1. Social Performance in Microfinance
Presentation by Laura Foose, Alternative Credit Technologies, LLC November 9, 2005

2. Social Performance Task Force
Launched in March 2005 by CGAP, Argidius Foundation and the Ford Foundation
Membership: 52 organizations
20 NGOs
9 Donors
9 Networks/Associations
2 Social Investor networks
4 Microfinance Raters
7 Action Research Programs/Universities
3 Consulting groups
Subcommittee structure used to work on a common agenda developed by the task force

3. Objectives of Social Performance Task Force
Strengthen understanding of social performance and learn about relevant initiatives and tools
Promote social performance management at MFI level so as to ‘improve’ operations
Bring various stakeholders together to establish industry-wide standards for social performance reporting, auditing, and social rating
Exchange on current and planned work in social performance
The 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.

4. What 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.

5. Social 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?

6. Benefits 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)

7. Manifesto de Task Force
Promover Resultados Sociales en Micro Finanzas
Hacia 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.

8. Manifesto con’t
4) 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 a
convertirnos en pioneros para poner en práctica el monitoreo periódico, reportando y liderando los aspectos sociales de nuestras organizaciones y las organizaciones que apoyamos
Formular 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 operaciones
Estar abiertos a auditorias externas sobre los resultados sociales
Promover y intercambiar ideas e información sobre los resultados sociales

9. Work Plan of Task Force 2006
Promote the spread and practice of Social Performance Management through training of practitioners
Establish industry social performance standards and a common reporting framework
Develop 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

10. Social performance pathway
“Effective translation of mission into practice”
Reaching Target Clients
Mission
Goals
Objectives
Systems
Service Design & Delivery
Change
Meeting Client Needs
Intent
Design and inputs
Outputs
Outcomes Impact
Governance/
policies
management/strategy
Outreach/ Changes
services

11. Current Initiatives and Existing Tools
New Initiatives
Intention and design
CGAP Poverty Audit
CERISE
Social Rating
(M-CRIL
Planet Rating
Microfinanza etc)
Outputs
CGAP Poverty Assessment
MicroSave
USAID/IRIS
AMAP
Accion
Council of MF Equity Funds
CGAP/ Ford
FINCA
Imp-Act SPM
MFC
Outcomes
AIMS
Imp-Act
Grameen FND

12. CERISE-Argidius SP Initiative: Objectives
At the level of MFIs
Reporting system for stakeholders (MFI Board, management, external financiers, member- clients)
Information for MFI strategic decision making and improved SP management
At industry level
Greater transparency on social development achievements
At national and international level
To provide a base for comparison with other MFIs on the basis of widely accepted SP standards

13. Conceptual Framework
Intention
Design
Principles
Process
Action
Output
Outcome
Impact
Economic & Social
Performance
The SPI approach: a self- assessment of principles, actions and corrective measures for internal use and external reporting.

14. 4 Dimensions of Social Performance
Outreach to the poor and excluded
Adaptation of services and products to needs of target clients
Improvement of social and political capital of clients
Social responsibility of the institution
 Score of 25 points each

15. Outreach to Poor and Excluded
Dimension 1:
Outreach to Poor and Excluded
mission of the MFI
geographic and socio-economic focus
tools for targeting
size of transaction
collateral

16. Adaptation of Services
Dimension 2:
Adaptation of Services
range of services
quality of services
non-financial services accessible to the clients
participation of the clients in the design

17. Social and Political Capital
Dimension 3:
Social and Political Capital
transparency of the financial transactions
clients representatives for consultation, decision-making or control of the MFI
empowerment : social cohesion, voice of the clients with the national or local government

18. Social responsibility of institution
Dimension 4:
Social responsibility of institution
human resource policy
social responsibility towards the clients
social responsibility towards the local community

19. Assessment with Action
Social Performance Management (SPM)
 the systematic assessment of performance relative to social objectives and the use of information to improve practice
demonstrate program impact
improve program services
Refer to guidelines in the binder
Assessment with Action

20. Social 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?

21. Main components of Social Performance Management
Developing a social performance strategy
Monitoring and assessing social performance
Institutionalizing and using social performance information

22. Component 1: Developing SP Strategy
Clarify mission and social goals
Define clear and realistic performance objectives
Set measurable performance targets
Design 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.

23. Component 2: Monitoring and Assessing SP
SP systems – two approaches
routine monitoring
follow-on research
SP 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.)

