You are currently browsing the tag archive for the ‘Social Performance’ tag.
>Posted by Sergio Guzman
Today, we link to Accion Ambassador Juan Rubio’s post describing a social rating by Planet Rating at El Comercio in Paraguay.
Juan starts out with an interesting question–is measuring social performance similar to measuring love? How can it be quantified? Indeed, social performance can be an abstract concept and at times it seems a bit difficult to measure. However, there are Social Performance Standards have been specially designed in order to give us a better idea how MFIs are working not only towards the idea of improving clients life, but also making sure that their products are not making them any worse off.
Now, with some markets showing signs of saturation, managing social performance goals might be secondary for some bottom line focused institutions who might want to focus on their core business. Notwithstanding, this has proven to be a differentiating factor for many microfinance institutions like El Comercio who see this as a strategic objective. Or as we call it, Smart Microfinance.
Read the rest of Juan’s excellent post here and further stories from the field through the Accion Ambassadors blog.
Image credit:pastorgraphics.com
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> Posted by Julie Shea
Large scale commercialization of microfinance institutions (MFIs) has led to an increased focus on profitability and with that a growing fear of “mission drift.” In an industry facing increased demands for both social and financial performance, how can investors in microfinance funds ensure that both of these “bottom lines” are appropriately balanced? One way is to create incentive structures that measure and compensate fund managers and the managers of the microfinance institutions (MFIs) in which they invest in accordance with the stated mission of the fund.
Paul DiLeo of Grassroots Capital Management, in his recently published paper, Re-Positioning Microfinance with Impact Investors: Codes of Conduct and “Social First” MFIs, argues that investors should do a better job of articulating their fund’s priorities. Rather than promoting a single, standard model, DiLeo promotes a framework, developed by the Monitor Institute, that more clearly positions funds along a spectrum from “Social First” to “Financial First”. In adopting this framework, investors are encouraged to provide transparency and to attract likeminded investors that support the mission of the MFI. Read the rest of this entry »
> Posted by Steve Wright, Director, Social Performance Management Center, Grameen Foundation and Kate Griffin, Director, Solutions for the Poorest, Grameen Foundation
In the recent New York Times article, “How Companies Learn your Secrets”, Charles Duhigg discusses how companies can use demographics and data on personal consumption behavior to manipulate shopping habits and attract new customers. Target, for example, can predict if a customer is pregnant, what trimester she is in, and, with this information, target baby-related advertisements to her. For many consumers, this use of “big data” (very large and complex data sets and the analytics to mine them), seems like an unacceptable intrusion of privacy. For many of us working in microfinance and development, this concept produces a reflexive “Eewww,” probably because our goals are much less about directing consumption through marketing than they are about increasing the opportunity and capacity to consume.
Despite this initial reaction to the manipulation of customer data to drive profits, the use of big data can actually prove very effective for the fields of microfinance and financial inclusion. At Grameen Foundation, we strive to: 1) examine large datasets to find relevant patterns and leverage opportunities, and 2) build tools and systems that use data to enable the poor to improve their quality of life. Read the rest of this entry »
> Posted by Elizabeth Davidson
Last Monday, January 30, Milford Bateman, author of Why Doesn’t Microfinance Work? The Destructive Rise of Local Neoliberalism, and David Roodman, author of Due Diligence: An Impertinent Inquiry into Microfinance, faced off in a debate about microfinance and the future of financial inclusion. The event, held at the QED Group and co-hosted by USAID and the Financial Inclusion Forum, was moderated by Chuck Waterfield, founder of MFTransparency.
To say the debate was contentious would be an understatement. Provocative, lively, and fast-paced also describe the two-hour event. Those of us from the Center for Financial Inclusion who attended the debate have been all a-buzz ever since.
The obvious differences in Bateman’s and Roodman’s debating styles were central to how we interpreted the arguments both men offered. As Holly Padgett articulated:
Bateman focused his arguments on extremism and was very eager to simplify the matter at hand. His style of debating clearly and attractively conveyed his principal arguments while avoiding supporting evidence. On the other hand, Roodman analyzed both negative and positive evidence of microfinance before developing a more nuanced, less decisive argument. Read the rest of this entry »
> Posted by Center Staff
ReVista: Harvard Review of Latin America has just released an issue that maps out Bolivia’s changing social, political, cultural, and economic landscape.
CFI Managing Director Beth Rhyne’s article “Microfinance: A World-Class Performance” takes readers on a tour of the “Bolivian model” of microfinance, which has “led to the transformation of dozens of MFIs around the world, launching the expansion of microfinance from a few tiny, donor-driven programs to a global industry that today brings access to financial services to 150 million people.”
Rhyne’s analysis begins:
When I first saw the photos of the sacking of BancoSol, I cried. The slide show began with chaotic pictures of the mob hauling desks, computers and files into the street and setting them on fire. Next were two captured looters lying face down and handcuffed amid the wreckage of what hours before had been a functioning bank branch. Finally, next-day photographs documented the ravaged premises of BansoSol’s branches all over La Paz and El Alto.
