Katalysis Partnership, Inc.
Partnership Principles, Practices and Methodology:
A Southern Perspective 
Katalysis Evaluation Report 
Supported by USAID Matching Grant 
Cooperative Agreement FAO-A-00-98-00052-00 
Beryl Levinger and Jean McLeod 
October 5, 2001 
Education Development Center, Inc. 
Center for Organizational Learning and Development (COLAD) 
55 Chapel Street 
Newton MA 02458 
(617) 969-7100 
(617) 332-6405 fax 
Executive summary
This study of partnership was conducted in the context of an organization that values partnership so 
much that it has included the term in its name: the Katalysis Partnership. For Katalysis, partnership 
is a set of relationships governed by mutually agreed upon values, principles, policies and 
mechanisms. This evaluation explores the effect partnership relationships have had on members of 
the Katalysis network and how these relationships have shaped service delivery to clients. 
The main purpose of this evaluation is to conduct an in-depth study of Katalysis’s partnership 
methodology as it has been developed and implemented. In the past, partnership has typically been 
designed and evaluated on northern terms. This study seeks to present the southern perspective. A 
secondary purpose of the evaluation is to provide an objective articulation of the methodology for 
potential future use in support of replication in other regions and to make recommendations for any 
improvements in the partnership methodology. 
The research methodology included an initial workshop, followed by interviews in the field. The 
initial results of the fieldwork were validated in a second workshop, and then presented to the 
Katalysis Management Team and the Executive Committee. This research methodology 
incorporates many elements of participatory evaluation. 
Key findings on the southern perspective of the Katalysis partnership are: 
1. Southern partners see client benefit as a result of participating in the partnership. In addition to 
technical skills that improve service delivery, partnership values, such as respect and trust, are 
reflected in relationships between staff and beneficiaries. 
2. The partnership provides differentiated benefit streams depending on the stage of 
organizational life cycle of the partner. The relative importance of different partnership benefits 
varies according to the characteristics of an organization and an organization’s tenure as a 
partner. As the network grows, it may become increasingly difficult to meet the varied needs of 
diverse partners. 
3. Partnership values are inculcated through a broad range of mechanisms, some of which are 
considerably more effective than others. Among the most effective are partner-to-partner 
exchanges, professional development activities and board meetings. 
4. Partners are pleased with Katalysis’s achievements in a broad range of activities including 
strengthening service delivery, providing technical assistance, mobilizing resources, and 
representing the partnership to international donors. An emerging area where partners would 
like to see more activity is advocacy. 
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5. Partners feel the network provides benefits of significant value and they are willing to invest 
some of their own resources to maintain it once external resources are no longer available. 
However, at the same time, they have concerns about the long-term financial sustainability of 
an independent Central American Network 
The following recommendations reflect suggestions by the partners themselves, as well as the 
conclusions of the researchers. 
PLANNING FOR NETWORK GROWTH 
1. Clarify the vision for the partnership’s growth. Determine what kind of organization constitutes 
the network’s primary clientele. Large or small? Nascent or established? Identify the tensions 
between the needs of distinct clienteles and determine the degree of heterogeneity that the 
network can support with current and projected resource levels. 
2. Explore opportunities for building new skills, including advocacy. Identify the unique insights 
that Katalysis brings to the policy arena as a network with regional scope. Among the advocacy 
opportunities identified by Katalysis, select those issues of highest priority and prepare position 
papers or similar collateral materials in order to enhance the effectiveness of advocacy efforts. 
Determine how Katalysis can best coordinate its efforts with national networks. 
MECHANISMS FOR CREATING AND SUSTAINING PARTNERSHP VALUES 
3. Maintain and expand powerful partnership mechanisms such as partner-to-partner exchanges, 
professional development opportunities such as the diplomado, and face-to-face meetings. 
Develop under-utilized partnership mechanisms, such as the probationary year, and make their 
partnership-building purpose explicit. 
4. Recast the role of the RFO director to include the promotion of technical excellence in 
partnership, as well as in microfinance. Ensure that the values of partnership are understood and 
applied at all levels of the RFO. Develop new techniques for confronting the challenge of 
partnership indicators. 
SUSTAINABILITY OF THE CENTRAL AMERICAN NETWORK 
5. Cultivate leadership skills in the RFO director as well as in partner directors. Establish a 
mechanism for group dialogue among partner directors that allows them to communicate 
directly with other network components such as Katalysis/USA or the RFO. 
6. Plan and implement the Microfinance Institute to build essential human resources as well as 
network identity. 
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7. Conduct a feasibility study of various financial scenarios for the RFO and establish the RFO’s
core mission. Identify markets within the partnership and beyond the membership and 
determine which products that are most marketable. Consider the extent to which the RFO will 
function as a secretariat, or central administrative body, for an independent Central American 
Network, and determine required changes in the structure of the RFO based on these decisions.
8. Given the demonstrated impact of the partnership model as practiced by Katalysis, identify 
effective means to disseminate key lessons to a broader audience within the development 
community.
