk collection centres.

3. Description of Very Poor Target Group

3.1. Individual and Household conditions

The following sections describe the conditions of individuals and families participating inLEEP. LEEP uses an absolute definition of poverty, which is whether a family is aboveor below the poverty line (APL or BPL) defined by the Government of India as Rp.

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18000 ($450) per annum. To be eligible, all LEEP participants must be BPL at the timeof entry. The identification of the very poor is only done on a relative basis by the 69implementing partners as part of their participatory wealth ranking (PWR) process thatdetermines family eligibility for CCF child sponsorship. It is estimated that 30% of LEEPparticipants are identified as very poor through the PWR.

3.1.1. Gender

Of the 332,621 family members (adults and children) covered by CCF-India as ofDecember 2006, 50.2% were female. LEEP participation is not tracked by gender, sinceit is the family that is the unit of interest. However, anecdotal evidence suggests thatmore than 70% of the loans given are in the name of a female. This is done to encouragefemale leadership and involvement in LEEP. It is the female who represents the familyin the SHG, which is the major platform for introducing information relevant to improvedchild well-being.

3.1.2. Age

Statistics are annually collected for all families covered under CCF Indias childsponsorship data collection system, e.g. Annual Impact Monitoring and EvaluationSystems (AIMES) As an agency focused on child well-being, the age distribution ofchildren is the demographic characteristic of interest, with adults falling into two broadcategories, e.g. 15-20 and over 20. The total population, which includes all familymembers, is 332,621, with the 63,691 families being a proxy for the current number ofLEEP India clients. The following table is the end of year 2006 age category data that iscollected.

DEMOGRAPHICS

MALE FEMALE TOTAL

UNDER 5 17,148 17,004 34,152

5+ to 15 61,152 60,669 121,821

Total Child Population A + B 78,300 77,673 155,973

15+ to 20 16,900 15,217 32,117

OVER TWENTY 70,508 74,023 144,531

Total Adult Population D + E 87,408 89,240 176,648

TOTAL POPULATION C + F 165,708 166,913 332,621

FAMILIES 63,691

TWENTY YEARSOLD* 3,052 2,478 5,530

1 to 2 YEARS OLD 3,540 3,287 6,827

LIVE BIRTHS 2,177 2,291 4,468

*Count girls and boys completing 20 years of age during the

12 months preceding the cut-off date.

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3.1.3. Disability and chronic disease

Disability and chronic disease is not directly monitored for LEEP participants. It is thecause of death of family members that is seen to be most relevant to the mission of child

protection and well-being. The following 2006 AIMES data for CCF India shows thataccidents, AIDS, cancer, and tuberculosis are leading health threats affecting adults.

DEATHS

AGE GROUPS

CODES < 1 YR 1+ to 5 YRS5+ to 15

YRS=> 15YRS TOTAL**

ACCIDENTS 3 4 32 59 98

AIDS 5 3 5 78 91

ARI 23 9 3 4 39

CANCER 1 0 3 41 45

DENGUE 2 0 1 12 15DIARRHEA 12 16 17 14 59

DIPHTHERIA 1 1 1 1 4

MALARIA 8 18 15 25 66

MATERNAL 0 0 2 13 15

MEASLES 11 13 5 0 29

NEO. TETANUS 22 0 0 0 22

OLD AGE 0 0 0 365 365

OTHERS* 35 40 64 241 380

PERTUSSIS 0 0 4 18 22

TUBERCULOSIS 0 0 3 63 66

UNKNOWN 25 6 10 54 95

TOTAL 148 110 165 988 1,411Source: Annual AIMS data collected for the period Jan. 1 Dec. 31, 2006.

3.1.4. Culture or religion

Deprivation, exclusion and vulnerability are all key considerations that determine thecommunities where CCF India, and thus LEEP work. In this framework, poverty isexperienced as social exclusion as much as an economic or material phenomenon.Psychosocial experiences such as discrimination are often as important to people ashunger, and religion can serve as a basis for discrimination. It is most likely that withinany specific community, all LEEP participants will belong to the same religious group.

While client or family data on religion is not collected, CCF-India communities cangenerally be expected to reflect the national distribution, e.g. Hindus 81%, Muslim 12%, and Christian 2%.