Thinking back to 2003 when these events occurred, I ask three questions. Why did protestors ransack a socially motivated bank that lends to the poor? Why did that make me cry? And what has become of BancoSol and the rest of the microfinance sector since then? Read the rest of this entry »
> Posted by Center Staff
Excellent post by Michael Burbano on the CGAP Microfinance Blog.
“Is Responsible Finance in Your DNA?” maps out “a way of doing business – a never-ending process of adapting your products, processes and policies to keep your clients at the center. ”
Burbano, who is General Manager at Banco Solidario, uses his institution’s 15th anniversary as a starting point for reflections on two strategies: grounding the practice of responsible finance in your business model, and measuring your “responsible finance chromosomes.”
Burbano highlights the Smart Campaign‘s set of Client Protection Principles as a tool to “help MFIs to measure and evaluate the effectiveness of our responsible finance practice.” He places the Smart Campaign’s principles in the same toolkit with the Progress out of Poverty Index (PPI), Social Performance Ratings (with Planet Rating and Microfinanza Rating), and the Social Performance Indicators Audit Tool (SPI).
Burbano’s advice? Make responsible finance part of your institution’s DNA. We couldn’t agree more.
Have you read?
Making History: Investors in Microfinance Agree on Principles of Conduct
Responsible Finance: Making It Work in Microfinance
> Posted by Center Staff
“Why write a book on Fonkoze when there are so many outstanding microfinance institutions in the world?”
Alex Counts poses that question to himself on the blog where he narrates his Fonkoze book project. It’s a query someone might naturally make, Counts says, upon learning that he is chronicling the work of the Haitian MFI.
Counts, the CEO of Grameen Foundation, sketches out a number of answers to the question based on his recent travels around Haiti. There, he’s been meeting with microfinance industry leaders, and in particular with Fonkoze’s stalwarts and trailblazers.
Counts, who was interviewed for the Center’s “Microfinance Matters” series, joined with other friends of Grameen Bank to set up Grameen Foundation in 1997.
His recent post “Microfinance, Short-Cuts, and Fonkoze” begins:
A natural question people in or close to the microfinance movement could ask me is, “Why write a book on Fonkoze when there are so many outstanding microfinance institutions in the world?” There are many plausible answers.
It is operating, with considerable success, in a so-called “failed state” and working with very poor people – at a time when many question whether microfinance can be effective in either context, let alone both. Furthermore, it is populated by some fascinating people and its history is punctuated by dramatic events. And as noted in an earlier post, it is a women-led organization in a sense that goes far beyond who the CEO is, and extends to who occupies the vast majority of leadership posts and, not unrelated, who defines the cultural norms. Read the rest of this entry »
> Posted by Center Staff
Opportunity International‘s blog recently posted “What We’re Reading: Top 10 Blogs About Microfinance and Poverty Eradication.”
It’s great to find this blog there, in the company of CGAP’s Microfinance Blog, Nicholas Kristof‘s New York Times columns, Grameen Foundation’s Creating a World Without Poverty blog, and the Wall Street Journal‘s India Real Time blog.
Check out the rest of their top 10 list by clicking here, and it’s worth glancing over the entire Opportunity Blog. Recent posts have cast an eye on Tanzania, expanding client access through technology and innovative products, and Opportunity’s Banking on Africa Campaign.
Image credit: C. Thure
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13 Key Institutions in Microfinance Industry Sign Open Letter Supporting Muhammad Yunus
Industry Experts Testify on the State of Global Microfinance
Campaign for Client Protection in Microfinance Announced at the Clinton Global Initiative
> Posted by Beth Rhyne
What is responsible financial performance? In other words, “How much private gain is appropriate for organizations serving the poor?” The Social Performance Task Force (SPTF), meeting this week in Den Bosch, the Netherlands, is putting this controversial question on the microfinance industry’s agenda – opening a debate that is sure to be both complex and emotionally-laden.
As an opening salvo, the Task Force is proposing that standards addressing the following questions become part of the Social Performance “Universal Principles”:
- What are acceptable levels of profit?
- How can we tell if organizations are charging clients for their own lack of efficiency?
- What levels of executive compensation are fair? Read the rest of this entry »
> Posted by Adriana Magdas
The Social Performance Task Force defines social performance, or the social bottom line, as the entire process of making an organization’s social mission a reality. This may include serving larger number of poor and excluded people; improving the quality and appropriateness of financial services; creating benefits for clients; and improving the social responsibility of microfinance institutions. Managers for social investments and microfinance funds must actively assess the social performance of their client institutions to determine the extent to which social goals are met and measure the benefits for clients of microfinance and their communities.
In 2010 Oikocredit, a large financier of microcredit which seeks to offer both financial and social returns to its investors, appointed social performance management specialists at all of its regional offices to assist project partners with social performance development and management.
Oikocredit routinely collects information from partner institutions using tools developed to monitor the social impact of investments. These tools incorporate the Social Performance Indicators, which assess the social performance of an institution by analyzing its intentions and actions, and the ESG (environment, social, governance) scorecard developed to reflect Oikocredit’s core selection criteria and vigorous environmental and governance criteria. It is important to note that a considerable component of the ESG scorecard is the Smart Campaign’s Client Protection Principles, which promote transparency, fair practices, and quality services. Read the rest of this entry »
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