On Corporate Social Responsibility

Thanks to the Nobel Committee’s recognition of Muhammad Yunus and the Grameen Bank, microfinancing is now getting the attention it deserves. The New Yorker profiles the various approaches to microfinance. As with many projects that start out well-intentioned, some microcredit institutions are reconsidering altruism in favour of profit-driven, commercially-sustainable models.

The debate is about much more than purity of motives. The Yunus faction worries about “mission drift,” saying that, as the drive for profitability increases, only the so-called “less poor” (as opposed to the very poor) will qualify for loans. “On the one side, there are the people saying, essentially, We want to be Citigroup for poor people,” said Jonathan Lewis, the C.E.O. of MicroCredit Enterprises, which provides loan guarantees from wealthy donors to institutions that serve mainly the poorest women. “But, on the other side, we’re saying, We didn’t start this to become a bank. We started this to end poverty. So we’re going to experiment with all the different ways, profitable or not, that we can work with our constituencies—who are our customers, not our shareholders. If your core mission is to provide a channel out of desperate poverty, it creates a different set of questions than if your mission is to create a global market in microfinance futures.”

Read the full article here.