Measuring the trade-off between outreach and sustainability of microenterprise lenders

Abstract

The progression of microfinance NGOs from small, money-losing operations to large providers of banking services to the poor involves many risks. Unless these risks are managed successfully, the conflict between the objectives of outreach and sustainability becomes destructive to both. Several analytical tools based on accounting data and financial analysis can monitor progress toward sustainability with expanding outreach. These should be routinely applied by microfinance providers and the donors that sponsor them.