Social Entrepreneurship Case Study

Case Title:

Mercy Corps’ Bank Andara in Indonesia: Delivering Socialism through Capitalism

Abstract:
Why would an NGO take over a commercial bank? Interestingly, a US-based NGO, Mercy Corps, took over an Indonesian commercial bank, Bank Andara, in 2008. Mercy Corps, through its acquisition of Bank Andara is aiming at the financial inclusion of Indonesian poor by extending its support to the local Microfinance Institutions (MFIs), both in the form of financial and technical assistance. In the process, the bank intends to operate as a self-sustainable model by generating revenues on its own than relying on aid. However, with the decrease in charitable giving, NGOs such as Mercy Corps are fast realising the need to increase their reach to the poor by adopting a corporate approach towards resolving social problems.

This case study also enables to understand how Mercy Corps is coming out with innovative approaches to tackle some of the long-existing social problems, effectively. It provides insights about how Mercy Corps’ ‘community-led and market-driven actions’ are helping the distressed to overcome the challenges of difficult times. The case particularly raises an interesting discussion on how social entrepreneurs are using profit ways to achieve social objectives and whether these can be accomplished with a commercial approach (in this case, acquisition of a commercial bank).

Pedagogical Objectives:

• To understand the growing significance of social entrepreneurship and inclusive business models
• To understand how social entrepreneurs are bridging capitalism (for profit objective) with their social mission
• To understand how Mercy Corps’ acquisition of Bank Sri Partha (renamed as Bank Andara), helps in attaining its social mission
• To analyse whether this innovative approach helps in making Mercy Corps’ business model successful.

Keywords : Mercy Corps, Bank Andara, Microfinance in Indonesia, Microfinance Institutions(MFIs), Grameen Bank, SKS Microfinance, Microfinance, BIMAS Rakyat Programme, Bank Rakyat Indonesia (BRI), Asian Crisis, Bottom of the Pyramid

Contents:

• The Need for Microfinancing
• Microfinance in Indonesia
• Mercy Corps: The Change Agent
• Community-led and Market-led Programmes
• Mercy Corps'Acquisition of Bank Andara: The Bank of Banks
• Social Mission with a Business Approach: Will it be a Successful Model?