Presentation on theme: "Social Performance in Microfinance"— Presentation transcript:
1Social Performance in Microfinance Presentation by Laura Foose, Alternative Credit Technologies, LLC November 9, 2005
2Social Performance Task Force Launched in March 2005 by CGAP, Argidius Foundation and the Ford FoundationMembership: 52 organizations20 NGOs9 Donors9 Networks/Associations2 Social Investor networks4 Microfinance Raters7 Action Research Programs/Universities3 Consulting groupsSubcommittee structure used to work on a common agenda developed by the task force
3Objectives of Social Performance Task Force Strengthen understanding of social performance and learn about relevant initiatives and toolsPromote social performance management at MFI level so as to ‘improve’ operationsBring various stakeholders together to establish industry-wide standards for social performance reporting, auditing, and social ratingExchange on current and planned work in social performanceThe task force is not imposing SP systems on MFIs, but rather facilitating such systems to develop in a way to meet local situations and specific cultural circumstances.Social Performance information can be used to “prove” outreach/outcomes to donors and can be used more importantly to “improve” operations…..making use of the information collected to respond to the needs of clients. The task force promotes this management foremost.
4What is Social Performance? Social performance is the effective translation of an institution’s social mission into practice(actions, corrective measures, outcomes).la actuación social de un instituto como la traducción efectiva de su misión social (acciones, medidas correctivas, resultados)Social performance is not just about measuring the outcomes but also about the actions and corrective measures that are taken to bring about those outcomes.
5Social Performance Management Questions 1. What are your social performance goals?2. How do you monitor who uses & who is excluded from using your services?3. How do you monitor & assess the effects on current clients?4. How do you monitor & assess the reasons why some clients leave?5. How do you use information to improve your services & achieve social goals?6. How do you review & improve the quality of your systems and processes?
6Benefits of Social Performance Better management (balance financial/social objectives, base line info., performance tracking, early warning systems)More client-responsive (appropriate services, more product choices, better customer service)Improved outreach and services (portfolio segmentation, understand client use, innovations, verify impact of programmatic changes, track impacts on clients)Improved financial performance (better client retention, growth, lower operational costs)
7Manifesto de Task Force Promover Resultados Sociales en Micro FinanzasHacia una línea base doble“Las Micro Finanzas funcionan mejor cuando se mide - y se revela- sus resultados.Información estandarizada y exacta sobre los resultados, tanto sobre los resultados financieros como los sociales, es indispensable.” (De “principios Claves” del CGAP aprobado por Los G-8).Nosotros los subscritores, como líderes en el campo de micro finanzas:1) Definimos la actuación social de un instituto como la traducción efectiva de su misión social (acciones, medidas correctivas, resultados)2) Reconocemos que medir el resultado financiero no es suficiente para medir el impacto que tiene micro finanzas en la vida de la gente pobre. Una línea base doble define el éxito como buenos resultados financieros y sociales, y que a largo plazo estos se esfuerzan mutuamente.3) Reconocemos además el creciente interés por donantes, redes, practicantes, fundadores y otros “stakeholders” en la evaluación, la aplicación y el mejoramiento de nuevas herramientas para fortalecer el desempeño social, monitoreo y informaciones.