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Description of Activities and Results to be Evaluated
This study of partnership was conducted in the context of an organization that values partnership so 
much that it has included the term in its name: the Katalysis Partnership. For Katalysis, partnership 
is a set of relationships governed by mutually agreed upon values, principles, policies and 
mechanisms. This evaluation explores the effect partnership relationships have had on members of 
the Katalysis network and how these relationships have shaped service delivery to clients. The 
evaluation is strategic in Katalysis’s efforts to articulate its partnership methodology for future 
replication elsewhere and to suggest possible modifications for the ongoing evolution of the 
methodology. 
Katalysis Partnership, a PVO based in Stockton, California, along with its field office in Honduras, 
Katalysis/Honduras, has been a leader in the field of partnership. Since 1989, the northern and 
southern staffs have built a deep commitment to a set of core organizational values rooted in 
partnership. Further, Katalysis has sought to share these organizational values with its Partners by: 
(1) Incorporating them on the Katalysis Board of Directors, 
(2) Creating a Partner Directors Board that is evolving into the leadership for the southern
Central American Network, 
(3) Promoting lateral learning via “joint” trainings involving the appropriate staff members 
from each partner organization, which maximizes regional exchange, builds bonds of 
professional support, and takes advantage of the breadth of day-to-day experience in the 
group. 
As noted at the outset, the “activity” or strategy to be evaluated is partnership as Katalysis 
practices it. The activities and intensive relationship building that have gone on during the past 
twelve years have been primarily supported through USAID’s Matching Grant Program, with 
counterpart funding coming from both the Katalysis Board and more recently from the Inter￾American Development Bank’s Multilateral Investment Fund (IDB/MIF). Katalysis is now coming 
to the close of the IDB/MIF grant and the third matching grant (MG3). The management and staff 
of Katalysis want to know how its Partners assess this experience. 
The USAID Matching Grant was Cooperative Agreement FAO-A-00-98-00052-00. Funding closed 
on September 30, 2001. The IDB/MIF grant was concluded June 25, 2001. 
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Table of Contents
Executive summary ii
Description of Activities and Results to be Evaluated v 
Evaluation Report 2 
Background 2 
Purpose 2
Methodology 3 
Key Findings 4 
Recommendations 12 
Conclusion 13
Appendix 1: Evaluation Questions 14
Appendix 2: Evaluation Methods 16 
Appendix 3: Characteristics of a Participatory Evaluation 19 
Appendix 4: Contacts 20 
Appendix 5: Documents Consulted 21 
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Evaluation Report
Background 
Since its inception in 1984, Katalysis has worked through indigenous NGOs in developing 
countries. Katalysis provides services to these NGOs which, in turn, offer microfinance services to 
their target populations. With funds from the first Matching Grant (MG1, which spanned FY1991-
1993), the executive directors of these local NGOs were invited to participate in occasional 
meetings designed to foster mutual support and exchange among attendees. These early meetings 
provided the catalyst for promoting a Partner Directors’ Board for southern partner directors under 
MG2 (FY1994 – 1998). MG2 also supported the creation of training events through the mechanism 
of Partnership exchanges. Although these exchanges featured professional trainers, the participants 
were invited and expected to share their own questions and experience. 
In addition to the formal training events, partners were further supported, under the grant, to share 
their own expertise with one another through direct exchanges where staff members from one 
partner organization went to train staff members at another partner organization in an area of 
strength. Partnership, having originated as a support group notion, became a way of operating and 
extending training. By the end of MG2, the notion of Partnership was so deeply embedded in the 
psyche of Katalysis staff that it informed the reframing of the mission and vision of Katalysis for 
the future. The strong sense of mutual respect between Katalysis USA and the eleven current 
partners, and the bonds among the partners themselves, are the foundation of Katalysis’s core 
partnership values: sustainability, integrity, accountability, social responsibility, and excellence. 
The Partner Directors’ Board has since become a formal committee of the Katalysis Board of 
Directors (1997) and meets three times per year. Having completed a 90-hour university-certified 
leadership training course, the southern members have taken on a more prominent role, 
increasingly providing leadership and participating in their own self-governance as a network. 
During MG3, the Partners have instituted formalized mechanisms to help underwrite partnership 
expenses by member cost sharing. The network’s sustainability and future structure is contingent 
upon the perceived and real value to the participants. 
This study attempts to articulate that perceived and real value of partnership in order to confirm for 
Katalysis and its Board the extent to which the commitment to partnership is (a) valued by the 
Partners, (b) effective as a way of promoting development outcomes, and (c) responsive to country￾level needs. 
Purpose 
The main purpose of this evaluation is to conduct an in-depth study of Katalysis’s partnership 
methodology as it has been developed and implemented. In the past, partnership has typically been 
designed and evaluated on northern terms. In this study the southern perspective is the focus. 
Katalysis and its funders sought documentation on not only the mechanisms Katalysis has designed 
to foster and sustain its Partner network, but also how participation in this set of values, principles, 
standards and practices truly affects the Partners and their services. A secondary purpose of the 
evaluation is to provide an objective articulation of the methodology for potential future use in 
support of replication in other regions and to make recommendations for improvements in the 
methodology. 
