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Library » Institutional Culture and Transformation: From NGOs to Market-led MFIs

Institutional Culture and Transformation: From NGOs to Market-led MFIs
Jul 2009, Leonard, M.

Managing the shift in institutional culture accompanying transformation

This note focuses on the experiences of Indian NGO-MFIs, and offers insights on managing the institutional culture shift that accompanies transformation.

Some of the largest and most successful MFIs in India have transformed from NGOs into regulated for-profit companies or banks. A diverse group of smaller, nascent NGO-MFIs that make up the large majority of MFIs in India are also increasingly opting for transformation. There are two primary cultural shifts that take place in transforming MFIs:

Moving from grant-funding into a much higher risk profile, such as accessing debt from banks, on-lending funds and ensuring repayments in order to meet its commitments;
Fostering an attitudinal and behavioral change throughout an organization built on purely social foundations.

Transformation from a social environment to a more business-like one should be gradual and incremental. MFI leadership should consult with stakeholders at all levels, the Board, staff and clients, and build consensus for change before, during and after transformation. Ultimately, as NGOs transform successfully to market-led MFIs, they are often better able to grow, mobilize funds and meet the needs of the poor.

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