As part of a pioneering initiative in the
global microfinance industry the MFC is implementing the
region wide program Advancing Social Performance
Management.
For more information please go to Social
Performance Resource Center at the Microfinance Gateway.
Some examples of other global initiatives are briefly
presented below:
1. International Task Force on Social Performance
In March 2005, the International Task Force on Social
Performance (ITFSP) was launched in Paris. The Argidius
Foundation, the Ford Foundation and CGAP brought together
leaders from various social performance initiatives in the
microfinance industry to come to an agreement on a common
social performance framework and to develop an action plan to
move the social performance agenda forward. A nine-point
action-plan focused on seeing increased coordination and
collaboration of action to ensure greater social focus and
transparency in performance management and reporting in
microfinance was developed. MFC is part of the group from the
very beginning. MFC represents regional MFIs as well as
reports on its on-going activities in the area of social
performance.
For more information about the current group activities and
planned meetings, please contact Laura Foose lfoose@alternative-credit.com.
Traditional evaluation has focused on end results and impact,
however impact is only one aspect of Social Performance. The
figure below shows the different dimensions of Social
Performance.
2. CGAP Donor Working Group on Social Performance
After the SP Task Force was formed donor agency
representatives felt the need to form a working group, which
would aim primarily on the coordination of efforts. The group
works on developing good donor practice in social
performance, and supports the development of industry
standards and benchmarks for social performance.
The first meeting of the Donor Working Group was held on 9
November 2005 in Mexico. The principle goal and objectives of
CGAP Donor WG were established:
Principal Goal: to harmonise efforts, create synergies
and avoid fragmentation.
Objectives: CGAP Donor WG will facilitate:
- the spread and practice of pro-poor Social Performance
Management through the financing of specific training
courses and action-research, and integration of the
social dimension of Microfinance in existing courses
which focus primarily on financial performance;
- the establishment of industry social performance
standards, and the development and spread of
easy-to-read, customised reporting formats for different
categories of stakeholders;
- dissemination of globally applicable guidelines for
social performance assessment, reporting and rating, thus
enhancing the transparency of social reporting and social
achievements by individual institutions and by the sector
as a whole;
- the establishment of an easily accessible virtual
knowledge, resource and communication centre on theory
and practice of Social Performance Management,
Assessment, Reporting, Auditing and Rating;
- identification of cases of the best practice in the
areas of SP governance and SP management, and make them
known (e.g. through launching a Social Performance
Transparency Award);
- support of the integration of the SP reporting system
into the MIX and Micro Banking Bulletin, with a view of
introducing the double bottom line reporting into an
international platform (financial and social) as a
regular practice in the MF industry.
‘Facilitation’ can be done by
a. the provision of financial resources at the
appropriate time, for the right type of initiative, in a
coordinated fashion
b. active participation in an ongoing dialogue among
stakeholders (including MFIs and MFI networks) about the
best way in which donors can support the SP agenda
(‘best donor practice’).
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3. Social Assesment,
Audit and Rating
COMPLIANCE AUDITS
The UK social audit network (SAN)
has developed guidance and training for social accounting and
auditing. This mirrors a traditional financial audit in that
it involves the preparation of a set of social accounts, and
audits this. It also uses a stakeholder-based approach,
gathering perspectives from a range of stakeholders and
auditing the social accounts through a half day meeting
involving the key stakeholders of the organisation rather
than an assessor site visit. For more information please go
to www.socialauditnetwork.org.uk
BENCHMARK AUDITS
Performance Audit Tool
(SPA), USAID The SPA tool uses a scorecard to assess
social performance using a set of simple indicators falling
under one of seven dimensions of outreach: breadth, depth,
length, cost, scope, worth, and outreach to the community. A
number of indicators are defined, and points are awarded
depending on the organisation’s status in relation to
each indicator. For example under the dimension of depth of
outreach one indicator is percentage of women clients; zero
.are awarded if less than 20% of the clients are women, one
point for 20 – 50%, and 3 points for greater than 50%.
