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> Posted by Sarah Samuels, Operations Specialist, CFI

A few weeks ago, 70 financial inclusion leaders from around the globe made their way to Harvard Business School’s freshly blooming campus for the ninth annual HBS-Accion Program on Strategic Leadership in Inclusive Finance. This year’s class was a diverse group of financial service providers, investors, regulators, policymakers, risk managers, and technology innovators, bringing their vast experience from 35 countries. The program content mirrored the industry’s transition from a microfinance focus toward a broader financial inclusion and impact investing scope. Renowned professors Michael Chu and V. Kasturi Rangan, both senior affiliates of Harvard’s Social Enterprise Initiative, led the six-day course.

The week began with vigor, with the group engaged in a lively discussion on the case of Grupo Elektra, a Mexican retail and finance corporation that began offering financial services after first creating a consumer retail network. The case sparked a lively debate about whether social intention is necessary for social impact. Elektra has brought financial services to millions of Mexicans, but has never identified its purpose as social. Can it receive recognition as a social venture? The question of whether social and financial returns work together or whether they are at odds reappeared throughout the week. It was an undeniably controversial but important concept, and increasingly so as it’s nearly impossible to talk about poverty alleviation these days without impact investing coming into the conversation. One day of the course was focused on the role of impact investors and their investee companies, both within the financial sector and beyond.

2014 HBS-Accion Program on Strategic Leadership in Inclusive Finance participants

As an observer of the course this year, I had the opportunity to see firsthand what hot-button issues prompted the most debate and disagreement. It is truly incredible how rich the quality of discussion is when you bring leaders from 35 different cultures together.

Read the rest of this entry »

> Posted by Beth Rhyne

The microfinance community pursues a double bottom line: both social and financial. Originally, the social bottom line dominated, while the financial bottom line was seen as a means (not an end) of achieving social ends, particularly through scale and permanence. But as microfinance became more commercial, financial returns began to hog the attention. Not only are financial returns a great motivator, they are much more easily communicated, monitored and understood than social returns.

To correct this imbalance and put the social bottom line in its proper place, over 900 microfinance professionals joined the Social Performance Task Force (SPTF), a sector-wide group that has met for several years to develop social performance measurement, management and reporting. The enthusiasm of microfinance practitioners for the SPTF shows how serious the field is about the social bottom line.  But although the SPTF has made very important strides, it has not yet cracked the nut.

What is the social bottom line?

The SPFT defines social performance as “the effective translation of an institution’s mission into practice in line with accepted social values.” This definition has two distinct parts – “mission translation into practice” and “accepted social values”.   Read the rest of this entry »

> Posted by Center Staff

Opportunity International‘s blog recently posted “What We’re Reading: Top 10 Blogs About Microfinance and Poverty Eradication.”

It’s great to find this blog there, in the company of CGAP’s Microfinance Blog, Nicholas Kristof‘s New York Times columns, Grameen Foundation’s Creating a World Without Poverty blog, and the Wall Street Journal‘s India Real Time blog.

Check out the rest of their top 10 list by clicking here, and it’s worth glancing over the entire Opportunity Blog.  Recent posts have cast an eye on Tanzania, expanding client access through technology and innovative products, and Opportunity’s Banking on Africa Campaign.

Image credit: C. Thure

Have you read?

13 Key Institutions in Microfinance Industry Sign Open Letter Supporting Muhammad Yunus

Industry Experts Testify on the State of Global Microfinance

Campaign for Client Protection in Microfinance Announced at the Clinton Global Initiative

> Posted by Julie Shea

As investors increasingly seek out social impact investing opportunities, microfinance continues to present an attractive opportunity for achieving double bottom line goals.

However, some countries are way ahead of the pack in terms of their social impact investing efforts. Investing in microfinance has gained particular traction in certain European countries, specifically the Netherlands and Switzerland, while investors in the US and UK have been less responsive to microfinance investment opportunities.

One example of social investing in microfinance coming out of the Netherlands is the Dutch Triodos Bank, which as of December 2009 had 236 million euros under management in its four microfinance funds. Read the rest of this entry »

> Posted by Beth Rhyne

What is responsible financial performance?  In other words,  “How much private gain is appropriate for organizations serving the poor?” The Social Performance Task Force (SPTF), meeting this week in Den Bosch, the Netherlands, is putting this controversial question on the microfinance industry’s agenda – opening a debate that is sure to be both complex and emotionally-laden.

As an opening salvo, the Task Force is proposing that standards addressing the following questions become part of the Social Performance “Universal Principles”:

  • What are acceptable levels of profit?
  • How can we tell if organizations are charging clients for their own lack of efficiency?
  • What levels of executive compensation are fair? Read the rest of this entry »
> Posted by Michelle Romeu

This week, we’re excited to highlight the housing-microfinance link, Islamic microfinance, and a debate that’s been brewing since the era of Monica Lewinsky.

