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Working Towards a Definition of Social Returns
2010, Ignatieva, I.

Reporting on social returns

This paper analyzes the balance that various MFIs strike between their social returns (SR) and financial returns (FR).

MFIs should be able to report their SR on a regular basis in the same manner as they report their FR. SR should be defined and measured in a way that is comparable to return on equity (ROE) and expressed as percentage growth of clients’ financial resources. The paper defines SR as change in clients’ savings over time. It presents findings from a study that analyzed 56 MFIs that were selected from over a thousand organizations. The study revealed that:

SR was negative in 61percent of MFIs in 2008, while their FR, expressed in terms of ROE was positive;
Most MFIs sustained ROE at a higher rate than clients’ savings growth;
Balance between FR and SR varied, with FR and SR being equal among some MFIs and FR being significantly higher among others.

Four scenarios are possible in MFIs that are willing to track their SR, namely, SR can exceed FR, be at the same or lower level than FR, or be negative. MFI stakeholders will have to decide which returns to maximize, and what the balance should be.

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Journal Title:
European Microfinance Platform - Newsletter

Journal Volume/Pages:
Summer 2010

Publisher(s):
European Microfinance Platform