A Case Study of NGO’s Profit-Seeking Business Model in the Microfinance Sector in Emerging Markets

Abstract

Non-government organizations (NGOs) aim to support people in need through programs that are primarily related to basic human needs. However, in recent years, in many emerging countries, the role and activities of NGOs have shifted more toward profit maximization through microfinance programs. This shift toward commercialization has profound consequences for its beneficiaries and the overall sector’s brand image. This study mainly aims to understand the reasons behind this shift from the NGO’s perspective, in other words, why NGOs have shifted their activities from social development to commercial ones.

The study's research design is qualitative, meaning it focuses on gathering descriptive information. Ten semi-structured interviews were conducted to collect primary data. These interviews involved specialists from the NGO sector in Bangladesh, specifically those in middle to top management positions within prominent NGO-based microfinance organizations. This group of individuals holds influential roles and plays a significant part in decision-making. By interviewing these managers, the study aims to gather primary data, gain a deeper understanding, and provide context. This research contributes to the existing literature on NGO commercialization and the overall sustainability of the sector. The data collected from the interviews will be analyzed using thematic analysis, which involves identifying key themes and patterns related to the reasons behind NGOs adopting commercialization and profit maximization approaches.

This master's thesis reveals that not any single cause was solely responsible for the commercialization of the NGOs. Instead, a set of five aspects contributed to this shift. The shifting elements are organizational, donor, market, financial, and insufficient regulatory authority factors in Bangladesh. Also, to balance between commercialization and social development activities by NGOs, government and NGO regulatory authorities should step up with achievable agendas.