Protecting and regaining clarity of mission in the microfinance industry

Purpose The paper's aim is to thoroughly examine solutions to mission diffusion and mission drift in the microfinance industry. Design/methodology/approach Extensive field experience relating to individual microfinance institutions and industry trends provide the grounding for a review of the trade and academic literatures in microfinance and social enterprise management. Findings Mission diffusion arises from pursuing diverse approaches to poverty alleviation and addressing disparate and changing stakeholder interests. Mission drift arises from commercialization and conversion activities aimed toward enhancing ratings and achieving scale. Mission clarity can be regained through clarification of the mission along with more effective corporate governance and performance management systems, and a research function. Practical implications The tension between financial and social performance is not merely ideological – economic realities make it almost impossible to stay on mission. Understanding these realities can help microfinance institutions maintain and regain clarity of mission. Originality/value The paper sheds new light on solutions for challenges of mission drift and diffusion in the microfinance industry. Addressing this would enable the industry to deliver on promises of poverty alleviation during a period of heavy demand rapid scaling.