From Social Rating to Seal of Excellence: Utility or Futility?

6 Pages Posted: 21 Jul 2011 Last revised: 29 Oct 2011

See all articles by Arvind Ashta

Arvind Ashta

CEREN EA 7477 Burgundy School of Business - Université Bourgogne Franche-Comté

Vitalie Bumacov

Oxford Brookes University

Date Written: July 14, 2011

Abstract

The microfinance sector stated with a promise of being good for poverty reduction. Thus, there was a social bottom line. Instead of giving charity, we were giving loans which help make the poor responsible and entrepreneurial. Thus microfinance developed with a strong social bottom line brand image. Donors rushed in. It was soon clear that if the MFI is not durable over time, then the social impact is minimal. Since donors are subject to fads, we need to wean away the sector from free funds and grants. Thus, we brought in the double bottom line: profits and social impact. The brand image of microfinance got modified: diluted as well as reinforced: diluted, because in addition to making poor people responsible and entrepreneurial, we were insisting that the MFIs themselves be responsible and economically sustainable; reinforced, because it now indicated that both the poor and the IMF associated with the movement would eventually not require donor finance. It seems that the double bottom line mission has generally become reduced to a focus on profits as MFIs realized that there is money to be made and that the amount of profits depends on scale. The rush to scale and taylorism made one forget the social impact. Can social rating or social labeling reinforce the social mission?

Keywords: social rating, social labeling, microfinance, MFI, double bottom line

Suggested Citation

Ashta, Arvind and Bumacov, Vitalie, From Social Rating to Seal of Excellence: Utility or Futility? (July 14, 2011). Available at SSRN: https://ssrn.com/abstract=1890682 or http://dx.doi.org/10.2139/ssrn.1890682

Arvind Ashta (Contact Author)

CEREN EA 7477 Burgundy School of Business - Université Bourgogne Franche-Comté ( email )

29 rue Sambin
21000 Dijon
France

Vitalie Bumacov

Oxford Brookes University ( email )

Gipsy Lane
Headington
Oxon. OX33 1HX, OX3 0BP
United Kingdom

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