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Methodology 
The research methodology included an initial workshop, in conjunction with the Katalysis Board of 
Directors’ Meeting in San Pedro Sula, Honduras, from March 19-21, 2001. The research team
attended the board meeting as observers and subsequently facilitated an interactive workshop with 
the full board and the Partner Directors. Through this process, the researchers validated and 
customized protocols that had been designed in advance, and initiated the process of data 
collection. Data collection continued over the following two weeks with a series of key informant 
interviews conducted with the Executive Directors and other key staff from organizations in 
Honduras and Guatemala. (For evaluation questions and research protocols please see Appendices 
1 and 2.) The initial results of the fieldwork were presented to the Partner Directors at their May 
meeting, where the findings were vetted and refined. Subsequently, the research results were 
presented to the Management Team and the Executive Committee of the Board of Directors of 
Katalysis USA. 
By consulting with key stakeholders, gathering empirical data, vetting findings in multiple settings, 
and emphasizing the learning process, this research methodology incorporates many principles of 
participatory evaluation. (For a further discussion of participatory evaluation, please see Appendix 
3.)
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Key Findings 
1. Southern partners see client benefit as a result of participating in the partnership. 
Southern partners affirmed that they are stronger organizations as a result of their membership in 
the Katalysis Partnership. They are able to provide better products and services, which in turn 
create better outcomes for their clients. Organizations cited both technical and relational skills as
areas that have been enhanced by their experience within the partnership. 
Many of the technical benefits of membership are obvious, but others are more subtle. Southern 
partners receive technical assistance directly from the RFO and benefit from economies of scale 
and subsidies within the network. Through partnership, the southern organizations have been 
exposed to new standards, practices and microfinance products, and received technical and 
financial support in order to implement this new learning in their own organizations. 
A subtle benefit of the partnership is that 
the partners have more readily accepted 
criticism and implemented change 
because the technical assistance was 
presented in the context of the 
partnership. The ongoing relationship 
and the sense of “being in this together” 
help overcome the resistance to change 
that is so often encountered in 
organizations. Several partners reflected 
that their own openness to change was a 
key element in the success of the 
network. They knew that even when it 
was difficult to hear, the feedback they 
received from the RFO was intended to 
strengthen them, not simply to criticize 
them for the sake of criticizing. The 
quality of the technical assistance 
reinforced this benefit. When partners implemented changes and saw that their organizations truly 
were strengthened by those changes, they were open to further critiques from the RFO, effectively 
creating a “virtuous” cycle of feedback and improvement. These improvements then translated into 
higher quality services to their microcredit clients. 
Benefits of Partnering for Microcredit Clients
• New microfinance products and services are 
introduced through partnership technical 
assistance. 
• Organizations are more responsive to 
technical assistance and capacity-building 
efforts, leading to improved service delivery.
• Organizations can learn from experienced 
peers when implementing changes. 
• Comparison to an international peer group 
sets high standards for program quality. 
• Exposure to partnership values promotes 
reflection on organizational values that are 
mirrored in work with clients. 
In addition to overcoming resistance to change, the partnership supported organizations as they 
attempted to transform new knowledge and new behaviors. Countless examples from the body of 
Change Theory literature make it clear that new skills sets do not necessarily translate into new 
actions and behaviors. As southern members implemented new practices, the partnership provided 
resources ranging from an ongoing monitoring relationship with the RFO to a network of peers 
who might be grappling with the same issues or have experience addressing them in their own 
organizations. The partnership also provided accountability. Within the network, the partners share 
data for key microfinance indicators. Several partner directors commented that they did not want to 
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let the partnership down, by failing to meet or uphold the “best practice” standards. Thus, this 
mutual accountability enhanced the effectiveness of the partnership’s technical support by 
encouraging partners to follow through on implementation. 
Southern directors value the relational aspects of the partnership as well. They comment that 
having a direct connection with peer organizations, which they have come to know well, is a source 
of inspiration and motivation, as well as an opportunity for learning. In addition to these direct 
benefits, directors also reported that interactions with the partners help them internalize the values 
of partnership at the network level, and model behaviors that are also relevant—in fact, 
necessary—for good microfinance. At the most basic level, partners feel that they can only 
empower their clients through microcredit if their organizations are empowered in their relationship 
with Katalysis. Similarly, partners feel that just as they teach their clients to be responsive to 
customer needs, Katalysis should continue to strive to respond to the needs of its clients, the 
southern partners. Partners also mentioned solidarity and competition as values that must be 
balanced in the partnership and in microcredit activities. 
One staff member from a partner organization 
illustrated this point with an example. “If one of our 
clients has a small store, and a customer comes in 
while we are conducting a visit, we stop our 
conversation and let her wait on the customer 
because we stress that attention to the customer is 
essential. Similarly, when Katalysis RFO staff come
to visit, they do not ask us to change what we have 
scheduled for that day. They accompany us as we 
visit our clients and go about our work.” 
Partnership Values and Service 
Delivery: A Partner Speaks 
Partnership values have to trickle down 
in the organization. How can we sit at a 
table with our partners and discuss 
solidarity if our employees go out in the 
field and compete for clients? 
Competition is a value of partnership. It 
can be positive if it pushes you to 
improve, but it must be balanced with 
other values such as solidarity. As a 
partnership organization, you have to 
reflect on ways to apply the values at all 
levels, including network, organization, 
and client. 
