In the world of microfinance, there are two well-established models. The first, the NGO model, focuses on the very vulnerable and provides other transformative services like training in business, money-management and ethics. The downside is that the NGO model is very costly and therefore relies on outside donors.
The other model is the MFI model. This model runs more like a bank, sustaining its operations from the interest collected on loans. While this model is more self-sustaining because it requires little donor money, MFIs tend to focus on financial measures of success (like loan repayment and organizational solvency) rather than transformation among clients. Most MFIs avoid loaning to the poorest of the poor because of the high risk of those loans.
The Great Exchange is a small MFI in India (with approximately 35,000 borrowers) looking to have a big impact. They are seeking to create a new, biblical-truth-based model that is:
- Self-sustaining through its business operations
- Cultivating wholistic transformation among its clients
- Reaching the poorest of the poor.
As we partner with The Great Exchange to build this model, we are reflecting on questions like:
“Beyond repayment rate and total loans what other measures of success should we be using?”
“How do we bring truth to those who are receiving loans?”
“What does true transformation look like in this context?”
Beyond answering those questions, we are also partnering to bring staff training. This training seeks to give loan officers a vision beyond loan collection–helping them to see their role as bringing transformation and teaching them how to do that. In the process many loan officers experience transformation in their own lives. Finally, we are setting up new measurement systems to help create a culture where indicators of transformation, as well as repayment rates, are core measures of success.