3.1.5. Ethnicity

Ethnic populations in India are collectively referred to as Scheduled Tribes (STs) by theGovernment of India. While ethnicity does not determine poverty, it does act as a

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predictor of the likelihood of poverty given the implications of traditional economicactivities undertaken by tribes. STs live in forest areas in the interior, are inaccessibleand have remained outside the mainstream of development. Health and educationfacilities have not reached them, resulting in low levels of education and health status.All of these circumstances combine to make ST communities a priority for CCF India

activities, and an influence on community selection. When giving priority ranking todistricts, the combined percent of the population considered Scheduled Tribes (ST) andScheduled Castes (SC) was a factor. Of the 74 partners (the future branches of LEEPIndia) with whom CCF India works, 30 work with ST communities.

The following is how CCF India describes Schedules Tribe children and their familieswithin its Deprivation, Exclusion and Vulnerability (DEV) framework.

Population Deprivation Exclusion Vulnerability

Tribalchildren in

forest areas

Lack of basicinfrastructure

Food insufficiency

Lack of drinking water Lack of irrigation water

Working children

Neglected children

Insecure childhood

Single parenting Excluded from mainstream

Family Indebtedness

Displacement

Drought

ParentsUnemployment

Lack of opportunities

Hunger deaths

State/Policy ledsituation

3.1.6. Membership to socioeconomic groups, such as caste and class

Social discrimination based on caste hierarchy is still a dominant feature of socialstructure in India. Dalits are the former untouchables, and are included in the category of

Schedules Castes (SC). There is evidence that they are still discriminated against, and theproportion of SCs is a good indicator of the proportion of disadvantaged people living inan area. Like religion and ethnic group, caste membership is not tracked by CCF India.However, at the implementing partner level, the membership in these groups is certainlyknown. The most significant role membership to a socioeconomic group plays is in theinitial selection of CCF communities. One of the stated strategies of CCF India isWithin the least developed 150 districts, CCF India will further focus in areas with highconcerntration of tribal, Dalit, or minority communities and work for the wellbeing ofchildren belonging to those communities. One CCF NGO partner focuses exclusivelyon Dalit caste members.

The following is how CCF India describes Scheduled Caste children within its DEVframework:

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Population Deprivation Exclusion Vulnerability

Dalit childrenin feudal

societies

Lack of basicinfrastructure

Food insufficiency

Lack of drinking water Lack of irrigation water

Bonded families

Discrimination of girlchildren

Skewed land distribution Dalit atrocity

Criminal environment

Caste exploitation

Child sexual abuse

Hunger death

Minoritychildren incastereligiousconflict areas

Landlessness Child marriage

Discrimination of girlchildren

Child trafficking

Child prostitution

Dalit atrocity

Caste/religiousconflict

HIV/AIDS

Lack of opportunity

Political turmoil

3.1.7. Household type, composition, marital status

The table provided in section 3.1.2 provides the overall profile of the household. The

average LEEP family consists of 5.2 members. At the village or community level,implementing partners know which households are headed by females, but this data is notyet consolidated at the national level. Having a large number of children and being afemale head of household are both characteristics that are used to determine vulnerabilityand priority participation through the PWR process.

3.1.8. Literacy

Literacy statistics are based on the 2006 data collected for all members of the 63,691families covered under CCF Indias child sponsorship data collection system, e.g.AIMES. The adult literacy rate for CCF family members is 49.65%. For the same CCF

population, adult male literacy is 58.62% and female literacy is 40.86%. The later ratio ismost descriptive of the LEEP borrower, who is typically female. The sited CCF literacystatistics compare to a national literacy rate (ages 15 and older) of 73.4% male, and47.8% female.

3.1.9. Education

The following table from 2006 AIMES data, reflects the education level of children ofLEEP participants up to 20 years of age. Education data on adults, which would includeLEEP borrowers, is not collected.

