Achieving Financial Sustainability: Six Key Strategies for Microfinance Associations

How can microfinance associations achieve financial sustainability?
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This paper outlines the six key strategies that microfinance associations (MFAs) could use to sustain themselves financially:

  • Strategic planning: The MFA needs to analyze its current situation, decide its long-term goals and then devise strategies that would help it achieve those goals;
  • Development of demand driven, fee based services: The MFA should initially offer its members only a few demand driven services and successfully deliver them, before offering an expansion in its range of services;
  • Member contributions: The MFA could charge flat annual membership dues or it could use a sliding fee scale structure. It could also accept in- kind contributions;
  • Donor contributions: The MFA could try and establish contact with a long list of donors or it could focus on building long lasting relationships with just a few;
  • Effective marketing techniques including:
    • Keeping members, donors and other stakeholders informed about its activities;
    • Keeping the MFA's profile high by attending and speaking at seminars, conferences, etc. and also writing articles.
  • Diversifying the sources of funds: MFAs have started adopting new and innovative ways of attracting funds. Some of these are:
    • Using students to design MFA websites;
    • Attracting sponsorships from the private sector;
    • Brokering partnerships between the private sector and MFIs, that lead to win-win relationships;
    • Seeking funds from government organizations that are also interested in the micro finance sector.

The author concludes that these 6 strategies would provide new insights to MFAs and would help them attain financial sustainability.

About this Publication

By McAllister, P. & Tenn, S.