Seeking partner to develop an institutional structure for a community-managed finance mechanism


C&A Foundation’s sustainable cotton programme is seeking a partner to develop an institutional structure for a community-managed financing mechanism that is making drip irrigation technology affordable for small and marginal cotton farmers of Gujarat.


C&A Foundation is a corporate foundation, sharing the same heritage, values and approach to sustainability, as the global apparel retailer C&A. The foundation works to transform the fashion industry with the aim of making fashion a force for good.

The foundation strengthens platforms, NGOs and other changemakers that can then transform the fashion industry and make it work better for every person it touches. We focus our work on areas where we believe we can have the biggest impact: accelerating sustainable cotton, improving working conditions, eradicating forced labour, strengthening communities and circular fashion.

Purpose of the study

C&A Foundation’s Sustainable Cotton Signature Programme aims to improve the livelihoods of smallholder farmers adopting sustainable cotton cultivation practices and, in the process, also help conserve the environment. As part of our commitment to help smallholder cotton farmers adopt sustainable cultivation practices and improve livelihood, we are working with the Aga Khan Foundation and its sister organization the Aga Khan Rural Support Programme (India) (AKRSP(I)) to improve smallholder farmers access to the drip irrigation scheme of the Gujarat Green Revolution Company, a Government of Gujarat initiative. The programme is under implementation in four districts of the Saurashtra region of Gujarat - Surendranagar, Morbi, Botad and Rajkot.

Installing drip irrigation systems is capital intensive and often out of reach of small farmers. To increase the uptake of this technology, the Gujarat government provides up to 70% subsidy on the cost of installation. It has created a Special Purpose Vehicle (SPV), Gujarat Green Revolution Company (GGRC) to implement this micro irrigation subsidy scheme. Apart from the subsidy provided by GGRC, the remaining cost is to be borne by farmers. Farmers either fund the remaining amount from their own resources, or take a loan, or a mix of both. While large (more than 25 acres) and medium farmers (5 to 25 acres) have managed to apply for the subsidy, small (2.5 to 5 acres) and marginal farmers (less than 2.5 acres) have not been able to benefit from the subsidy equally as they do not have the resources to contribute the balance of the installation cost. Getting a loan is also not easy for these small and marginal farmers as they do not meet the credit assessment criteria of formal financial institutions.

C&A Foundation is working towards bridging this credit gap and helping small and marginal cotton farmers afford drip technology. The foundation has provided support for the establishment of a community managed financing mechanism that provides interest-free loans to small and marginal farmers. This helps in meeting the farmers’ need for the balance amount for installation of drip through the GGRC subsidy scheme.  The programme was started in 2010 and by 2020, it is expected to benefit over 10,000 farmers. It is estimated that this financing mechanism will be revolved to provide loans worth 9.59 million euros by 2024-25 and enable farmers to avail Government subsidy worth 15.68 Million euros along with their own contribution of around 2.12 Million euros.

Keeping in mind the long-term sustainability of this financing mechanism, AKRSP (I) is supporting farmers to form Farmer Interest Groups and Farmer Producer Organizations (FPOs) to sustainably manage this financing mechanism in future. So far, four FPOs have been formed under the programme. These FPOs will manage the financing mechanism and facilitate access to many more farmers as these interest-free loans are returned to the FPO, leveraging the benefits of collective negotiations. These institutions would also enable them to buy inputs collectively and help find markets for their produce. Currently, the loans are processed, disbursed and collected from the participating farmers by the field team of AKRSPI. AKRSPI maintains a simple enrolment process for farmers with minimal documentation. Gradually as the capacity of the FPOs is built, this whole process will be managed by them.  The money will be collected by the FPO staff and maintained in the FPO bank account.

A major weakness of this model is the accumulation of large sums of money with a single institution (FPO), and decision making centred in the hands of a few persons (FPO Board of Directors). Each FPO covers a cluster of 25-30 villages. It is unlikely that all villages will be represented in the Board of Directors, and a potential risk of more distant (and therefore more needy villages) being left out of the decision-making process. To avoid the parking of large sums of money in a single institution (FPO) and potential risks of large loans from the financing mechanism not being returned, it is important to decentralise the distribution of funds to institutions closer to the drip irrigation farmers and over which the farmers would have greater control. AKRSP (I) has therefore proposed a three-tier structure with Farmer Interest Groups, Cluster Level Associations (CLAs) and Farmer Producer Companies, with funds being held at the CLA and FPO levels, which will be registered community institutions.

The C&A Foundation is seeking to identify an organization to conduct a risk analysis of the current and proposed fund management model and suggest low risk and sustainable options for the management of the fund in future.

This study, should help the foundation and AKF/ AKRSP (I) in setting up an institutional structure for efficient and sustainable management of the fund, with a priority focus on promoting access to drip irrigation and sustainable farming practices.

Scope of the Study

The scope of the study will include the following key activities:

  • Interaction with the AKRSPI programme staff and FPO management to identify the potential risks of the current model of fund management
  • A thorough political, economic, social and legal risk analysis of the current and proposed fund management practices
  • Review of the available financial data such as loan disbursements and repayments to identify any risk or discrepancy
  • Review of the current systems and processes of fund management, and an assessment of the sustainability of the proposed three-tier structure
  • A detailed analysis of the FPO books to assess the dependence of the FPO on the fund money
  • Literature review of similar programmes at national and global level with actionable lessons for the Foundation’s programme
  • Workshop with the key foundation and AKF/ AKRSP (I) staff to discuss the key findings and proposed institutional structures
  • Identifying minimum 3 options for decentralized, low-risk institutional structures for the management of the fund

The organization can suggest additional activities under the scope in the proposal, that can improve the comprehensiveness of the final report.

Delivery Expectations:

We are expecting a comprehensive report with :

  • a risk analysis of the current fund management model
  • list of institutional structure options for managing the fund with clearly defined advantages and disadvantages & a SWOT analysis
  • brief overview of similar successful programmes and lessons for the programme

Timeline for the study

The study is expected to be completed in six weeks. with minimum of 2 weeks of visit to the programme sites and offices.

Qualification Criteria for the Organization/ Consultant

Evaluation Methodology and Criteria:

The proposal will be evaluated basis a combination of the methodology proposed for the study and the proposed budget.

The technical methodology should contain the following elements:

  • Understanding of the Terms of Reference
  • Expertise of the Team (Prior experience of working on rural finance, agriculture value chains is important)
  • Credentials of the organization in doing similar studies (On ground experience of successfully managing similar funds is desirable)
  • Proposed work plan and approach
  • Timeline for delivery of all agreed outputs

Submission of proposals

Please submit your financial &technical proposal to by 20th August, 2018.