Social Performance Standards Micol Pistelli

MIX

2010RBAP‐MABSNa.onalRoundtableConferenceHya=HotelandCasino,ManilaJune2‐3,2010

Micol Pistelli, Manager Social Performance Program, MIX

Social Performance Standards

2010 RBAP-MABS NATIONAL ROUNDTABLE CONFERENCE, June 2, 2010

  How we can measure social performance?

  MIX’s experience with SP data collection

  Challenges faced by MFIs in reporting on SP

  MIX agenda on social performance in 2010

Overview

Performance is not incidental

We can manage only what we explicitly define and measure   Need to define desired performance   Need to measure results against

desired performance

4

Performance Management

Social Performance

Financial Performance

Mission

Performance is not incidental

The Social Performance Task Force (SPTF)

•  In March 2005, CGAP, the Argidius Foundation, and the Ford Foundation brought together leaders from various social performance initiatives in the microfinance industry to come to agreement on a common social performance framework and to develop an action plan to move social performance forward.

• The SP Task Force developed a common action plan that takes advantage of the synergies between the different groups who are carrying out social performance initiatives–primarily the Imp-Act Consortium, the CERISE group, the Client Protection Principles work of the Center for Financial Inclusion and CGAP, and the Social Performance Working Group of the SEEP Network.

SPTF

Transparency

Improving Practice

Communication

How to measure social performance?

- Relevant   - Useful   - Possible to be validated   - No confidential

The 22 indicators of MIX/SPTF:

Mission Internal

systems and activities

Outputs Outcomes

Why should every MFI measure and report its social performance?

- To best serve its clients needs

- To have a culture of social responsibility

- To improve both its financial and social performance

- To have access to more resources from donors and investors

- To improve industry’s transparency

- To compare its SP with its peers

Outreach Q11- Geographic outreach Q12- Women outreach Q13- Clients outreach by lending methodology

Q1–Mission & Social Goals

Q2- Governance

Q3–Range of Products and Services (financial & non-financial) Q4–Training of staff on social performance Q5–Staff performance appraisal and incentives Q6–Market research on clients Q7–Measuring client retention Q14–Poverty assessment

Q8– Social responsibility to clients Q9-Cost of services to clients Q10–Social responsibility to staff Q15 – Social responsibility to the community Q16–Social responsibility to the environment

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

Outputs and outcomes Q17-Outreach by Products Q18–Employment creation Q19–Children in School Q20–Poor clients at entry Q21–Clients in poverty Q22–Clients out of poverty

Intent Internal systems/activities

Outputs Outcomes Impact

Indi

cato

rs

Social Performance Indicators

  Reporting   The SPS report was sent on February 2009 to all MFIs registered on

MIX Market   By the end of 2009, 208 MFIs had reported on SP indicators (41 from

Asia)   5 MFIs from the Philippines reported (3 NGOs, 1 bank and 1

cooperative): ASKI, BANK OF CARAGA, CEVI, GATA DAKU, TSPI

  Results   Individual MFI reports are available on MIX Market, along with social

ratings and related SP documents (example: Bank of Caraga)   An aggregate excel database for analysis is available on MIX Market   For early findings visit MIX SP Blog: www.spblog.org

MFIs that have reported on SPS to MIX in 2009

Profile of MFIs reporting

10671

22 8

1

TypeofMFI

NGO

NBFI

BANK

COOPERATIVE

Other

52

6735

54

NumberofAc2veBorrowers

≤5000

5000‐25000

25000‐50000

50000+

1648

72

72

Yearsofmicrofinanceopera2ons

≤3years

4‐8years

9‐13years

14+years

80

51

41

21 15

MFIsbyRegion

LAC

ECA

ASIA

MENA

Africa

Profile of the 208 MFIs reporting

  MISSION: All 5 MFIs reported having their mission focused on poverty

reduction, income growth, employment generation, growth of existing business

and women’s empowerment

  TARGET MARKET: All 5 MFIs have as target market women, urban and rural

clients

  GEOGRAPHIC OUTREACH: mainly rural (55%)

  WOMEN’S OUTREACH: above 77%, served by group-loan methodology

  DIVERSIFICATION OF FINANCIAL SERVICES: wide variety of credit services,

savings, insurance products and other services

  NON FINANCIAL SERVICES: all offer enterprise services, adult education and

women’s empowerment services

Overview of the 5 MFIs in the Philippines

  STAFF INCENTIVES: All 5 MFIs have incentive schemes related to areas such as attracting new clients from the institution’s target market and maintaining portfolio quality .

  SR TO CLIENTS: several policies related to the 6 principles of the SMART Campaign: 1) prevention of over-indebtedness, 2)Transparent and Responsible Pricing 3)Appropriate Collections Practices 4)Ethical Staff Behavior 5)Mechanisms for Redress of Grievances 6) Privacy of Client Data

  SR TO COMMUNITY/ENVIRONMENT: Most MFIs have informal policies such as avoid credit for enterprises with negative social value, promote transparency and anti-corruption, raise awareness of client about environmental impacts

Staff incentives and policies on SR towards the clients, community and environment

  Poverty profile of clients (32% of MFIs could report this data. 20 MFIs used or are testing the PPI (3 from Philippines: ASKI, Gata Daku, Bank of Caraga) and 8 PAT (1 from Philippines: CEVI)

  Progress out of poverty of clients (Philippines MFIs are starting using PPI but data not reported yet)

  General lack of data worldwide on outreach about non financial services, employment creation, but the MFIs in Philippines could report these data. No data on children’s education in the Philippines, despite one of main development goals

  External data validation: 31 MFIs sent a social rating (1 from Philippines, ASKI), work in progress on social audit (investors need to include SP in their due-diligence). Raising interest from MIVs in social audit

Global Challenges on reporting/data validation

  Creation of peer groups to assess the alignment between mission – internal activities - products and results

  Focus on social performance management and quality of infomation reported (collaboration with IMP-ACT)

  Comparative analysis at regional level

MIX Agenda on SP Analysis

Analyzing the correlation between financial and social performance will help us to:   Identify links to the MIX Global 100 and make recommendations for a set of new, more

comprehensive rankings; and   Identify links between MFIs’ performance and product development.

Previous research carried out by MIX on financial performance helped us identify four areas of financial performance and related indicators that are more likely to be affected by SP outcomes. These areas include:

  Productivity: Borrowers per Staff and Savers per Staff   Efficiency: Operating Efficiency (as % of Average Loan Portfolio) and Cost per Borrower

as % of GNIPC   Portfolio Quality: PAR30 & Write-off Ratio   Profitability: Return on Average Assets (ROA)

MIX Research Agenda: Linkages between Social Performance and Financial Performance

MIX agenda on social performance standards in 2010

•  New data collection started: MIX will collect SPS reports until September 2010

• Data analysis: First draft available at the SPTF meeting in Bern in July

• Strengthening data validation process

• Inclusion of social performance data in MIX Market

•  Change of the diamonds of transparency system

• Blog on social performance indicators in English, Spanish and French: www.spblog.org

For more information about MIX Social Performance Program please contact:

Ms. Micol Pistelli at mpistelli@themix.org

And visit our website: http://www.themix.org/standards/social-performance

For more information about the SPTF, visit:

http://www.sptf.info/ http://www.microfinancegateway.org/p/site/m/template.rc/1.11.48260/

Thank you!

MICROFINANCE INFORMATION EXCHANGE, INC.

The leading provider of business information and data services for the microfinance industry.

Web: www.themix.org

Email: info@themix.org

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1901 Pennsylvania Ave., NW, Suite 307 Washington, D.C. 20006 USA

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