24. Component 3: Institutionalizing and
Using SP Information
Ensure effective use of information  feedback loop
Institutionalize SPM through management/board commitment and staff buy-in
Improve SPM system through periodic reviews

25. CGAP-Ford Social Indicators Project
Develop indicators to track MFI social performance through monitoring outreach to the very poor and changes in client well-being
Create common reporting format for MFIs across countries standardization
Report on social performance
of MFIs on MIX Market
35 participating MFIs
16 Asia
6 Sub-Saharan Africa
1 Northern Africa
9 Latin America
3 Eastern Europe

26. Methodology Develop 2 sets of indicators
industry indicators: 5 to 6 globally applicable indicators on different dimensions that can provide cross-country comparisons
proxy indicators: simple context-specific indicators developed by each MFI
Proxy indicators will be benchmarked to industry indicators so that MFI context-specific reports can be compared globally

27. Methodology (cont’d) Criteria for selecting the indicators
Have reasonable reliability/validity
Relevance across a variety of national contexts
Cost-effective data collection
How is the information collected?
Existing client information from application form
Simple low-cost small sample surveys

28. Initiatives in Social Rating
Overview
Frameworks
Issues
Indicators and methods
Cost
Sub-committee: M-CRIL, Planet Rating, Microfinanza, Accion
With contribution from: Imp-Act

29. Rating and social performance
SP definition: effective translation of social goals into
practice
Social Rating must reflect and make explicit the:
social goals and objectives in microfinance
systems within an MFI which are relevant to achieving
those objectives
environmental factors which affect MFI activity, and
indicators of whether those objectives are
[on the way to] being achieved.

30. Social Ratings so far: ‘pilots’
Excludes questionnaire tests which did not result in reports
Stand-alone reports:
complement to the financial assessment of credit rating
a direct comparison of the ‘double bottom line’
still some experimentation

31. Objectives
To contribute to:
Investment decisions
Ø  Transparency on social performance
Ø  Benchmarking social performance across MFIs, and to
Ø  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

32. Different frameworks
Cerise: social indicators project - dimensions of corporate
social responsibility (CSR - clients, employees, community)
+ mF specific dimensions (depth of outreach and adaptation
of services) [starting point for some rating agencies]
Rating agencies/M-CRIL: the Imp-Act pathway and credit
rating approach (focus on MFI and clients)

33. Working hypotheses in rating
the risk profile and creditworthiness of an MFI depends
critically 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 by
its managerial capabilities and governance

34. Social performance pathway
“Effective translation of mission into practice”
Reaching Target Clients
Mission
Goals
Objectives
Systems
Service Design & Delivery
Change
Meeting Client Needs
Intent
Design and inputs
Outputs
Impact
Governance/policies
management/strategy
Outreach/services
SOCIAL RATING

35. Generic social values (clear and agreed) – or specific to
Social benchmarking?
Generic social values (clear and agreed) – or specific to
each MFI’s situation, model and stated objectives?
E.g. not all MFIs target women, target the poor, apply group
based model (social collateral), can legally offer
savings products
Considerable debate: try to balance both
Generic is important to compare across the industry
(countries, models); and has to make sense for specific MFI
Reflected in selected dimensions and what is scored

36. The dimensions of a social rating
Similarity in scope and content:
Social mission, systems, strategy
Outreach – depth and breadth
Appropriateness of financial services
Social responsibility to clients
“ to staff
“ to community
Differences in grouping, and in scoring
1-3 are fundamental, can be scored (equal weights)
4 may be scored as part of 1 and 3
5-6 difficult to score; can be described

37. Parameters: social mission & systems
Main
Mission: clarity, communication, commitment (board/mang’t)
Systems aligned with stated mission: approach to targeting;
staff incentives; reporting/monitoring and use of
information/findings (e.g. market segmentation,
client data/feedback, dropout data/feedback)
Relationship with clients: transparency, ensuring awareness
Provision of or linkage with non-financial services – described

38. Indicators: Outreach
Operations in poorer areas (more remote, poorer within more
developed areas, e.g. urban slums)
Clients who are poor - % and number
Hired employment in micro-credit supported enterprises
% clients not served by formal financial services
% clients not served by other MFIs
% clients from marginal groups/communities

39. Indicators: Financial services
Range of financial services (within regulatory guidelines)
Process of product development
Client awareness/understanding
Client satisfaction: products, EIR, timeliness, comparison
with alternative sources
(if applicable) Effective group systems (regular
attendance, updated passbooks, transparency of transactions)
Client exit – dropout rate
Poverty assessment of dropouts, reasons for exit