Some social performance initiatives look at the intent and design of MFI programs to make sure programmatic objectives are clear and systems are in place to monitor the MFI's social goals. Other initiatives look at the "outputs" of programs to measure indicators, such as the breadth and depth of programs’ outreach, or at "outcomes," such as the changes in client status. However, a more holistic approach is needed that encompasses all three levels of social performance: operational, procedural, and outcome. An institution needs to align its operations with its mission; review, evaluate, and when necessary, adjust programs, products, and services regularly; and assess the impact on iys clients' lives over time.
| Framework for Achieving Social Objectives This framework is designed to help organizations understand the different levels of social performance and the questions they need to answer depending on their stated social objective. | ||
| INTENT AND DESIGN | What does the MFI seek to achieve? How are services and performance objectives designed toward this end? | |
| ACTIVITIES | How will services be provided to target clients through a specific organizational structure and designed to reach organizational objectives? | |
| OUTPUT | What services are delivered to whom? What is the breadth and depth of outreach? What is the quality of service? Are the services sustainable? | |
| OUTCOME/IMPACT | What changes result from the services provided (e.g. business growth, increased income, new skills)? What are the longer term sustainable changes produced by these outcomes (e.g. poverty reduction)? What are the unintended consequences? | |
Aligning Operations with Mission.
At the design level, the questions are whether the financial institution has clearly defined its social mission, and whether its services and work methods are consistent with that social mission. For example, if a financial institution is interested in reaching and serving very poor clients, is it using some sort of targeting mechanism to identify poor households (such as Prizma's Poverty Scorecard)? An institution might target those with thatched roofs (as opposed to tiled ones) in a particular region to ensure it reaches poor clients. The flip side of these questions is whether there are mechanisms in place that effectively screen out the poor or those the financial service provider intends to reach (for example, insistence on collateral).
Looking at Impact Processes.
Traditional evaluation focuses on end results, but social performance management (SPM) helps you to understand and manage the whole process by which impact is achieved. SPM’s regular monitoring of that process highlights adjustments you can make at multiple points along the way to improve practice. Improving program practice to be more responsive to clients will ultimately increase program impact. The information collected will also help you provide evidence of impact to external stakeholders.
Achieving Impact.
The highest level of social performance is the most difficult to measure, yet it is the one that best reflects the idea of social returns: impact. Impact is about concrete improvements in the lives of poor clients as a result of their access to financial services. A longstanding debate about the purpose of impact assessments and measurements revolves around “proving” impact versus “improving” the quality of financial services available to poor people. Typically, donors and other external funders want to prove the social and economic impact of microfinance. But rigorous studies that can truly isolate the impact of microfinance relative to many other variables are expensive and take years to complete.
In contrast, many MFIs and networks advocate user-friendly, simple methods that practitioners can use to understand the impact of their services on clients. Many MFIs want to use these methods to help them understand and manage their social performance. These methods may be less rigorous than the more comprehensive studies, but they offer valuable information on clients, allowing financial institutions to improve the design of their products.
In the end, the debate between proving and improving is likely to be resolved by recognizing the importance of larger, more rigorous impact studies (probably funded by donors) conducted periodically, as well as “lighter” versions that observe changes in outcomes and can be integrated into financial institutions’ operations. (Read more in-depth information on impact in the "Impact on Clients" section of this site.)