When asked if the rigor of the microfinance industry 
conflicted with the “softer” values of partnership, the 
directors responded that it did not. In fact, they felt 
partnership obligated the partners to hold themselves 
and each other to high standards, first because their 
reputations were linked through partnership, and 
secondly because they cared about their fellow 
partners. To let a partner fail would be to have failed 
as partners themselves. 
2. The partnership provides differentiated benefit streams depending on the stage of 
organizational life-cycle of the partner 
All members of the Katalysis partnership felt that the partnership provided a variety of benefits. 
However, the particular benefits cited and their relative importance varied according to the 
characteristics of the organization and the organization’s tenure as a partner. The greatest
differentiation was between the newest members (generally large organizations) and older members 
(generally small to mid-sized organizations). The most important distinction seems to be that the 
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former group joined Katalysis when they were already well-established organizations with strong 
reputations while the later joined Katalysis as nascent or struggling organizations and achieved 
excellence in the course of their relationship with the network. 
For the newest members of the partnership (typically the largest organizations) the areas of greatest 
value-added from partnership are: 
• Prestige 
• Professional relationships with other organizations 
• Technical assistance 
For the older organizations (typically small to medium-sized organizations) the areas of greatest 
value-added are: 
• Mutual support and exchange 
• Technical assistance 
• Funding 
In general terms, the older members value the personalized, focused attention they receive in a 
smaller partnership while newer members value the connections and prestige of a broader well￾recognized network. To some extent, this schism is an artifact of the recent addition of three new 
(provisional) partners that are all large, well-established microfinance institutions. These 
organizations reinforce the new/large versus old/small dichotomy, which is not always so clear-cut 
in real life. 
Nevertheless, this gap has important implications 
for the partnership. Several older partners 
explained that Katalysis has traditionally served as
an incubator for promising young organizations. 
With Katalysis’s guidance, they have matured and 
established themselves as solid microfinance 
institutions, and now see themselves as poised to 
mentor a new generation of up-and-coming 
organizations. They express concern that the 
network is expanding to include new organizations 
at the same time it is at risk of losing two current 
members who have not met new technical 
standards. 
Even if we never received anything 
else from Katalysis, we would stay. 
It is not the same for the new 
members. How could they possibly 
feel the way we do? Why should 
they? They came to the partnership 
when they were already strong 
organizations. We owe our very 
existence to Katalysis. 
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Competing Needs: Partnership Tensions 
As the Katalysis Partnership grows, it incorporates 
organizations with varied—and at times competing—
needs and desires: 
• Younger, less experienced microfinance institutions 
(MFIs) versus older, well-established MFIs 
• Recent partners versus long-time partners 
• MFIs that need help meeting basic standards versus 
MFIs that need advanced technical assistance on 
innovative topics 
• Partners that want intensive relationships with a few 
organizations versus partners that want a broad, but 
less personalized network 
• MFIs that have internalized Katalysis’s partnership 
values versus MFIs that are still considering the 
values and “trying them on for size” 
Katalysis faces a paradox. The 
benefits that it offers to younger, 
less experienced organizations 
derive largely from the fact that 
there are also strong, well￾established members in the 
partnership. And yet, the benefits 
that would attract and maintain 
those larger members may require 
the partnership to grow in ways 
(e.g., more members, higher 
standards) that will threaten its 
ability to include and support 
nascent members. Still, if
Katalysis fails to attract and retain 
prestigious organizations as 
members, its own prestige will 
fade, and it will be less able to 
serve nascent—or any other—
partners. 
And so, Katalysis is faced with the question of how to deal with a classic case of organizational 
growing pains. Part of the answer lies in the unique methodology of Katalysis, in particular, its 
partnership mechanisms.
3. Partnership values are inculcated through a broad range of mechanisms, some of which are 
considerably more effective than others. Among the most effective are partner-to-partner 
exchanges, professional development activities, and board meetings. 
Building Blocks of Partnership: 
Key Mechanisms 
Most effective: 
• Partner-to-partner exchanges 
• Microfinance diploma (diplomado)
• Partner director meetings 
• Annual board meetings 
Potentially effective:
• Microfinance training institute 
• RFO partnership training 
• Probationary year 
A network driven by relationships and values 
must develop mechanisms for transmitting those 
values to new members. Partner-to-partner
exchanges, the degree program (diplomado),
partner director meetings, and annual board 
meetings are all key mechanisms that strengthen 
the partner relationship. 
Southern directors highlight partner-to-partner 
exchanges as an excellent partnership activity 
that fosters learning between partners and also 
serves as a great source of motivation. One 
director explained that in the face of difficulties, 
it is encouraging “just to know that someone out 
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there is going through the same things I am day after day.” Partners also express pride in the fact 
that the exchanges are “horizontal,” demonstrating that the southern partners have an important 
contribution to make to the partnership as a whole, as well as to each other. Several partners 
commented that these exchanges model the highest ideals of partnership, including transparency 
and mutual support. One partner director explained that the sincere happiness that partners feel for 
the success achieved by another—in the normally competitive world of microfinance—
demonstrates the uncommon strength of the bonds they have formed through Katalysis. 
Similarly, the training course 
(diplomado) completed by the 
southern directors was an 
important opportunity for 
professional development that 
also allowed them to build a 
strong sense of camaraderie. 
