Microfinance Initiatives: Social Performance Task Force

Core Social Indicators – Work in Progress

The goal of the Social Performance Task Force Subcommittee on Social Indicators is to select a core set of indicators for the microfinance industry that can be standardized and reported on globally.

The core indicators will perform several important functions for MFIs, donors, investors and the public at large. These include:

• make more information about microfinance available on a public information platform, the MIX Market
  
  
• improve performance benchmarks for MFIs. These benchmarks will also be integrated into the MicroBanking Bulletin
  
  
• improve social performance, increase funding, and mitigate reputational risk for microfinance

Core considerations in creating the indicators

• Short list: there should only be 10 to 20 indicators to minimize the burden on MFIs. MFIs do not need to report on all indicators, but only those that make sense for them.
  
  
• Buy-in from MFIs: the indicators need to be useful to the MFIs themselves (i.e. can be used to improve social performance)
  
  
• Buy-in from users of data: investors, donors and other industry members should endorse the indicators

Selection criteria for Core Indicators

The indicators should be:

• easy to report on for MFIs: ideally, drawing from data already captured by their MIS systems, or can easily be added
  
  
• objective: can be verified by third parties, but not need external sources to collect the data
  
  
• globally comparable

Types of indicators

The indicators fall into four different types:

• Context indicators: e.g. country and regional development indicators, services offered, MFI institutional profile, client outreach, etc.
  
  
• Process indictors: e.g. whether MFI conducts market research, whether MFI discloses effective interest rate, length of group meetings, types of collateral taken, MFI contributions to community, compliance with environmental standards, pay ratio male to female, percentage of females in management, staff turnover, etc.
  
  
• Outcome indicators: Millennium Development Goal indicators that measure household, enterprise, or individual outcomes

In selecting the final indicators, emphasis will be put on the role that each organization will play in promoting them:

• MFIs: Would you report?
  
  
• Funders/Networks: Would you promote? (i.e., would you encourage MFIs to report, even if you are supporting a specific initiative)
  
  
• Raters: Would you review?
  
  
• Everyone: Would you help maintain fresh? Would you help update standards?

Progress to date:

Present findings at the Social Performance Task Force meeting in Paris, France, June 10-12, 2007

Next Steps:

• Get feedback from MFIs.
  • A survey has been developed that asks MFIs to give feedback on the ease and relevance of the selected indicators. Several Regional and National MFI networks are testing the indicators.
    
    
• Get feedback from investors.
  • A targeted survey for social investors and commercial investors has been developed. Interviews are being conducted through another sub-committee of the Social Performance Task Force chaired by Frank Rubio of Oikocredit.
    
    
• Present findings at the Social Performance Task Force meeting in Paris, France in June.