APRIL 2010
Social Performance Framework and Initiatives
Part I: Defining Social Performance
Serving increasing numbers of poorer and more excluded people sustainably
Improving the quality & appropriateness of financial services through assessment of clients’ needs
Increasing clients’ social capital, assets, income, and access to services
Reducing clients’ vulnerability
Improving social responsibility of the MFI toward clients, employees, and communities
Definition of ‘Social Performance’
The effective translation of an institution’s mission into practice in line with accepted social goals such as:
Managing for Results
Performance is not incidental.
What is explicitly defined and measured is what is managed.
Need to define desired performance.
Need to measure results against desired performance.
Mission
Performance Management
Social Performance
Financial Performance
Dimensions of Social Performance
INTENT AND DESIGNWhat is the mission of the institution?Does it have clear social objectives?
INTERNAL SYSTEMS & ACTIVITIESWhat activities will the institution undertake to achieve its social
mission? Are systems designed and in place to achieve those objectives?
OUTPUTSDoes the institution serve poor and very poor people?Are the products designed to meet their needs?
OUTCOMESHave clients experienced social and economic improvements?
IMPACTCan these improvements be attributed to institutional activities?
Part II: Indicators and Tools for Social Performance
Social Performance Indicators Framework
Process
Results
Q1–Mission & Social GoalsQ2-Governance
Q3–Range of Products and Services (financial & non-financial)Q4–Training of staff on social performance Q5–Staff performance appraisal and incentivesQ6–Market research on clientsQ7–Measuring client retentionQ14–Poverty assessment
Q11- Geographic outreachQ12- Women outreachQ13- Clients outreach by lending methodology
Q17-ProductsQ18–Employment (Family & Hired in credit supported ents.)Q19–Children in School (girls/boys)Q20–Poor and very poor clientsQ21–Clients in povertyQ22–Clients out of poverty
Q8– Social responsibility to clientsQ9-Cost of services to clientsQ10–Social responsibility to staffQ15 – Social responsibility to the communityQ16–Social responsibility to the environment
MFIs that want to update their profile on MIX Market with the social performance indicators are expected to be able to report information on the 13 indicators contained in Part I of the report (indicators highlighted in yellow).
Assessing Social Performance - Initiatives and Tools
StrategyAchievement of Social Goals
Business
Planning
Outputs - Outreach
PPI/PAT – poverty levels at entry
MISION tools
Policies and Compliance
Smart Campaign client protection
MicroFinance Transparency – costs to clients
Human Resources Policy/
Manual
FMO – Health, Safety and
Environment
Market Research for product development, client satisfaction, exit surveys
Staff training, appraisal and incentives
MIS tracking – outreach to target areas; retention; dropout; gender disaggregation
Outreach OutcomesPPI/PAT– poverty levels of client households after 3 years
Tracking other profile indicators over time
Client Exit Rate (dropout or graduation?)
Audit Tools for Assessing Social Performance
Take into account an MFI’s records, statements, and internal processes/procedures related to social performance
Goal is to assess the quality and meaningfulness of an organization’s claimed social performance
Audit tools may or may not include outputs
Usually applied internally, sometimes externally (investors & donors) and internally
EXAMPLE:
Social Performance Indicators (SPI ) Tool
Standardized questionnaire
Evaluates whether actions & strategies are in line with social objectives
Over 250 MFIs have administered the SPI either alone, with their network, TA provider or social investors.
Developed by CERISE: www.cerise-microfinance.org
Rating Tools
External opinion on an MFI’s intent, and capacity to achieve their social mission and generate social returns
Examine MFI’s internal processes and analyses portfolio/client data (outputs)
Stand-alone or accompany a financial rating
Grading based on a standardized rating scale
EXAMPLE: Microfinanza Rating Social Rating
Focuses on consistency of practice with mission and values
Assesses: governance, business planning, market development, HR, MIS, and internal audit
Includes client level data to profile outreach and quality of services (questionnaire and focus groups); includes PPI
Stakeholders Invested in Social Performance
MFIsInvestors and DonorsNGO NetworksMicrofinance Associations
MFIs as Stakeholders
Social performance data inform management decisions and preempt problems.
Client-centered products and strong client protection attract and retain clients.
Strong social performance attracts donors/ investors.
Reporting social performance data demonstrates social focus and transparency to investors, donors, and the public.
MFIs in Practice
“Social performance management and reporting keeps a check on our strategies, planning processes, products, and programs, which in turn helps us to assess the changing needs of the community.” -Evangelical Social Action Forum (ESAF), India
“Social performance reporting should be as important to an MFI as financial reporting. Neither tells the whole story alone. Internally, we need to know whom we are reaching and if we are changing lives. Investors and donors deserve to know as well.” -FONKOZE, Haiti
Investors & Donors as Stakeholders
Social performance data inform investment decisions.
Social performance measurement, monitoring and reporting are superior to anecdotes.
Client-centered MFIs are a good investment because they attract and retain clients.
Social performance data are reported to fund investors who seek a social return on their investment.
Investors yield power over the data MFIs collect by the questions they ask & reporting requirements.
Investors & Donors in Practice
“We want our investments to go to the best problem solvers, not the best storytellers.” - Acumen Fund
“We want to invest in MFIs who retain their clients because they offer tailored services, pay attention to client satisfaction, are committed to client protection, and are making a difference in their communities.” –BlueOrchard
Part III: Living up to the Promise of Microfinance
Challenges for the Industry
Challenge 1: Representing ourselves accurately (honestly), recognizing that institutions have different aims
Challenge 2: Living up to the promise of microfinance—creating positive changes in the lives of clients
Challenge 1: Representing Ourselves Accurately
•Know who you are and do not claim to be more.
•Which type of MFI are you?•Which type of investor are you?
Challenge 2: Living up to the Promise of Microfinance
First step: Responsible finance—the practice of the six principles of client protection:
1.Avoidance of over-indebtedness2.Transparent pricing3.Appropriate collections practices4.Ethical staff behavior5.Mechanisms for redress of grievances6.Privacy of client data
First step: Responsible Finance
Responsible finance is essential to social performance, but not synonymous.
Mission is to provide the poor with access to financial services
MFI targets the poor with products & services that do not harm them.
Products and services delivered to the poor adhere to the client protection principles.
Does not address outcomes.
Second Step: Social Performance
Social performance is the effective translation of an institution’s mission into practice.
•Clients make progress out of poverty•Increased food security•Products and services meet diverse life-cycle needs•Clients are satisfied and have input•Non-financial services (health & education) speak to development needs•Staff & environment benefit
✔ ✔✔
Meeting the Challenges
The Social Performance industry has developed a variety of tools for meeting these challenges:
1.Define where you are on the spectrum with the SPTF/Mix Social Performance Indicators
2.Assess your compliance with the principles of client protection with the Client Protection Self Assessment
3.Measure your outreach to the poor—Poverty measurement tools. PPI and PAT
4.Microfinance Transparency – Interest Rate Calculator.
Meeting the Challenges (Continued)
5. Clarify your social goals and recommend solutions for improvement—social audit tools.
6. Validate and communicate your social strengths and weaknesses—social rating tools. Co-funding available from www.ratinginitiative.org
7. Measure client-level indicators—food security surveys; client satisfaction surveys; exit interviews; market research for product development.
Thank youFor more information:
• Contact Laura Foose at the Social Performance Task Force: [email protected]
•Go to: www.sptf.info