New Resources for Social Performance Management from the Imp-Act Consortium

Guest Post by:
Veronika Thiel, Microfinance Research Consultant

The primary goal of microfinance has always been to help people out of poverty through the provision of financial services to people who were previously thought to be unbankable. After a period of growth and going from strength to strength, there has been a tendency to focus too much on the financial stability of microfinance institutions (MFIs) rather than on the social impact they are creating. There has been the assumption that a financially-viable organization is automatically creating beneficial social outcomes. Following a series of articles and academic research that highlight serious problems with overindebtedness and the destruction of savings in certain contexts, the microfinance sector is being challenged to revisit their approach to effectively achieve their social mission. Financial viability needs to be seen again for what it is – a means to an end rather than an end in itself. The achievement of social outcomes is not an automatic side effect of having a financially viable organization – social performance management (SPM) needs to take center stage.

In other words, microfinance needs a social performance approach that measures and monitors the social impacts organizations’ work have on the lives of their clients and the communities they operate in. Do organizations help or hinder? Do they reach the clients they seek to reach? Do their products help clients reach their goals? Are MFIs creating a lasting legacy or do they unintentionally destroy existing assets? To find this out, MFIs have to become as attuned to social indicators as they are to financial ones. By mainstreaming social performance management across an organization, they can ensure that they track social – and financial – performance in a meaningful way.

The Imp-Act Consortium, a partnership of nine organizations operating worldwide, has over the past 10 years demonstrated that most MFIs can improve their services with relatively small and affordable changes, and that social performance needs to be integrated into management for social goals to be achieved. Their work has promoted the mainstreaming of SPM into microfinance by providing practical guidance and research on how to do so. The underlying idea of marrying social and financial outcomes to help MFIs fulfil their promise is also reflected in a set of principles for SPM endorsed by the Social Performance Task Force in June 2009. Over 75 MFIs have signed to these principles already.

To follow on from this work, Imp-Act now has produced a series of new materials and resources available for free on the internet. These include:

• The SPM film, “Fulfilling the Promise: Managing Social Performance,” which provides in-depth examples of SPM from two MFIs and provides a practical introduction to why SPM makes sense for MFIs and the microfinance industry, as well as some guidance on first steps. The film is aimed at MFI managers and those who support them. It is available in two versions (22 minutes and 13 minutes) and in four languages (Arabic, English, French and Spanish), and is accessible on our website or by order as a DVD.

• A translation of the SPM Practice Guide, “Putting the ‘Social’ into Performance Management: A Practice-Based Guide for Microfinance.” Downloaded in English over 35,000 times, it is now available in Arabic, French, and Spanish. It is a practical step-by-step guide that will help MFIs build SPM-systems, supported by examples of MFI's concrete experiences.

• The on-line SPM Resource Centre goes beyond the Practice Guide to include a self-assessment tool, additional practitioner experience, discussions, and a guide to a wide range of online resources on social performance.

• Seven case-studies from leading organizations in SPM have recently been completed and are show-cased on our website. These case-studies are based on a two-year action-learning program, and further research is forthcoming.

• An Imp-Act training course  offered to Directors, Board members and senior management to develop organizations’ SPM strategy, and supported by a network of certified trainers worldwide.

• Furthermore, the SPM Network, the go-to place on the net to engage with practitioners, support organizations, investors and donors active in supporting SPM, now has over 1200 members from across the globe and is open to everyone with an interest in microfinance—so why not join?

The growing influence and importance of SPM is clear. MIX now encourages MFIs to report on their social performance. All the major rating agencies have developed social rating tools to assess the social side of microfinance. Self-assessment tools are being developed for a variety of organizations and operational contexts – the Grameen's Progress out of Poverty Index, CERISE's Social Performance Indicator's Initiative, ACCION's social audits, MFC's Quality Audit Tool for Managing Social Performance – to name but a few.

Research currently undertaken by Imp-Act on the state of practice in Social Performance Management indicates that MFIs are increasingly under competitive pressure in many parts of the world and have to distinguish themselves from other organizations in order to retain and attract new clients. One such distinguishing measure is social performance measurement, and, within that, client support and protection. Products are diversifying and are being tailored to clients' needs – and social performance tools and indicators help MFIs find and track the necessary data to ensure they are serving their target markets.

Let's be clear – microfinance organizations do have a financial responsibility to their funders and their clients. But the key message is that social performance management can help microfinance institutions achieve this. Managing social and financial performance are not exclusive, they are mutually supportive. The more MFIs realize the potential of SPM in improving their organizations, the more impact microfinance will have!

Implementing social performance management is not without challenges, but support and help is available. Visit the Imp-Act website, access the resource centre, and join us on the SPM Network!