Stanford Journal of Microfinance Volume 1 (2008) The Rise of Cross-Sector Partnerships in Microfinance: Environmental Causes and Future Potential

Abstract: Microfinance, like every other solution to poverty, is neither simple in its implementation nor perfect in its outcomes. The basic premise of microfinance is that by providing the poor with access to financial services they will be able to lift themselves out of poverty. Beneath this simple idea lie deep methodological disagreements and sectoral limitations that can frustrate cross-sector cooperation. Non-governmental organizations (NGOs) and private bank operate with very different ideologies, which in turn influences each sector to approach microfinance with a unique program structure and design. Individually, each sector has distinct advantages and limitations in the field of microfinance. Cross-sector partnerships are a tool that merit further exploration for microfinance institutions (MFIs) because such partnerships allow each sector to emphasize it strengths while actually reducing its limitations to providing financial services. First, I will discuss the theoretical and practical challenges to working in microfinance that face the governmental, NGO, and private profit sectors. Then I will look at the methodological and ideological differences in microfinance practices found between NGO-based and private bank operations. I will show that while NGOs and private banks certainly maintain different fundamenta