CHILDREN'S PARTICIPATION IN SCHOOLS

Age Group FormalNon-

Formal None

5+ To 15 Years Male # 52,020 3,966 5,

% 85.07% 6.49% 8.4

Female # 49,774 3,948 6,9

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% 82.04% 6.51% 11.4

Total # 101,794 7,914 12,

HIGHER EDUCATION/SKILL DEVELOPMENT

Age Group

Primary/Elementary

School High schoolUniversit

ySkill

Trainin

15+ to 20 yrs Male # 2,848 6,698 1,426 8

% 16.85% 39.63% 8.44% 4.9

Female # 2,496 5,618 1,203 9

% 16.40% 36.92% 7.91% 5.9

Total # 5,344 12,316 2,629 1,7

20 YEAR OLDS' LEVEL OF LEARNING ACHIEVEMENTS*

Learning Levels Male Female Total

Passed Grade VII # 1,054 655 1,709

% 34.53% 26.43% 1.10%

High School Graduates # 668 522 1,190

% 21.89% 21.07% 21.52%

College Gratuates # 309 219 528

% 10.12% 8.84% 9.55%

Skill Training Dgree/Diploma # 215 191 406

% 7.04% 7.71% 7.34%

None # 806 891 1,697

% 26.41% 35.96% 30.69%

Total # 3,052 2,478 5,530

* All girls and boys completing 20 years of age during the year.

The above data can be put in the context of a national net primary enrolment ratio of male92% and female 87%.

3.2. Socioeconomic conditions

3.2.1. Refugee or IDP status

Included in the 75 partners implementing CCF India programs, there are two who work

exclusively with Tibet refugee camps. These two partners are a part of a network ofNGOs responsible for the management of 18 refugee camps throughout the country. Asthe administrator of all camp activities, these NGOs understand the needs of thesecommunities well. IDP and refugee LEEP participants typically have few assets ordeveloped land. While the government has provided land, it requires extensive cleaningand preparation to be cultivatable. Land reclamation is an activity common in other poorcommunities, and LEEP is experienced in facilitating that process through loans andtechnical assistance. Trading, especially in linens, is another traditional activity that

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many IDP communities engage in. Grants were initially provided for infrastructuredevelopment, but at this point most have been converted to loan activities.

3.2.2. Economic conditions

3.2.2.1. Underemployment

LEEP analyzes employment by looking at two types of workers:

1. Small and marginal farmers (60%)

If they do not have irrigation, the small and marginal farmer can expect 3 monthsof employment or a one crop season. With irrigation (20% of the 60% farmers),this can be extended to two crops resulting in 8 months of employment. Duringthe remainder of the year, farmers are forced to migrate for employment, oftenwith their families.

2. Landless (40%)

For those not owning land, wage employment as a daily laborer or employee is theonly alternative. Employees who have work all year represent less than 5% of thelandless. Most of the landless rely on daily labor, working an average of 180 daysper year. On average, for 4-6 months of the year, landless, wage labors must resortto migration to find employment.

Underemployment leads to migration, an outcome of particular concern to CCF-Indiabecause of the disruption it can have on the education of children. LEEP activitiesstrive to generate income so families, especially the mother, can remain in the homecommunity. Approval of loans for activities like dairy includes an analysis of whowill remain with the asset throughout the year. By creating a consistent income streamin the community, it is far more likely migration will be curtailed.

3.2.2.2. Income Sources

Depending on the area, rain feed agriculture, collection of non-timber forest products,small livestock and unskilled wage employment are the main income and/orsubsistence sources of income for the very poor. A family is typically engaged insome combination of all of these, and after LEEP (which will establish a primary orcore source of income) will continue with a diversified income strategy.

3.2.2.3. Land ownership

LEEP considers two categories of land ownership which includes 60% of participatingfamilies: 1) Between .5 and 2 acres non-irrigated and 2) 1 acre irrigated. If irrigated,1 acre of land can meet the subsistence needs of a family and even create a surplus for

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income. However, irrigation requires an investment that is often beyond the capacityof the very poor. Land reclamation is a national priority activity of LEEP, and assistssmall farmers to make this transition. Non-irrigated land meets less than 50% ofhousehold subsistence needs.

3.2.2.4. Asset ownership

The following are the typical assets, productive and household, owned by a very poorfamily participating in LEEP:

- Small house of poor quality- Mats for sleeping, but sometimes even on the ground- Basic cooking utensils- Small animals like chickens or even a goat- Transistor radio- Limited and inadequate clothing

- Perhaps a used bicycle

3.2.2.5. Income level

The average wage for daily labor is Rs. 50 per day for women and Rs. 70 for men.While the GOI has a minimum wage requirement of Rs. 63 per day, it is difficult toenforce, especially in the rural areas.