8Manifesto con’t4) Apoyamos el desarrollo actual en el campo de monitoreo de resultados sociales, para organizaciones que tienen el mismo objetivo de promoción de la actuación social, pero cada uno con enfoques y perspectivas diferentes.5) Nos comprometemos aconvertirnos en pioneros para poner en práctica el monitoreo periódico, reportando y liderando los aspectos sociales de nuestras organizaciones y las organizaciones que apoyamosFormular objetivos sociales claramente especificados por nuestro organización;Diseñar, introducir y usar sistemas para manejar, examinar, monitorear y reportar sobre los resultados sociales dentro y fuera de nuestra organización;Usar la información sobre los resultados sociales para mejorar el efectos social de nuestras operacionesEstar abiertos a auditorias externas sobre los resultados socialesPromover y intercambiar ideas e información sobre los resultados sociales
9Work Plan of Task Force 2006Promote the spread and practice of Social Performance Management through training of practitionersEstablish industry social performance standards and a common reporting frameworkDevelop a common reporting site at the MIX to support reporting on social indicators and make double bottom line reporting a regular practice in the MF industry
10Social performance pathway “Effective translation of mission into practice”Reaching Target ClientsMissionGoalsObjectivesSystemsService Design & DeliveryChangeMeeting Client NeedsIntentDesign and inputsOutputsOutcomes ImpactGovernance/policiesmanagement/strategyOutreach/ Changesservices
11Current Initiatives and Existing Tools New InitiativesIntention and designCGAP Poverty AuditCERISESocial Rating(M-CRILPlanet RatingMicrofinanza etc)OutputsCGAP Poverty AssessmentMicroSaveUSAID/IRISAMAPAccionCouncil of MF Equity FundsCGAP/ FordFINCAImp-Act SPMMFCOutcomesAIMSImp-ActGrameen FND
12CERISE-Argidius SP Initiative: Objectives At the level of MFIsReporting system for stakeholders (MFI Board, management, external financiers, member- clients)Information for MFI strategic decision making and improved SP managementAt industry levelGreater transparency on social development achievementsAt national and international levelTo provide a base for comparison with other MFIs on the basis of widely accepted SP standards
13Conceptual FrameworkIntentionDesignPrinciplesProcessActionOutputOutcomeImpactEconomic & SocialPerformanceThe SPI approach: a self- assessment of principles, actions and corrective measures for internal use and external reporting.
144 Dimensions of Social Performance Outreach to the poor and excludedAdaptation of services and products to needs of target clientsImprovement of social and political capital of clientsSocial responsibility of the institution Score of 25 points each
15Outreach to Poor and Excluded Dimension 1:Outreach to Poor and Excludedmission of the MFIgeographic and socio-economic focustools for targetingsize of transactioncollateral
16Adaptation of Services Dimension 2:Adaptation of Servicesrange of servicesquality of servicesnon-financial services accessible to the clientsparticipation of the clients in the design
17Social and Political Capital Dimension 3:Social and Political Capitaltransparency of the financial transactionsclients representatives for consultation, decision-making or control of the MFIempowerment : social cohesion, voice of the clients with the national or local government
18Social responsibility of institution Dimension 4:Social responsibility of institutionhuman resource policysocial responsibility towards the clientssocial responsibility towards the local community
19Assessment with Action Social Performance Management (SPM) the systematic assessment of performance relative to social objectives and the use of information to improve practicedemonstrate program impactimprove program servicesRefer to guidelines in the binderAssessment with Action
20Social Performance: Six Key Questions what are your social performance objectives and how do you plan to achieve them?Who uses your programme’s products and services? Who is excluded?Why and when do clients leave or fail to fully utilise the available services?What is the effect/impact on current clients?How will you use information to improve your services?How do you maintain and improve the quality of the systems you use to answer these questions?
21Main components of Social Performance Management Developing a social performance strategyMonitoring and assessing social performanceInstitutionalizing and using social performance information
22Component 1: Developing SP Strategy Clarify mission and social goalsDefine clear and realistic performance objectivesSet measurable performance targetsDesign program (operational plan)Social peformance indicators cannot easily be globally applicable like financial performance indicators. Example of housing improvmeent that is very context specific, in Nicaragua could mean bringing in electricity, in rural Mali, would be more like getting a kerosene lamp in the home.
23Component 2: Monitoring and Assessing SP SP systems – two approachesroutine monitoringfollow-on researchSP systems – design (key questions)What information is needed? Who needs it?How will information be collected?From whom will data be collected?How frequently will the information be collected?Who will collect, collate, analyze and report information?Early warning == (early warning, base line info., tracking client use)Follow on research == (explore trends in routine monitoring, etc.)
