With the success of microcredit, poor people have access to more loans than ever before. But many are still stashing savings in a lock box, storing it with a "money guard" or pooling it in an informal savings club because they have no other options.

Many banks and other institutions don't make savings accounts available to the poorest borrowers.

Today the Bill & Melinda Gates Foundation is contributing $38 million in grants in a push to help leading microfinance institutions (MFIs) offer clients safe and affordable places to save money.

"We see it as a major step to drive change and help broaden the microfinance business model to include savings," said Bob Christen, the foundation's director of Financial Services for the Poor.

GRAMEEN FOUNDATION

Members do banking at ACSI, a microfinance institution in Ethiopia's Amhara region, which depends largely on agriculture. ACSI provides savings accounts for more than 586,000 people.

Six grants will help 18 institutions expand their portfolios and make savings accounts available to 11 million people in Africa, Asia, and Latin America over the next five years. The challenge of finding ways to reach poor savers is being met with the help of motorcycles, PDAs, mobile phones and even soap operas.

The largest grant, $9.8 million, will go to the Grameen Foundation to begin a Microsavings Initiative with partners in Ethiopia, India and the Philippines to test and fine tune models for savings for people at the bottom of the economic ladder -- those living on about $1.25 per day.

Even at that level, people are putting away small amounts -- often pennies at a time -- and using sophisticated balancing acts to stretch their capability. But the informal savings methods often lead to financial losses.

Many of the poorest people live far from cities, so the cost of traveling to a bank is too high. It's also expensive for banks to create branches in remote areas where the number of clients is limited and their deposits small.

A $5.8 million grant to ACCION International will focus on agent banking, mobile banks, and access to savings accounts over mobile phones. A $3.3 million grant to World Vision will help it offer savings accounts to rural farmers and poor people in Ethiopia through mobile technologies, including equipping savings offers with PDAs and motorbikes to travel to clients in outlying communities.

Collecting more savings deposits from local customers could help the microfinance institutions reduce their reliance on external funding from commercial banks, becoming more like community banks in the United States, said Kate Druschel Griffin, director of the solutions for the poorest initiative at the Grameen Foundation.

GRAMEEN FOUNDATION

The microfinance institution ACSI holds a meeting for clients in Ethiopia's rural Amhara region.

"For us it's how do we make sure we are enabling the poor households to have tools they need to work their way out of poverty," she said. Grameen's initiative aims to reach 1.45 million new savers over three years. Besides a safer place to store assets, clients can earn interest -- ACSI, Grameen's partner in Ethiopia, provides 5 percent interest on regular savings accounts, and between 5.25 and 5.5 percent on time deposits.

The Grameen Foundation has begun using a tool called the "progress out of poverty index" to measure the impact of credit and savings programs on borrowers. The index measures a range of non financial indicators, such as housing type and sanitation type to see whether living conditions improve.

An $8.5 million grant will go to Women's World Banking (WWB), a network of leading microfinance institutions and banks dedicated to the economic empowerment of women.

The grant will help WWB to create new savings products and services for nearly seven million low-income people in Latin America, Africa and Asia.

WWB will use the money to support its network members invest in market research, product design, marketing and sales and service delivery methods. The members are Banco ADOPEM in the Dominican Republic, WWB Colombia, Kenya Women Finance Trust, and Kashf Microfinance Bank in Pakistan.

"As the microfinance industry matures, we are seeing the beginning of a major shift from a focus on credit to an emphasis on savings," said WWB president and CEO Mary Ellen Iskenderian, adding that demand for savings among the poor is increasing.

WWB found that poor people save between 10 to 15 percent of their monthly household income, using it to pay for childrens' education, health emergencies, housing and marriage.

Since women tend to be the savers in a poor household, designing savings products for them is critical, WWB said.

Using a creative approach, WWB will launch a TV soap opera in the Dominican Republic, part of a financial literacy campaign to bring attention to the benefits of savings. WWB said it seeks to change cultural attitudes and behaviors related to money and will work with Puntos de Encuentro, a Nicaraguan NGO that has used TV serial drama to successfully affect social change.

"Loans or credit were the model for the first 30 years of microfinance," said Iskenderian. "Savings is the future."