The main objective of LEEP is to move families from BPL to APL. The way progresstoward this objective is measured in net income derived from the supportedmicroenterprise activity. A diary of income and expenses is maintained by the client,with the assistance of the NGO social worker. On a monthly basis, this data isforwarded to the NGO office, which monitors progress toward achieving the minimumof Rp. 24000 per annum.

3.2.3. Geographic conditions

3.2.3.1. Rural/urban, remoteness from trading centers and roads, population density

About 80% of LEEP participants live in remote, rural areas that have limited publictransport. Out of the 74 partner NGOs, 30 work with tribal communities that areparticularly difficult to reach. While NGO offices are on paved roads, accessibility isoften an issue for the communities they serve. Remoteness has a direct link tolivelihood opportunities, and is a major factor to a communitys being identified byCCF-India as vulnerable. Other factors considered include tsunami affected, highHIV/AIDS prevalence, and water scarcity.

3.2.3.1. Access to markets

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While all communities are within 5 10 kms. of a rural market, these rural marketsare not seen as the outlet for LEEP producers. LEEP takes responsibility for bringingthe market to the producers an important advantage of focusing on a limited numberof priority activities. One example is dairy, where LEEP works to get milk collectionsites established to get communities into the national grid of Milk Collection Routes.

3.2.3.1. Access to banks

In the rural communities where CCF-India works, the poor have very limited access tobanks, and depend on money lenders. SHGs are one way that the poor can be linkedto a bank when member demand exceeds savings. SHG loans are typically foremergency and consumption purposes. Under LEEP, the principle business activity issupported with a loan provided by the NGO because of its size and need for technicalsupport. Banks are simply not willing to finance such a large loan without a trackrecord.

3.2.3.1. Access to doctors and clinics

The government is the primary provider of medical services, but access is generallypoor in rural areas. CCF-India works primarily works to improve access by improvingfacilities and building the capacity of health staff. A common service the partnerNGO provides is transport of more complex cases to a more equipped facility.Implicit in the livelihood strategy is that improved income will enable families to payfor medical services when needed. Improved income raises the economic status of thecommunity at large, and the government is more likely to respond with a higher levelof social services. Economic strength translates into political strength.

3.2.3.1. Proneness to natural disasters

India is prone to wide range disasters. Some, like flood, are inevitable/seasonal and itis just that the exact date or time is not known. In this case, emergency preparednessis encouraged. Then there are disasters that may occur, like earth quake zones andTsunamis. In all of the LEEP areas, two things are common, e.g. flood and drought,depending on whether it is a hilly area or the plains. Plains are prone to seasonalflooding. The hills have chronic water shortages, and the deep water table makesirrigation for agriculture expensive. So, the priority activity selected has to not requireextensive water, or have water management systems like drip irrigation built in.

3.2.4. Major vulnerabilities and risks encountered by target group

Drought is most common and largest risk, followed by flood. Lack of rainfall and theresulting drought is an extreme condition. Migration is the common coping strategy.Unfortunately, this results in children missing school and raises HIV/AIDS transmission.The LEEP response strategy to reduce migration is to provide a reliable family incomesource. If there is income, an individual can go to the market and purchase what isneeded. An example of how improved income reduces risk is seen in the dairy activity.

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Now, when a husband leaves to find work, there is an asset at home. So, the wife staysbehind with the children who continue in school. The HIV/AIDS concern is addressedthrough intense education campaigns that raise awareness of the risks.

4. Poverty Targeting and Assessment

4.1. Poverty measurement practices

4.1.1. Poverty data collection

4.1.1.1. Which poverty indicators are collected?

LEEP uses two types of poverty indicators, one is an absolute, universal measure ofwhether a family is above or below the poverty line (APL or BPL), and the other is aset of indicators that provide a relative measure of the poverty of the participants

family in relation to its position within the community.

The absolute measure of poverty is the appearance of a family on the governmentslist as being BPL.

At the community level, relative poverty looks at indicators of vulnerability, likefemale headed households, above average number of dependents, or family memberwith a disability or chronic illness that requires special care. The community alsoconsiders the assets of the family, like land owned, condition of house, animals,appliances, and any forms of transportation, as mobility is a major indicator of wealth.The final indicator is the existence of a regular job.

4.1.1.2. What poverty assessment tool is used?

The Government BPL List

For the absolute measure, LEEP measures poverty using the Government of Indiadefinit

Documents

CCF India LEEP Case Study 9-14-07-FINAL