Guideline for selection of Partner Organization (PO) of PKSF

Guideline for selection of Partner Organization (PO) of PKSF cos

, such as salaries and administration costs, through its interest earnings. PKSF’s interest income from loans both ensures operational sustainability and covers bad debt expenses and financial expenses incurred in making loans and thus it is financially sustainable. With operational and financial sustainability already achieved PKSF is committed to attain economic viability.

PKSF has also achieved institutional sustainability. PKSF has a well defined, highly transparent and proactive governance system. Its governing body includes persons with international reputation in the field of rural development, poverty alleviation and microcredit. Its management cadre consists of individuals having distinctive academic record and high degree of professional efficiency and commitment. No individual or person dominates PKSF policy or management. Although it is created by the Government and funded by and through the Government it enjoys operational autonomy. All these factors have contributed to PKSF’s institutional sustainability.

          Sustainability of POs

Fundamental policies to run a successful rural credit program are in place in many POs. Selection of members, savings and loan policies, portfolio management, financial control, and monitoring and evaluation are some of the fundamental areas of policy formulation.

So far, many POs within their limited capacity have tried to recruit competent staff.  POs do not have adequate financial resources to recruit staff with better educational attainment and competence.  Many POs are being managed by their founders and expected to do so for quite some time.  Leadership by the present directors at this early stage of the organization is important for growth and sustainability. Many POs either have physical assets like office buildings and land or purchased land for construction of office, training center, etc. This shows a clear commitment from the part of the organizers for giving POs a solid foundation.

The basic issue in financial viability analysis is whether POs can cover the costs of managing their credit programs from the income of the programs, mainly the service charge from loans. Some POs have been successful by gradually covering the cost of operations from the income of the credit program and generating a moderate surplus.  It is expected that all POs will continue to improve their profitability.