24Component 3: Institutionalizing and Using SP InformationEnsure effective use of information feedback loopInstitutionalize SPM through management/board commitment and staff buy-inImprove SPM system through periodic reviews
25CGAP-Ford Social Indicators Project Develop indicators to track MFI social performance through monitoring outreach to the very poor and changes in client well-beingCreate common reporting format for MFIs across countries standardizationReport on social performanceof MFIs on MIX Market35 participating MFIs16 Asia6 Sub-Saharan Africa1 Northern Africa9 Latin America3 Eastern Europe
26Methodology Develop 2 sets of indicators industry indicators: 5 to 6 globally applicable indicators on different dimensions that can provide cross-country comparisonsproxy indicators: simple context-specific indicators developed by each MFIProxy indicators will be benchmarked to industry indicators so that MFI context-specific reports can be compared globally
27Methodology (cont’d) Criteria for selecting the indicators Have reasonable reliability/validityRelevance across a variety of national contextsCost-effective data collectionHow is the information collected?Existing client information from application formSimple low-cost small sample surveys
28Initiatives in Social Rating OverviewFrameworksIssuesIndicators and methodsCostSub-committee: M-CRIL, Planet Rating, Microfinanza, AccionWith contribution from: Imp-Act
29Rating and social performance SP definition: effective translation of social goals intopracticeSocial Rating must reflect and make explicit the:social goals and objectives in microfinancesystems within an MFI which are relevant to achievingthose objectivesenvironmental factors which affect MFI activity, andindicators of whether those objectives are[on the way to] being achieved.
30Social Ratings so far: ‘pilots’ Excludes questionnaire tests which did not result in reportsStand-alone reports:complement to the financial assessment of credit ratinga direct comparison of the ‘double bottom line’still some experimentation
31ObjectivesTo contribute to:Investment decisionsØ Transparency on social performanceØ Benchmarking social performance across MFIs, and toØ Encourage MFIs to improve their social performance(specific recommendations possible)Task:· To simplify and measure quite complex ideas· Adapt to different contexts and organisational models· Provide validity – reasonable levels of rigour/precision· Do so practically – at reasonable levels of time and cost
32Different frameworksCerise: social indicators project - dimensions of corporatesocial responsibility (CSR - clients, employees, community)+ mF specific dimensions (depth of outreach and adaptationof services) [starting point for some rating agencies]Rating agencies/M-CRIL: the Imp-Act pathway and creditrating approach (focus on MFI and clients)
33Working hypotheses in rating the risk profile and creditworthiness of an MFI dependscritically on its financial performance,the social profile of an MFI depends critically on its outputs(depth of outreach and appropriate products),but both are also affected byits managerial capabilities and governance
34Social performance pathway “Effective translation of mission into practice”Reaching Target ClientsMissionGoalsObjectivesSystemsService Design & DeliveryChangeMeeting Client NeedsIntentDesign and inputsOutputsImpactGovernance/policiesmanagement/strategyOutreach/servicesSOCIAL RATING
35Generic social values (clear and agreed) – or specific to Social benchmarking?Generic social values (clear and agreed) – or specific toeach MFI’s situation, model and stated objectives?E.g. not all MFIs target women, target the poor, apply groupbased model (social collateral), can legally offersavings productsConsiderable debate: try to balance bothGeneric is important to compare across the industry(countries, models); and has to make sense for specific MFIReflected in selected dimensions and what is scored
36The dimensions of a social rating Similarity in scope and content:Social mission, systems, strategyOutreach – depth and breadthAppropriateness of financial servicesSocial responsibility to clients“ to staff“ to communityDifferences in grouping, and in scoring1-3 are fundamental, can be scored (equal weights)4 may be scored as part of 1 and 35-6 difficult to score; can be described
37Parameters: social mission & systems MainMission: clarity, communication, commitment (board/mang’t)Systems aligned with stated mission: approach to targeting;staff incentives; reporting/monitoring and use ofinformation/findings (e.g. market segmentation,client data/feedback, dropout data/feedback)Relationship with clients: transparency, ensuring awarenessProvision of or linkage with non-financial services – described
38Indicators: OutreachOperations in poorer areas (more remote, poorer within moredeveloped areas, e.g. urban slums)Clients who are poor - % and numberHired employment in micro-credit supported enterprises% clients not served by formal financial services% clients not served by other MFIs% clients from marginal groups/communities
39Indicators: Financial services Range of financial services (within regulatory guidelines)Process of product developmentClient awareness/understandingClient satisfaction: products, EIR, timeliness, comparisonwith alternative sources(if applicable) Effective group systems (regularattendance, updated passbooks, transparency of transactions)Client exit – dropout ratePoverty assessment of dropouts, reasons for exit