FINCA’s Journey from Non-Profit to For-Profit

Friday, May 18, 2018

By David McCann

For a company to make money, it helps if its employees have a money-making mindset. But that’s not what Roman Hingorani found when he joined FINCA International as its CFO in 2015.

FINCA was formed in 1984 as a non-profit microfinance organization providing business loans to economically disadvantaged entrepreneurs in developing countries. It acquired capital largely through grants.

By 2012, it became apparent that relying on grants would no longer be a sustainable approach to its mission, Hingorani tells CFO. So the organization created a for-profit joint-stock company. The idea was that by acting more like a traditional financial institution with a business purpose rather than only a charitable one, profits would follow.

It didn’t work.

“They tried to operate it with the staff of the original non-profit,” says Hingorani, who initially was CFO of both the for-profit and non-profit entities. “For example, I had a head of FP&A who had previously been with another major non-profit organization. If you don’t have banking professionals running a bank, it’s very hard to succeed. You create value by having people with the right mindset.”

 

Source: CFO (link opens in a new window)

Categories
Investing
Tags
financial inclusion, microfinance