Many directors look forward to 
the proposed microfinance 
institute as an important 
opportunity to build skills in their 
staff and also expose more 
members of their organizations to 
the values of partnership. 
Partner director meetings and 
annual board meetings were 
almost universally cited as the 
basic building block of the 
partnership. However, there 
seems to be less commitment to 
the meetings as an important 
partnership mechanism among 
the provisional members. At the 
time of the study, one director 
had not attended two recent 
meetings, (although he expressed 
concern that he had been unable 
to attend). Another provisional 
partner questioned whether the meetings are truly necessary in light of the expense and the time
they require. He questioned whether they could be condensed into fewer meetings per year or 
shortened by better planning (e.g., circulating documents ahead of time and discussing them by 
phone if necessary). In spite of a few reservations, the meetings were viewed as an important 
mechanism because they bring the entire partnership, north and south, together in person. 
Safeguarding Partnership Values through Probation: 
A Case Example
Most organizations become full partners after their 
probationary year. However, this is not always the case. 
One organization chose not to join Katalysis after
participating in the partnership for a year. Although the 
organization is considered a strong microfinance institution 
in its country, Katalysis requested several changes to bring 
the new organization into line with partnership values. 
The organization felt that its board of directors should 
make such decisions, not an outside entity. Katalysis felt it 
could not compromise on the issue of partnership values. 
Therefore, the organization withdrew from the partnership. 
Although the organization’s decision not to join was 
disappointing, it was the only option, given the firm 
positions of both sides. 
Today, the organization’s director expresses great respect 
for the work of the Katalysis Network, saying it was simply 
not the right fit for his own organization. Since its 
separation, the former partner has maintained friendly 
relations with a local Katalysis partner and even considered 
working with Katalysis in a less rigorous relationship in the 
future. 
An under-utilized partnership mechanism is the RFO. To date, the RFO has done an excellent job 
in improving the technical skills of many southern partners. However, most directors express 
concern that the current RFO role of monitoring, reporting and training will not be adequate as the 
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Central American Network takes on more responsibility and independence. They feel that the RFO, 
and the job of the RFO director in particular, must be recast to emphasize visionary leadership. In 
particular, directors would like to see an RFO that understands and models technical excellence in 
partnership practice, not just microfinance practices. The role of the director would be to ensure 
that the Katalysis philosophy of partnership reaches all levels of the network and is communicated 
to a broader external audience in the development community. 
Finally, the probationary year for new members is an important partnership mechanism, but some 
members see it as simply a technical safeguard. New partners must comply with technical 
microfinance standards in order to enter the partnership. One probationary member questioned the 
need for the subsequent probationary year saying that if the organization met the requirements it 
should be “in” and certainly if the organization failed to maintain those standards, Katalysis would 
have the right to end that organization’s membership. However, the comments of other directors 
reveal the probationary year to be an important time of exploration to see if the values and culture 
of a new member blend well with those of Katalysis. This “acculturating” purpose of the 
probationary year should be explained and emphasized to all partners, especially as the network 
grows and includes new types of organizations that it has not traditionally served. 
4. Partners are pleased with Katalysis’s achievements in a broad range of activities including 
strengthening service delivery, providing technical assistance, mobilizing resources, and 
representing the partnership to international donors. One emerging area where partners 
would like to see more activity is advocacy. 
The Katalysis Partnership has provided 
great value to its southern members. 
Partner directors feel that the network has 
optimized its levels of activity in areas 
such as service delivery, technical 
assistance, resource mobilization and
representation to international donors. 
However, one area where the potential 
benefits of partnership have not been 
optimized is political and legislative 
advocacy. 
Advocacy Opportunities at the Country and 
Regional Level 
• Government regulation 
• Taxation of interest earned through funds 
and repayment of loans 
• Tax status of NGOs 
• Entry of commercial banks into the 
microfinance sector
• Dollarization 
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The policy and legal environments of the 
countries where Katalysis operates are changing 
and developing rapidly. New regulatory 
frameworks, taxation, dollarization, and the 
entry of private banking institutions into the 
microfinance arena are issues of concern to the 
partners. Partners greatly appreciate the recent 
training on legal and regulatory issues offered 
by the RFO. Several members suggest that the 
RFO is well positioned to provide information 
and data that inform the policy debate. As a 
prestigious regional network, with credibility in 
the area of microfinance, Katalysis should 
carefully consider the extent to which it can 
serve its partners’ interests through advocacy. 
Thoughts on the Changing Policy Context:
“In El Salvador, we will be the first to 
experience the effects of dollarization. Our 
experience can help others.” 
“The governments see that microfinance is 
profitable, and now they want to get 
involved.” 
“The commercial banks are strong. We will 
have to work together as nonprofits to 
confront the banking industry.”
5. Partners feel the network provides benefits of significant value and they are willing to 
invest some of their own resources to maintain it once external resources are no longer 
available. However, at the same time, they have concerns about the long-term financial 
sustainability of an independent Central American network 
As the Katalysis Partnership moves toward a new stage in its history, one where the southern 
partners will take significantly more responsibility for the leadership of their network, the southern 
directors are committed to mobilizing the resources necessary to maintain partnership. They are 
willing to invest some of their own resources, but do not feel that the amount they can provide 
would be adequate. They question whether the southern network currently has the leadership and 
financial resources to be self-sufficient. 
