A proposal for sustainable development through microfinanceThe following proposal summarizes the history of the microfinance sector, in particular its successes and failures, a model for developing a sustainable microfinance initiative. At the heart of this synthesis is the analysis of the strengths and weaknesses, challenges and opportunities, as well as characteristics of three well-managed microfinance institutions (“MFIs”): Grameen Bank (“Grameen”), Compartamos and Friendship Bridge (“Friendship”). . These analyzes highlight the strategic leverage points – business strategies, organizational structures, financial reporting transparency, performance measures and organizational goals – that determine the success of microfinance initiatives. These strategic levers in turn shape the framework for developing a prudent microfinance initiative. Microfinance emerged from Muhammad Yunus's microcredit poverty alleviation strategy – providing small, short-term, unsecured loans to the poor. Briefly, Yunus founded the microfinance institution Grameen Bank after a successful experiment in providing loans to poor women in Bangladesh revealed that the poor were able to repay their debts at a high rate and could benefit from a access to credit. The high repayment rate, around 98% according to Yunus, meant that a commercial bank could become financially viable while providing loans to the poor as a method of poverty alleviation. Furthermore, access to credit gives the poor the opportunity to escape poverty. Grameen's rapid success has led to the popularization of microfinance's ability to alleviate poverty and, therefore, provides valuable insights into effective microfinance business strategies,...... middle of article. ..... that future competition would force Compartamos to reduce its rates. ultimately if it was blatant. Compartamos leveraged its organizational structure to achieve its goal of growth and financial sustainability. Compartamos' focus on profitability and bank-chartered organizational structure produced high-quality reporting, rapid growth and, through its IPO, provided evidence that microfinance could provide significant returns to investors while helping the poor. However, Compartamos' financial success is believed to exploit the poor through high interest rates and microfinance mission creep. These strengths and weaknesses highlight the limits of the search for financial performance rather than social impact in the microfinance sector. The history of the microfinance industry provides a framework for understanding why some MFIs succeed and others do not..