INCRA

The Bertelsmann Foundation developed its International Nonprofit Credit Rating Agency (INCRA) proposal following the 2008 financial crisis and the subsequent criticism of the practices of the leading credit-rating agencies.

The Bertelsmann Foundation’s first report on the INCRA concept was published in April 2012. The Foundation considered its INCRA ratings to offer higher quality by including a wider range of factors in its ratings determination, and by offering greater transparency in the rating process. The INCRA model also seeks to minimize conflicts of interest that are inherent to the current credit-rating agency sector.

Since publishing its initial report, the INCRA team tested the model’s methodology by rating six countries: the United States, Germany, France, Brazil, Japan and Italy. To do this, the Foundation assembled a team of international sovereign-ratings experts to use INCRA’s wide-ranging factors to calculate the ratings.

INCRA used, in addition to traditional macroeconomic data, forward-looking socioeconomic indicators in its analyses. These indicators included the ability of governments to master crisis management and to implement needed reform. They also considered investment in future resources such as education and infrastructure.

INCRA defined sovereign ratings as “public goods” available to all citizens. Therefore, all detailed rating reports would be available online for free.

The Foundation saw INCRA as an important contribution to the debate and discussion on new rules for international financial and economic policy governance.