. 
“Currently, the Katalysis Partnership 
has very strong leadership in Jerry 
[Hildebrand]. Katalysis USA must begin 
the process of building leadership in the 
South, to ensure a smooth transition to 
an autonomous Central American 
Network in the future.” 
The leadership concern is less urgent because it is 
already being addressed. Although partners do not 
feel that they are currently ready, they have seen 
their own leadership skills grow, especially 
through the diplomado, and Katalysis has been 
responsive to their desire to recast the position of 
the RFO director as one that involves more 
dynamic leadership of the southern network. 
A more pressing concern is the financial sustainability of the RFO, which most partners assume
would serve as a “secretariat” for an autonomous southern network. To date, the RFO has been 
largely underwritten by Katalysis USA. Southern members 
feel the network is valuable and they are willing to help 
support it financially at some level, but also feel that whether 
they want to or not, their organizations are unable to fully 
subsidize an independent RFO. Since many partners have 
“How can we support another 
organization, such as a 
secretariat, when we are barely 
able to sustain ourselves?” 
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only recently achieved self-sufficiency, they are very “price sensitive.” They are aware that some of 
the most valued partnership mechanisms (e.g., international meetings several times a year) are very 
expensive. 
The most common suggestion is that the 
RFO sell microfinance support services to 
achieve self-sufficiency. Many partners feel 
that this is a promising direction, especially 
because it would spread the costs of 
supporting the RFO beyond the relatively 
small Katalysis network. As a caveat, 
several organizations pointed out that the 
RFO is currently not “market oriented” 
enough to succeed with this strategy. They 
feel that the RFO must offer innovative 
training and products in order to compete 
with other service providers, and that they 
themselves would go elsewhere if the RFO 
could not provide the services they required 
at a competitive cost. However, others
mentioned that it is currently difficult to 
find high-quality technical assistance, and 
so the RFO has an opportunity to capitalize 
on its reputation for technical excellence by 
developing responsive products and 
capturing a large share of the market. 
Paths to RFO Financial Sustainability 
• Providing training and technical assistance 
services to the microfinance sector 
• Providing diagnostic and monitoring and 
evaluation services to the microfinance 
sector 
• Publishing market research and MF sector 
data 
• Researching and producing innovative MF 
products for the region 
Challenges to RFO Financial Sustainability 
• Being more market responsive 
• Being attractive to a price-sensitive clientele 
• Balancing a focus on leadership with 
provision of technical services 
The underlying tension with this approach, is that these potentially profitable actives (e.g., technical 
assistance, monitoring, training) reinforce the traditional “quality control” role of the RFO at a time
when many partners would like to see the RFO break out of that role, and provide more strategic 
leadership.
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Recommendations 
Southern perceptions of the Katalysis Partnership are overwhelmingly positive. Partners see real
benefits to their organizations and clients as a result of their participation in the network. The 
southern directors also describe their partnership as a work in progress, an ongoing effort to 
translate the partnership’s values into daily practice. The following recommendations reflect 
suggestions by the partners themselves as well as the conclusions of the researchers. 
PLANNING FOR NETWORK GROWTH 
1. Clarify the vision for the partnership’s growth. Determine what kind of organization constitutes 
the network’s primary clientele. Large or small? Nascent or established? Identify the tensions 
between the needs of distinct clienteles and determine the degree of heterogeneity that the 
network can support with current and projected resource levels. 
2. Explore opportunities for building new skills, including advocacy. Identify the unique insights 
that Katalysis brings to the policy arena as a network with regional scope. Among the advocacy 
opportunities identified by Katalysis, select those issues of highest priority and prepare position 
papers or similar collateral materials in order to enhance the effectiveness of advocacy efforts. 
Determine how Katalysis can best coordinate its efforts with national networks. 
MECHANISMS FOR CREATING AND SUSTAINING PARTNERSHP VALUES 
3. Maintain and expand powerful partnership mechanisms such as partner-to-partner exchanges, 
professional development opportunities such as the diplomado, and face-to-face meetings. 
Develop under-utilized partnership mechanisms, such as the probationary year, and make their 
partnership-building purpose explicit. 
4. Recast the role of the RFO director to include the promotion of technical excellence in 
partnership, as well as in microfinance. Ensure that the values of partnership are understood and 
applied at all levels of the RFO. Develop new techniques for confronting the challenge of 
partnership indicators. 
SUSTAINABILITY OF THE CENTRAL AMERICAN NETWORK 
5. Cultivate leadership skills in the RFO director as well as in partner directors. Establish a 
mechanism for group dialogue among partner directors that allows them to communicate 
directly with other network components such as Katalysis/USA or the RFO. 
6. Plan and implement the Microfinance Institute to build essential human resources as well as
network identity. 
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7. Conduct a feasibility study of various financial scenarios for the RFO and establish the RFO’s 
core mission. Identify markets within the partnership and beyond the membership and 
determine which products that are most marketable. Consider the extent to which the RFO will 
function as a secretariat, or central administrative body, for an independent Central American 
Network, and determine required changes in the structure of the RFO based on these decisions. 
8. Given the demonstrated impact of the partnership model as practiced by Katalysis, identify 
effective means to disseminate key lessons to a broader audience within the development 
community. 