The scorecard thus describes ‘desirable’
characteristics, and allows for comparison and benchmarking
between organisations. More information about the USAID SPA
please go to www.microlinks.org
ACCION, SOCIAL tool evaluates the success of
the microfinance institution in fulfilling its social mission
and contributing to broadly accepted social goals. The tool
assesses six dimensions of social performance: social
mission, outreach, client service, information transparency
and consumer protection, association with the community, and
labour climate. It consists of interviews with management,
staff, board members and clients; strategic plan/business
plan, minutes of Board of Directors meetings; MFI client
database; available external survey data to validate the MFI
database; secondary source data (national data, MIX, market
studies); map of geographic coverage; and branch visits. For
more information about the SOCAL tool please go to www.accion.org
CERISE Social Performance Indicators
Initiative
The SPII is a joint venture of
CERISE, CGAP, and the Argidius Foundation. The objective of
the SPII is to articulate a conceptual framework for defining
social performance in microfinance and to develop a set of
social performance indicators for MFIs with broad social
relevance. The tool is a questionnaire and a guide on how to
use it and it is aimed at evaluating the intentions, actions
and corrective measures implemented by an MFI in order to
determine whether it has the available means to attain its
social objectives.
The questionnaire consists of
about 60 weighted questions on:
- outreach to the poor
and excluded
- services and products
adapted to the needs of target clients
- effects of the
products on the clients
- corporate social
responsibility – relationship with other
stakeholders
The questions give an
impression on the social performance results itself as
indicating up to what extent social performance management
tools are developed within an MFI. It can easily be used as
checklist or scorecard indicating the level of advancement in
social performance instruments within an MFI, without a need
for very specific MIS-data.
PROCESS AUDITS
There is another type of
audit which includes the QAT, which examines the status and
effectiveness of the organizational systems.Two examples of these are the
International standards Organisation (ISO) quality management
auditing for ISO0001:2000 and the USAID SPA tool.
The ISO 9001:2000 describes standards for
process management auditing. This implies a different
approach to auditing, away from compliance-based systems and
the related views of what constitutes objective
evidence.
The USAID SPA focuses on alignment of
organisational systems with their social mission, and
therefore is broadly comparable with the QAT, but it is not
specifically aligned to the SPM process. In addition to the
SPA scorecard the tool uses a subjective audit of the
MFI’s commitment and capacity to achieve social return
in five key internal processes. These are internal
communication and management leadership, hiring and training,
monitoring systems, incentive systems, and strategic
planning.
The MFI’s performance
on the scorecard and in the five key internal processes form
the basis for awarding the microfinance institution a social
rating score, which indicates the microfinance
institution’s likelihood of creating significant
social impact both now and in the future.
4. Commitment letter
Recently, a coalition of MFIs, donors, investors, rating
agencies, and microfinance networks circulated and signed a
statement committing themselves or their organisations to
promoting social performance in microfinance. MFC joined a
group of over 35 microfinance practitioners, donors, raters,
and investors to endorse a common statement of principles in
support of social performance.The text of the letter is
presented below:
Declaration of
Principles
Promoting Social Performance in Microfinance: Toward
a ‘Double Bottom Line’
“Microfinance works best when it measures –
and discloses – its performance; accurate,
standardised performance information is imperative, both
financial information and social information”
(from the G8-endorsed CGAP “Key Principles of
Microfinance”).
As leaders in the field of
microfinance, we the undersigned:
1. Define social performance as the effective
translation of an institution’s social goals into
practice (actions, corrective measures, outcome).
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2. Recognise that financial performance
alone is insufficient to achieve our goal of serving
increasing numbers of poor and excluded people sustainably.
Success in microfinance is driven by a double-bottom line:
strong financial and social performance, and that these twin
measures are mutually reinforcing in the long run.
3. Further recognise a growing interest from
donors, networks, practitioners, rating agencies, funders,
and other stakeholders in testing, applying and improving new
tools for social performance management, assessment,
monitoring and reporting.
4. Support recent developments in the field of
monitoring social performance. Many actors developed new
tools, all of which have the same objective of promoting
social performance, but which offer different approaches.
5. Commit to improving the social impact of
microfinance by:
- Becoming pioneers in the
practice of regularly assessing, reporting on, and
managing by the social performance of our organisations
and the organisations we support
- Setting clearly specified
social objectives for our own organisations and criteria
for the organisations we support
- Designing, introducing and
using systems to manage, assess, monitor, and report
inside and outside our organisation on social performance
- Using information on social
performance to improve our operations
- Remaining open to external
auditing of our social results
- Promoting and exchanging
ideas and information on social performance.
Download Declaration of Principles from www.triasngo.be.
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