For years, microfinance appeared to be one of the most promising means of fighting poverty and underdevelopment worldwide. With all the hype, it then became a kind of global movement—a hybrid combining social good with economic goods, morality with moneymaking. A few years ago, the Nobel Peace Prize committee hopped on the bandwagon and laureated Yunus.

Over the last year, however, MF has faced a growing crisis, primarily in parts of India and in Bangladesh. It has also apparently suffered from the economic downturn like much of the rest of the lending industry–of which it is clearly a part notwithstanding its social aspects.

In many ways this is a sad but predictable moment. After the oversell, reality always hits hard. For me, the interesting question is how microfinance as a movement responds to its crisis—and more generally how other social movements do so. (Some might quibble about whether MF should be considered a social movement, but I think of the term broadly—and don’t want to get bogged down in definitional squabbles.) To my knowledge this is an important but understudied issue—one that goes well beyond microfinance in its significance to activists and presumably to scholars.

In business schools and among corporations, a similar kind of issue seems to have been tackled previously. There have been a number of books written and fortunes made about “crisis management”–for companies facing major scandals or owning up to big errors. Think BP, Shell, Tylenol, etc. Of course the situation is different for an individual company than for an entire industry (e.g., nuclear power in the wake of Chernobyl or Fukuishima).

These business sources may provide some practical ideas for the MF industry and individual lenders to tackle their crisis. But, I’m wondering whether anyone can suggest ideas from political science or sociology that might be relevant to this kind of question: How does a social movement deal with a crisis, i.e., a series of events that calls its methods and even its goals into serious question? I have a graduate student researching the conceptual and empirical issues, but speaking off the cuff, it seems that there are a number of typical responses:

1) Deny, deny, deny.

2) Counter-Attack: go for the message as well as the messengers, especially their jugulars.

3) Purify: if #1 and #2 fail, rid yourself of the bad apples or bad approaches, best through public ritual. In a broad movement, rather than a single organization, this may be difficult. Distancing may be the most feasible approach.

4) Re-dedicate: loudly restate your belief in remaining principals and principles.

5) Re-authenticate: deploy your most authoritative “objective” allies to restate their deep belief in your principals and principles. A Nobel or two in your stable usually helps.

6) Divert: change the subject, by pointing to your many successes, preferably in realms distant from the one that got you into trouble.

7), 8), 9): Please add your ideas–both additional strategies and any relevant literature on the issues.