Conclusion 
Partnership, as practiced by Katalysis, is a powerful methodology. The relationships between north 
and south, as well as among southern partners, are strong and highly valued by partner 
organizations. Working in partnership provides a range of benefits to a group of diverse members. 
Benefits include enhanced program quality, technical assistance, and access to information, as well 
as less tangible benefits such as solidarity and a supportive peer network. The Katalysis Partnership 
also has the potential to increase its impact by taking on new roles, such as advocacy, and 
solidifying the Central American Network as a sustainable development actor in the region. 
Furthermore, the Katalysis experience in Central America provides useful insights to other US 
PVOs seeking to establish value-driven relationships with their southern partners. The RFO can 
serve as a resource for organizations that seek to learn from Katalysis’s experience in partnership. 
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Appendix 1: Evaluation Questions 
These questions were refined and validated during the Partnership Forum (March 19-21, 2001) with 
the participation of Katalysis Board of Directors, including northern members and southern Partner 
Directors. ) 
What is an accurate description of each network “component,” i.e. of the core groups within the 
Partnership? 
• Southern NGOs 
• Katalysis/USA 
• Katalysis Regional Field Office RFO 
What is the impact of participation in the Partnership on each network component’s service 
delivery, i.e. is there any “added value” in the delivery of services to clients? If so, what are the 
details of the “added value?” 
How do the values, principles and practices manifest themselves in Partner actions? 
To what extent do all the members appreciate the full costs/benefits of Partnership?
What do the various components identify as the costs and benefits associated with partnership 
as they have experienced them during their membership?
What are the processes associated with network growth and development? Are these perceived 
as clear, useful, and necessary? 
• Recruitment processes – nomination, organizational assessment, interviews, 
approval process 
• Probationary year for the new Partner with clearly articulated expectations: 
memorandum of understanding (MOU), institutional standards, microcredit best 
practices, and acceptance of Partnership tenets 
• Commitment to standards, values, principles as articulated and approved by the 
Partner Directors 
• Transparency at all operational levels (e.g., sharing of programmatic statistics; 
finances) 
• Initial methods of sustaining the network (e.g. cost-sharing, self-governance, shared 
leadership) 
• Provision for Partner separation from the network 
What are the roles, responsibilities and expectations among network components as the 
Southern members know them? And how do these compare with the Katalysis’s intentions and 
to what degree have these been clearly and effectively transferred to the southern members?
(Examples include: Southern partners’ views on governance, decision-making, and leadership 
related to the Partnership) 
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What are the activities and strategies of the partnership for promoting “best partnership 
practice”? To what degree is organizational learning taking place with regard to “partnership 
best practices?” 
What are the identifiable mechanisms that distinguish the Katalysis partnership methodology?
How effective are they? 
Are the motivations for partnering clearly articulated? To what extent are members invested in 
creatively and strategically expanding the partnership?
How do southern Partners experience the combining of the collaborative spirit of partnership 
with the rigors of microcredit?
Are there any factors that contribute to or detract from network coherence?
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Appendix 2: Evaluation Methods 
Research Process: 
1. Finalize in collaboration with Katalysis Partners, the list of questions to be addressed by the 
study. (See Appendix 1.) 
 
2. Develop, with the full participation of Partners, appropriate protocols and key indicators to 
explore, in-depth, the questions to be addressed by the study. Develop stratified sampling 
methodology. 
3. Conduct field research with local Partners in two countries (Honduras and Guatemala) – six of 
the current 11 Partners will receive site visits. One former Partner will be consulted as to its 
experience while being considered for full partnership in the network. 
4. Review, validate and, as necessary, triangulate preliminary findings in with Partners. All 
Partners will hear and respond to the findings in an effort to correct any perceived errors and 
fill-in any gaps. 
5. Prepare a comprehensive report summarizing findings from field-based research. 
6. Present findings to Katalysis Management Team and Executive Committee. 
7. Complete final written reports to the study and project sponsors – USAID and IDB/MIF project 
officers. 
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Basic Interview Protocol: 
Name of interviewee:
Organization: 
Date: Interviewer(s): 
1. Identify (through a drawing) each element represented in the Katalysis Partnership Network. 
[For each element noted] 
2. Describe the element in its ideal state in terms of functions, values, and resources. 
Describe the element in its current state in terms of functions, values, and resources. 
[Four separate stories/anecdotes will be elicited for subsequent thematic and content analysis] 
3. Tell a short story or share an anecdote that sheds light on: 
 
a. The degree to which network values influence partners in their relationships with each
other 
b. The degree to which network values influence partners in their relationships with clients
(borrowers) 
c. The degree to which network values influence partners in their relationships with any 
other stakeholder group 
d. The benefits of partnership 
4. Why did your organization initially choose to become a member of the Katalysis Partnership 
Network? To what degree have these initial aspirations been realized? 
