Competing Business Models and the Microfinance Double Bottom Line

The first “crisis of conscience” in microfinance did not revolve around mission drift towards larger loans and serving less poor clients as many expected. Instead, it came from a clash of ethics over the production and distribution of profits associated with the Compartamos public share offering in 2007. At the heart of the discord were interest rates of over 80 percent generating return on equity over 50 percent, and leading to original investors earning 270 times their investments. Some cheered these results as proof positive microfinance could integrate successfully in conventional financial systems while others were outraged that so much was made by so few from lending to poor rural Mexican women.