In group-based microfinance, success in attaining the goals of inancial sustainability and poverty reduction is crucially dependent on the sustainability of groups as organizations. This article argues that as mounting tensions arise between financial sustainability and organizational sustainability, this produces fundamental instability within groups and a tendency for the system to collapse. What is more, tensions tend to lead to the fracturing of groups and greater exclusion of the poor, creating negative impacts on well-being. The article discusses how tensions between financial and organizational sustainability can be minimized, and suggests that incentives should be put in place to strengthen groups.
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