Metrics That Matter

> Posted by Micol Pistelli

This is a guest posting by Micol Pistelli, Manager of Social Performance Standards at the Microfinance Information Exchange (MIX).

Micol Pistelli

Micol Pistelli

Measuring financial performance is a natural piece of any organization’s self-evaluation and goal setting, and the measures of such performance have been pretty well defined.
Most microfinance providers, however, pursue a double bottom line: strong financial performance, of course, but ultimately in the service of a social mission. The development of ways to measure that social performance – a framework of comparable, standardized data analogous to the financial performance framework – has been the focus since 2005 of a global industry-wide Social Performance Task Force.
But how does one begin to measure this second “bottom line”?
Last week, MIX distributed The Social Performance Standards Report to more than 900 MFIs . MIX created the report to collect information on the 22 core indicators selected by the Social Performance Task Force.
Spanish and French versions of the report go out this week.
In order to make it into the report, indicators had to be:

  • relevant,
  • easy for the MFI to obtain,
  • easy to verify,
  • not confidential for the MFI

Indicators cover topics including social responsibility to staff, cost of products to clients, poverty outreach, and social responsibility to the community and environment. The Report incorporates input from the Campaign for Client Protection, following the six principles identified by the Campaign and incorporating learning to date from the Beyond Codes Project.
Less than 24 hours after release, responses from MFIs have already started coming in (and, considering the time zone difference, this is pretty amazing!). MIX will begin publishing this data as soon as we receive it, and in autumn 2009, we will incorporate these indicators into the data on MIX Market. In the future, social performance information will also be included as a factor in determining the number of diamonds an MFI is awarded on the MIX Market for transparency.
By reporting on social performance, MFIs demonstrate a commitment to transparency, social goals, and improving their clients’ lives. If they can show tangible data on their achievements they can better position themselves to attract funding especially from socially responsible investors. We know that there is a huge interest from MFIs, networks, investors and donors for data on social performance, and we think this is where the microfinance industry is trending.