1. SOCIAL PERFORMANCE TASK FORCE Microfinance Social Performance Standards and Social Rating Services Laura Foose Social Performance Task Force June 19, 2008 Paris

2. SOCIAL PERFORMANCE TASK FORCE 2 Outline of Presentation I.Introduction of Social Performance Task Force II.Social Performance i.definition ii.importance iii.different dimensions III.Tools to Measure Social Performance i.What Is Measured ii.Which Tools Exist IV.Examples: i.Progress out of Poverty Index (PPI) ii.Social Rating Tools V.Next Steps of Task Force - Social Indicators

3. SOCIAL PERFORMANCE TASK FORCE 3 Social Performance Task Force Membership NGOs Donors Social Investors Networks/Associations Microfinance Raters Action Research Programs/Universities

4. SOCIAL PERFORMANCE TASK FORCE 4 What Is Social Performance? The effective translation of an institution’s mission into practice in line with accepted social goals that relate to: –reaching poorer and excluded clients; –improving the lives of clients and their families; –widening the range of opportunities for communities.

5. SOCIAL PERFORMANCE TASK FORCE 5 Why Is Social Performance Important? Achievement: to improve our programs to achieve the social goals we set out in our mission statements Accountability: to be more transparent

6. SOCIAL PERFORMANCE TASK FORCE 6 Deliberately Managing to Achieve Desired 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 Performance Management Social Performance Financial Performance Mission

7. Dimensions of Social Performance INTENT AND DESIGN What is the mission of the institution? Does it have clear social objectives? INTERNAL SYSTEMS & ACTIVITIES What activities will the institution undertake to achieve its social mission? Are systems designed and in place to achieve those objectives? OUTPUT Does the institution serve poor and very poor people? Are the products designed to meet their needs? OUTCOME Have clients experienced social and economic improvements? IMPACT Can these improvements be attributed to institutional activities? Intent and Design Internal Systems / Activities Output s Outcomes Impacts

8. SOCIAL PERFORMANCE TASK FORCE 8 Tools for Assessing Social Performance Intent and Design Internal Systems / Activities Output s Outcomes Impacts CERISE SPI MFC Social Audit SPA Audit ACCION SOCIAL Triodos/GRI - TSF FMO E&S Risk Audit M-CRIL MicroFinanza Rtg Planet Rating MicroRate Progress out of Poverty Index USAID/IRIS PAT FINCA FCAT SEEP/AIMS tools MicroSave tools INAFI (Oxfam/Novib) [-------------PROCESS-----------------------][------------------RESULTS-------------]

9. SOCIAL PERFORMANCE TASK FORCE 9 Example 1: Progress out of Poverty Index (PPI) Composed of simple, non-financial indicators derived from national household surveys PPIs are created on a country basis Provides snapshot of household relationship to the national poverty line Show the rate at which clients are moving vis-à- vis the poverty line Increasingly used by donors and investors (e.g. Ford Foundation, Oikocredit) Used in comprehensive social ratings

10. SOCIAL PERFORMANCE TASK FORCE 10 The PPI: What does it look like? 6 3 0 0 0 11 6 4 0 0 30

11. SOCIAL PERFORMANCE TASK FORCE 11 Progress out of Poverty Index for Morocco by Microfinance Risk Management, L.L.C. The PPI: Portfolio analysis MFI client PPI score = 30 Client poverty likelihood 26%

12. SOCIAL PERFORMANCE TASK FORCE 12 How Much Does It Cost to Use the PPI? Streamlined systems approach Cost analysis: –$0.50 per client per year –1.4% ops. budget Footballs, Binh Chanh Client

13. SOCIAL PERFORMANCE TASK FORCE Poverty Scoring Summary 13 PPIs are simple, easy-to-use, inexpensive, transparent, and objective They estimate likelihood that a person is poor: -Use policy cut-offs for targeting -Track over time for progress out of poverty Practicality and accuracy both matter: -one page, few indicators, simple weights -field workers can compute scores on paper in real time (no software required)

