Posted by: Katherine Oglietti
An MFI can have a relevant impact in the community where it operates not only through the provision of financial services to its clients but also through the implementation of policies and actions aimed to support community development at large. The social performance indicator on social responsibility to community assesses the steps that an MFI takes in this direction. Of the 133 MFIs who reported on social performance to MIX, we find that the majority of MFIs demonstrate concern for their community-level social impact through their formal and informal policies.
Graph 1: Current Types of Policies on Social Responsibility to the Community, in a sample of 133 MFIs
A combined 74% of MFIs have written or informal policies regarding social responsibility to the community. While only 26% of MFIs have a written policy, an additional 8% of MFIs that have no current policies are in the process of adopting written policies. This leaves only 11% of MFIs who reported on the indicator who do not have policies regarding social responsibility to the community. This data seems to show that the majority of MFIs who reported to MIX value the social impact that they have on the entire community, beyond the impact they have on their clients through offering financial services.
Yet the focus of analysis should be on performance, not just on intentions, so these indicators need to be supported by evidence of which policies and practices MFIs have developed in order to ensure that their social objectives related to the community are met. Last week, we interviewed Fundación Paraguaya, who offered an interesting example of what an MFI can do to promote social capital and labor in the community where it operates. In the course of the following weeks, we will continue to interview MFIs to learn about concrete steps undertaken in this direction to social responsibility to the community, and later, to the environment.
The MIX Social Performance Report includes a section regarding the policies on social responsibility to the community that each MFI includes in its programming. The following is a breakdown of the percent of MFIs who include the following policies.
Among MFIs with a written or informal policy on the subject, the majority of MFIs include measures to:
1) Support local communities for social or economic development (67%)
2) Promote transparency and counter corruption (66%)
3) Avoid giving credit to enterprises that have a negative social value (65%)
4) Support women’s leadership (59%)
Nearly half of these MFIs have informal or written policies that:
5) Ensure that there are employees that speak the local dialects (47%)
6) Support the local communities in cases of emergencies (45%).
Finally, the least common policies reported involve:
7) Promoting reasonable working conditions among the employees of credit-supported enterprises (31%)
8) Taking measures to eliminate child labor (27%)
9) Taking measures to eliminate forced or coerced labor (16%)
Looking just at MFIs with written policies, we find little difference in the order of policy prioritization, except that the policies on supporting women’s leadership and supporting the community in case of emergencies move up a few places. It seems from this data set that the least prioritized social responsibility policies involve working conditions for employees of credit-supported enterprises. On the other hand, the most common social responsibility policies reflect a promotion of community development.
For our readers who are working in the field, what sorts of measures on social responsibility to the community have you found to be most important for MFIs and their beneficiaries? Is it crucial that social responsibility policies be written, or can informal policies be just as effective in meeting an MFI’s objectives?
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