5. Partnership networks have many functions to perform. In your opinion, what is the best possible 
way that the following functions can be carried out: 
a. Recruiting partners 
b. Maintaining standards of technical excellence among partners 
c. Sustaining a partnership network 
6. To what degree are there similarities or difference between these “best ways” that you’ve 
described for these three functions and current practice within the network? [Probe or give cues 
to ensure comments are offered regarding each of the three functions: partner recruitment; 
maintenance of technical standards; and network sustainability] 
7. How good, in your opinion is the fit between the collaborative spirit of partnership and the 
day-to-day challenges of operating high quality microcredit programs? [Probe for sources of 
tension as well as complementarities]
8. Imagine a ten-point scale where 1 equals “11 totally separate organizations” and 10 equals “a 
fully integrated, seamless system.” Where would you place the current Katalysis Partnership 
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Network on this scale? Why? Using this same scale, where would you like to see the Network 
in five years? Why?
9. What, in your opinion, are the most important lessons that the Network has learned about 
partnering? What more—if anything—should the Network do in order to learn about “best 
practice” in the field of partnering? 
10. What are your three most deeply felt wishes or hopes for the Network over the next five years? 
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Appendix 3: “Characteristics of participatory evaluation” 
Characteristics of Participatory Evaluation 
Participatory evaluations typically share several characteristics that set them apart from traditional 
evaluation approaches. These include: 
Participant focus and ownership. Participatory evaluations are primarily oriented to the 
information needs of program stakeholders rather than of the donor agency. The donor agency 
simply helps the participants conduct their own evaluations, thus building their ownership and 
commitment to the results and facilitating their follow-up action. 
Scope of Participation. The range of participants included and the roles they play may vary. For 
example, some evaluations may target only program providers or beneficiaries, while others may 
include the full array of stakeholders. 
Participant negotiations. Participating groups meet to communicate and negotiate to reach a 
consensus on evaluation findings, solve problems and make plans to improve performance. 
Diversity of views. View of all participants are sought and recognized. Move powerful stakeholders 
allow participation of the less powerful. 
Learning process. The process is a learning experience for participants. Emphasis is on identifying 
lessons learned that will help participants improve program implementation, as well as on 
assessment whether targets were achieved. 
Flexible design. While some preliminary planning for the evaluation may be necessary, design 
issues are decided (as much as possible) in the participatory process. Generally, evaluation 
questions and data collection and analysis methods are determined by the participants, not by 
outside evaluators. 
Empirical orientation. Good participatory evaluations are based on empirical data. Typically, rapid 
appraisal techniques are used to determine what happened and why. 
Use of facilitators. Participants actually conduct the evaluation, not outside evaluators as is 
traditional. However, one or more outside experts usually serve as facilitator—that is, provide 
supporting roles as mentor, trainer, group processor, negotiator and/or methodologist. 
From: “Conducting A Participatory Evaluation” Performance Monitoring and Evaluation TIPS. USAID Center
for Development Information and Evaluation: 1996, Number 1 (PN-ABS-539). Available on-line at:
http://www.dec.org/pdf_docs/PNABS539.pdf. 
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Appendix 4: Contacts 
Field Interviews: Key Informants 
Name Position Organization 
Santa de Euceda Executive Director ODEF 
Miguel Navarro Sub-director ODEF 
Lenin Reyes Head of credit ODEF 
Sulamita Martinez Head of administration ODEF 
Daniel Martinez Executive Director Katalysis Honduras 
Martha Maria Salgado Microcredit specialist Katalysis Honduras 
Partricia Amadua Program assistant Katalysis Honduras 
Nolvia Lizeth Lagos Program assistant Katalysis Honduras 
Leonardo Alvarez Rural enterprise specialist Katalysis Honduras 
Cecilia Bognon Administrator Katalysis Honduras 
Xiomara Velásquez Microcredit specialist Katalysis Honduras
Roberto Ruiz Pineda Executive Director Auxilio Mundial 
Eloisa S. Acosta Executive Director FAMA 
Fabio Mauricio Nante H. Administrator FAMA 
Milton Paz Supervisor, solidarity credit FAMA 
María Teresa Henríquez Supervisor, community banks FAMA 
Sonia Garcia Supervisor, community banks FAMA 
Edgar Ramiro Bucaro Rosales Executive Director Genesis Empresarial 
Reynold Walter Executive Director FAFIDESS 
Catarina Mendoza Silvestre Executive Director MUDE 
Gregorio Tzoc Norato Executive Director CDRO 
Cesar Abraham Tocón Vásquez Administrative/ Operational 
Director SFC-POP 
CDRO 
In addition to the field interviews, the researchers also met with all board members in attendance at
the March 19-21, 2001 board meeting and the May 29, 2001 partner directors’ meeting.
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Appendix 5: Documents Consulted 
Documents consulted in the preparation of this report: 
• “A Manual on the Principles, Practices and Standards of Partnership,” created by Katalysis 
Partnership and updated as necessary. It includes the formal agreement of all Partners to abide 
by these principles, practices and standards in a memorandum of understanding (MOU). 
• Katalysis Annual Board Meeting minutes and Partner Directors’ Board minutes 
• Annual reports for USAID that document the Partnership Exchanges and training events and 
describe lessons learned in any given year 
• Final evaluations for MG1 and MG2 that detail the growth of the Partnership from one Partner 
to six (and now in MG3 to eleven). 
• Katalysis newsletters—“Field Notes” and “Bootstrap Bank Accounts” 
• IDB/MIF Quarterly Reports 
• IDB/MIF Evaluations. 
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