Spinning Off for Sustainable Microfinance: Save the Children Federation into JWDS, Al Majmoua, and FATEN

This paper examines how microfinance programs are spun off from their parent organizations to form new entities. It draws lessons from the spinning off of Save the Children's microcredit programs in Jordan, Lebanon and the West Bank and Gaza, the Jordanian Women's Development Society (JWDS), Al Majmoua and Palestine for Credit and Development (FATEN).

Most microfinance programs in the Middle East and North Africa are lodged in larger parent organizations. These institutional forms may be appropriate in the early stages, but they are likely to block program development. A microfinance program should gain access to commercial funds in order to decrease donor dependency, achieve growth and become sustainable.

Save the Children, JWDS, Al Majmoua and FATEN currently function as independent entities. Their experiences demonstrate the importance of:

• Regulatory and legal issues and institutional governance structures in achieving sustainability;
• Instilling a sense of responsibility and ownership in the new board of directors;
• Timing and technicalities of transferring management information and accounting systems;
• Developing a good working relationship between parent institution and spin-off;
• Defining donors' role;
• Developing a sole-purpose, independent MFI rather than continuing in a program-based setting.