  • Philanthropy News Digest announces that Habitat for Humanity International, Habitat for Humanity India, and the ASK Group are launching a five-year initiative to provide microloans to thousands of low-income households in India.
  • CGAP’s Microfinance blog continues coverage of its Islamic Microfinance Challenge by profiling Tanzania eco-Volunteerism’s honey project, which provides a microfinance model for rural Tanzanian communities that also complies with Islamic guidelines for business and finance. Read the rest of this entry »

> Posted by Jennifer Maurer, RESULTS

How much of the US federal budget do you think goes to foreign aid, including microfinance and microenterprise? If you think around 25 percent, you wouldn’t be alone — that’s the median estimate from the most recent poll. The poll also asked how much Americans thought would be “appropriate” to spend on foreign aid; the median response was 10 percent. But how much do we actually spend? Just 1 percent. This is consistent with numerous polls over the years. Americans grossly overestimate what we spend overseas on development and diplomacy.

Yet the House of Representatives continues to attack the foreign aid budget in an attempt to cut the national deficit. Michael Gerson — Washington Post columnist and former policy advisor to President George W. Bush — called the attacks on the international affairs budgets “both irrelevant and destructive.” It’s irrelevant because cutting funding from less than 1 percent of the budget is not going to make a dent in our national deficit. Instead, the attempt creates a distraction from the real, difficult decisions that have to be made.”

These cuts would be destructive because the programs are saving lives and building stable countries. Read the rest of this entry »

> Posted by Michelle Romeu

This week our blog-hopping takes us from the water pump to the cell phone, as well as points in-between.

  • Mary Ellen Iskenderian, president and CEO of Women’s World Banking, guest posts at the Harvard Business Review blog to point out the many circumstances in which women are not only microfinance clients, but also microfinance leaders.
  • The UN’s World Water Day was last week, and Chelsea Dubois of the (oft-microfinance-oriented) Innovations for Poverty Action blog took the opportunity to show us a striking photo (and the story behind it) that shows us the dire need for clean water in areas such as rural Ghana. (And in connection with MF and H2O, don’t forget Matt Damon.) Read the rest of this entry »

> Posted by Peg Ross, Director, Human Capital Center of Grameen Foundation

Frontline staff, like these field officers in Varanasi, India, need support and guidance to make microfinance effective and meaningful to their clients.

Frontline staff, like these field officers in Varanasi, India, need support and guidance to make microfinance effective and meaningful to their clients.

Sitting at his desk in a small office in the far northeast of India, Anil describes why he does what he does: “When I see a client who started with two pigs and now has 50, I know I’m helping to make a difference in her life.” As a regional manager at a small microfinance institution (MFI) working in rural villages, he leads a team of five branch managers and 30 field officers.

Anil joined his MFI to help address the poverty he saw in his own community and because he needed a steady job. He stays because he sees the impact his work is having — and because he still needs a steady job. There are limited employment opportunities in his area and many young people are unemployed. His story is a typical one. He’s not out to make a fortune; he just wants to provide a comfortable life for his family and give the people he serves a chance at a better future.

The Indian microfinance sector is facing an unprecedented crisis and the reasons are many and complex.  Politicians, regulators, academics, and the visionary founders and leaders of the sector will continue to debate what went wrong and the best way to fix things. Meanwhile, people like Anil will still be in the field, working hard to help their poor clients escape the bounds of poverty.

One of the things Anil does especially well is translating the mission and vision of his organization for his team in the field. Beyond ensuring that growth and collection targets are met, he wants each one of them to develop the capability and confidence to use their strengths to advance the MFI’s social mission and sustainability objectives. But he’s got a lot on his plate, and thinking about how to support his team sometimes comes at the end of a long 14-hour day. Imagine how much more effectively he could support the professional development of his team members if he had easy-to-use, relevant tools to help him. Read the rest of this entry »

> Posted by Center Staff

Siddhartha Chowdri with clients from Bihar

Alex Counts, president and CEO of Grameen Foundation, speaks with community members in Banda Aceh, Indonesia.

Why do so many capable people put their lives into building the microfinance industry? What do they hope to accomplish? What motivates them? Why do they think microfinance is a solution? Are they pleased with the results?

The Center for Financial Inclusion is interviewing founders, pioneers, and entrepreneurs in order to answer these questions and capture the scale and impact of microfinance in today’s world.

During 2011, we’ll bring you a score of such ‘Microfinance Matters’  interviews from leaders around the globe. These authentic voices will speak about what is most meaningful to them in their work.

Today, we talk with a leader in the international dissemination of the Grameen model…

Alex Counts

Reaching Out to the Poorest

In the spring of 1987, Alex Counts, a student at Cornell University, wrote to Muhammad Yunus, founder of Grameen Bank, and expressed his interest in working with one of the world’s first microfinance institutions.

“God bless him, he wrote me back,” says Counts. That was the beginning of a career in microfinance that led Counts and other friends of Grameen Bank to the 1997 founding of Grameen Foundation, an independent organization that collaborates with microfinance organizations around the world to deepen services provided to the poorest and more remote communities…

To read more of the interview with Alex Counts, click here.

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The views and opinions expressed on this blog, except where otherwise noted, are those of the authors and guest bloggers and do not necessarily reflect the views of the Center for Financial Inclusion or its affiliates.