social performance task force microfinance social performance standards and social rating services...

SOCIAL PERFORMANCE TASK FORCE

Microfinance Social Performance Standards and Social Rating Services

Laura Foose Social Performance Task Force

June 19, 2008 Paris

SOCIAL PERFORMANCE TASK FORCE2

Outline of Presentation

I. Introduction of Social Performance Task Force

II. Social Performancei. definitionii. importanceiii. different dimensions

III. Tools to Measure Social Performancei. What Is Measuredii. Which Tools Exist

IV. Examples:i. Progress out of Poverty Index (PPI)ii. Social Rating Tools

V. Next Steps of Task Force - Social Indicators


Social Performance Task Force Membership

• NGOs

• Donors

• Social Investors

• Networks/Associations

• Microfinance Raters

• Action Research Programs/Universities


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.


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


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

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?

OUTPUTDoes the institution serve poor and very poor people?

Are the products designed to meet their needs?

OUTCOMEHave clients experienced social and economic improvements?

IMPACTCan these improvements be attributed to institutional activities?

Intent and Design

Internal Systems / Activities

Outputs

Outcomes Impacts


Tools for Assessing Social Performance

Intent and Design

Internal Systems / Activities

Outputs

Outcomes Impacts

CERISE SPIMFC Social Audit

SPA AuditACCION SOCIALTriodos/GRI - TSF

FMO E&S Risk Audit

M-CRILMicroFinanza RtgPlanet RatingMicroRate

Progress out of Poverty IndexUSAID/IRIS PAT

FINCA FCATSEEP/AIMS toolsMicroSave tools

INAFI (Oxfam/Novib)

[-------------PROCESS-----------------------][------------------RESULTS-------------]


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


The PPI: What does it look like?

6

30

0

0

11

6

40

0

30


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%

Poverty likelihood in score range

ScoreBelow Poverty

LineAbove the

Poverty Line0-4 84.2% 15.8%5-9 67.1% 32.9%

10-14 54.6% 45.4%15-19 47.6% 52.4%20-24 31.8% 68.2%25-29 16.0% 84.0%30-34 25.8% 74.3%35-39 7.1% 93.0%40-44 3.1% 96.9%45-49 6.5% 93.5%50-54 1.0% 99.0%55-59 0.0% 100.0%60-64 0.0% 100.0%65-69 0.0% 100.0%70-74 0.0% 100.0%75-79 0.0% 100.0%80-84 0.0% 100.0%85-89 0.0% 100.0%90-94 0.0% 100.0%95-100 0.0% 100.0%


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


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)


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


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


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…


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


Approaches to Social Rating

MFI Intent/Values & Systems

Outputs Outcomes Type of Rating Rating agencies

Without client level information

ALL

Range of servicesPortfolio data

SIMPLE based on MFI

MISALL

Without client level information

ALL

Profile of recent clients

Awareness/feedbackSatisfaction

Future option:

rating survey a baseline

COMPREHENSIVE

- collect client level data with MFI staff

MRI/M-CRILMicrofinanz

a Rating

With client level information:

ALL Profile of recent clients

Awareness/feedbackSatisfaction

If MFI data available

FUTURE STANDARD

based on MFI MIS

ALL- Verify MFI

data


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


Social Indicators

20

Q19-% women; % urban, semi-urban, rural

Q20-% women’s empowerment Q21-% socially marginalized

Q22- % poor, very poor Q23-% children in school

Q24-PAR Q25-Client dropout rate

Q26-% clients still w/institution Q27-% moved above poverty line

Q28-% still below poverty line Q29-% children in school

Q30-# of employees

Q5-Mission & Social Goals

Q6-Board of Directors & Management Team Q7- Staff Incentives

Q8-Training Q9-Poverty Assessment

Q10-Women’s Empowerment

Q11-Client Satisfaction Q12-Client Retention

Internal systems/ activities

Ind

icat

ors

Q13-SR to Clients Q14-SR to Staff

Q15-SR to Community Q16-SR to Environment Q17-Gender Approach

Q18-Member Governance

Intent

Strategies& Systems Policies

Achievement of Social Goals

[----------------------PROCESS-----------------------][-----------------RESULTS----------------]

Intent and Design Outputs Outcomes Impacts


“From Mission to Action” Social Audit

Three dimensions are examined:• Intent and Design• Information Systems• Management Systems


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


From Mission to Action

Gap analysis Development of meaningful indicators

Quality Audit Tool

•Diagnoses management systems’ strengths & weaknesses

•Identifies priorities for improvement


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


• From Mission to Action Management Series– Social Audit Overview– Strategic Management Overview– Resource CD:

• Handbooks• Facilitator's guides• SPM related articles

• English & Spanish

social performance task force microfinance social performance standards and social rating services...

Documents

social performance important

social mission

accepted social goals

clear social objectives

comprehensive social

social rating tools

desired performance

desired results performance