14. SOCIAL PERFORMANCE TASK FORCE Example 2: Externally Administered Social Rating Tools What is Social Rating? Provides an external opinion on the capacity of an MFI to put its social mission into practice The social rating tools all follow the social performance framework and evaluate the following dimensions of social performance: social mission, strategy, systems, social responsibility, outreach and quality of services Rating Agencies : –M-CRIL, Microfinanza Rating, MicroRate, Planet Rating

15. SOCIAL PERFORMANCE TASK FORCE Sample of Questions Addressed by the Rating Tool Intent: Mission and Culture Is the strategy / mission adequate to reach social goals? How well is the mission communicated throughout the organization Does governance strategy seeks to balance financial and social goals? Operations: Internal Systems / Activities How well do systems align with mission? Human resources: staff orientation and incentives Monitoring and reporting: portfolio analysis from a social perspective; client profiling; mechanisms for client feedback, market research, exit analysis, use of information in decision making? Social responsibility to clients: client protection, transparency, costs (EIR); non-financial service/linkages; Are there policies and systems for compliance

16. SOCIAL PERFORMANCE TASK FORCE Questions Continued Outputs Outreach (areas of operation, reaching target groups)? Profile of new client households: - % below poverty line? How appropriate is the product design? Transparent presentation of interest rates to clients? Does the MFI undertake regular audits? Client awareness (client protection) - % aware of key features (product options, costs…) and many others…

17. SOCIAL PERFORMANCE TASK FORCE Outputs versus Outcomes 17 Social Rating Does Measure: Intent and Design Internal Systems / Activities Outputs (portfolio only or portfolio and client) Social Rating Does Not Measure: Outcomes Impact However: Social rating may involve validation of methods and results used in impact assessment studies done by other agencies Social rating research may serve as baseline data for future analysis of outcomes

18. SOCIAL PERFORMANCE TASK FORCE Approaches to Social Rating MFI Intent/Values & Systems OutputsOutcomesType of RatingRating agencies Without client level information ALL Range of services Portfolio data SIMPLE based on MFI MISALL Without client level information ALL Profile of recent clients Awareness/feedback Satisfaction Future option: rating survey a baseline COMPREHENSIVE - collect client level data with MFI staff MRI/M-CRIL Microfinanza Rating With client level information: ALL Profile of recent clients Awareness/feedback Satisfaction If MFI data available FUTURE STANDARD based on MFI MIS ALL - Verify MFI data

19. SOCIAL PERFORMANCE TASK FORCE Next Steps The SPTF has agreed on a common set of indicators that are going to be uploaded to MIX Consumer Report on SP assessment tools – and share ‘user’ perspective (both MFI and investor) Social Rating Initiative – to co-fund ratings Four Investor Fora between now and end of year

20. SOCIAL PERFORMANCE TASK FORCE Social Indicators 20 Intent and DesignOutputsOutcomesImpacts

21. SOCIAL PERFORMANCE TASK FORCE “From Mission to Action” Social Audit Three dimensions are examined: Intent and Design Information Systems Management Systems

22. SOCIAL PERFORMANCE TASK FORCE Institutionalization approach Supports operationalization of SPM Grounded in institution’s context and prioritized needs Establishes an on-going change process integrated into daily operations Involves all staff – participatory, bottom-up Internally driven with external inputs

23. SOCIAL PERFORMANCE TASK FORCE From Mission to Action Gap analysis Development of meaningful indicators Quality Audit Tool Diagnoses management systems’ strengths & weaknesses Identifies priorities for improvement

24. SOCIAL PERFORMANCE TASK FORCE Social Audit Diagnostics –Diagnoses strengths and weaknesses –Identifies priority actions for improvement –From self-assessment to external evaluation –Can be done by team of internal and/or external auditors Entry point for SPM institutionalization –Initial diagnosis –Permanent part of on-going SPM (periodic review) implementation

25. SOCIAL PERFORMANCE TASK FORCE From Mission to Action Management Series –Social Audit Overview –Strategic Management Overview –Resource CD: Handbooks Facilitator's guides SPM related articles English & Spanish