NextBillion.net - Development Through Enterprise - Imagination with Realism: What Works for Microfinance - Comments

BabyBoomer Talent for MFI's

Betsy - GreenMicrofinance — Wed, 11 Jun 2008 15:53:41 -0400

You mention utilizing the talents of recent retirees. There is a vast pool of very healthy, relatively young early retiree baby boomers - looking for meaning and to give back, who are satisfied with modest compensation but don't want to be volunteers in the traditional sense. We don't even have a name for this demographic yet - some have suggested "paid volunteers". It would be smart to have some MFI training programs for this crowd, building on their expertise and filling in where they need skill-building - in all modes of electronic communication, trend in MFI's, etc. This demographic likes to travel and see the world. MFI projects can certainly help with that, along with idealism!

The Toughest Job You'll Never Get

Rob Katz — Wed, 11 Jun 2008 10:20:34 -0400

You are both right. There is a role for short-term volunteers, especially when they bring hard skills from the business world (i.e., recently retired executives looking to give back) or can drive specific changes for an enterprise (i.e., helping them secure export permits or building their web site). I think this is what Pin-Quan Ng is driving at - and I agree.

Still, I think Nitin is correct that microfinance institutions - and social businesses as a whole - are hurting themselves in the long term if they don't allow their senior leaders to make market or close-to-market salaries and/or take equity stakes (stock options) in the firm.

Ironically, this is the very point made by Alana Conner in an article published along with Alex Counts' in the latest Stanford Social Innovation Review: The Toughest Job You'll Never Get. To be sure, Conner's piece focuses on the domestic (United States) nonprofit Executive Director position, but it has lessons for all social enterprises and nonprofits.

Fad Talent

Nitin Rao — Wed, 11 Jun 2008 09:59:28 -0400

Pin-Quan Ng, Thanks for your comment. There is no denying that talent available for the short-term adds significant value. Indeed, my previous post (-changing-development-sector...) spoke about just this. However, this only underscores the need for the sector to attract/retain sustainable talent for senior executive positions - the ones which Alex Counts refers to in his SSIR article.

talent retention

pin-quan ng — Tue, 10 Jun 2008 22:47:10 -0400

>>the fact that the development sector is increasingly dependent on a large chunk of "fad" talent that is attracted to development for the very short term>> I wouldn't be so quick to dismiss the value of volunteers who might not be able to commit themselves to a full-time career in development yet, or even those just looking for a hook in their b-school essays. They are probably more likely to make a switch back to development at some later stage, volunteer on a part-time basis, or at least retain some of the idealism of the sector throughout their professional lives. It also helps build that critical mass in which future top managers will have their formative experiences in development/ social enterprises as much as they do now in say, management consulting and private equity.

Imagination with Realism: What Works for Microfinance

Nitin Rao — Tue, 10 Jun 2008 14:22:05 -0400

Microfinance, in its for-profit avatar, is attracting capital, talent, blogposts - you name it - and a fair bit of criticism. So when Alex Counts, President & CEO of the Grameen Foundation proposed his vision for Reimagining Microfinance in the Stanford Social Innovation Review, he targeted the right issues. The problem, as I see it, is that elements of Counts' vision are simply not realistic.

I agree with Alex that microfinance is better placed as a platform from which to develop and distribute a range of products and services—not just financial ones. I also agree that microfinance institutions stand to gain by structuring themselves to gain from high volume, not high margin models. This will help not just in terms of revenue, but also in terms of managing what can be a precarious political environment for MFIs and their investors.

An excerpt from an article (The Big Trouble With Small Loans) in TIME Magazine illustrates the line MFIs must tread:

Consider the time a bank chairman asked if SKS could raise its interest rates. Akula said yes (in most markets it has a monopoly) but that SKS wouldn't do so because it would be exploitative. The banker scoffed that Akula didn't understand economics. Akula shot back that the banker didn't understand customers, who would turn on SKS if they felt abused. "We're maintaining a loyal customer base that will stay with us as they get out of poverty," says Akula.

(Full disclosure: I work at SKS Microfinance)

However, in my view, Counts goes too far and becomes too idealistic in the proposals that follow.

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