Sustaining Service to the Poor through the Transformation Process of the Commercialization of Microfinance: The Experience of CARD Bank in the Philippines

This study critically reflects on the risk of mission drift through the transformation process.

Several microfinance NGOs are transforming themselves into regulated financial institutions to enhance developmental impact. Critics, however, argue that this will lead to a trade-off between financial self-sufficiency and reaching the poor. This paper draws on evidence taken from wealth-ranking activities done in the Philippines to check the validity of this allegation.

CARD NGO was founded in 1986, and transformed into a bank in 1997. The wealth-ranking exercise was conducted in one of CARDs bank branches. The study reveals that mission drift is not an automatic consequence of transformation. The study states that:

• CARDs mission and vision from inception was to establish a bank owned and controlled by the landless rural poor;
• Recent developments in the industry that pushed for commercialization helped CARD realize this vision;
• Socio-economic make up of CARD clients after transformation shows that integration of the profit objective did not obstruct its service to poor clients.