Social Performance Program

Social Performance Standards Micol Pistelli MIX 2010 RBAP‐MABS Na.onal Roundtable Conference  Hya= Hotel and Casino, Manila  June 2‐3, 2010 

Social Performance Standards 2010 RBAP-MABS NATIONAL ROUNDTABLE CONFERENCE, June 2, 2010 Micol Pistelli, Manager Social Performance Program, MIX

Overview  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

Performance is not incidental Performance is not incidental We can manage only what we explicitly define and measure Mission  Need to define desired performance  Need to measure results against desired performance Social Performance Financial Performance Performance Management 4

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. • he SP Task Force developed a common action plan that takes advantage of T 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. Transparency SPTF Improving Practice Communication

How to measure social performance? Internal Mission systems and Outputs Outcomes activities - Relevant The 22 indicators of MIX/SPTF:  - Useful  - Possible to be validated  - No confidential

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

Social Performance Indicators Intent Internal systems/ Outputs Outcomes Impact activities [---------------------------- PROCESS---------------------------- - - -- ] [-------------------------------- RESULTS -----------------------------] Q1–Mission & Q3–Range of Products and Q8– Social responsibility to Outreach Social Goals Services clients Q11- Geographic outreach Q2- Governance (financial & non-financial) Q9-Cost of services to clients Q12- Women outreach Q4–Training of staff on Q10–Social responsibility to Q13- Clients outreach by social performance staff lending methodology Q5–Staff performance Q15 – Social responsibility to Indicators appraisal and incentives the community Outputs and outcomes Q6–Market research on Q16–Social responsibility to Q17-Outreach by Products clients the environment Q18–Employment creation Q7–Measuring client Q19–Children in School retention Q20–Poor clients at entry Q14–Poverty assessment Q21–Clients in poverty Q22–Clients out of poverty

MFIs that have reported on SPS to MIX in 2009  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

Profileofof MFIs reporting Profile the 208 MFIs reporting Type of MFI  MFIs by Region  1  22  8  NGO  21  15  LAC  80  NBFI  106  41  ECA  BANK  71  ASIA  COOPERATIVE  51  MENA  Other  Africa  Years of microﬁnance  Number of Ac2ve Borrowers  opera2ons  54  52  ≤5000  ≤3 years  16  5000‐25000  72  4‐8 years  48  35  25000‐50000  9‐13 years  67  50000+  72  14+ years 

Overview of the 5 MFIs in the Philippines  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

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

Global Challenges on reporting/data validation  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

MIX Agenda on SP Analysis  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 Research Agenda: Linkages between Social Performance and Financial Performance 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 agenda on social performance standards in 2010 • New data collection started: MIX will collect SPS reports until September 2010 • ata analysis: First draft available at the SPTF meeting in Bern in D July • trengthening data validation process S • nclusion of social performance data in MIX Market I • Change of the diamonds of transparency system • log on social performance indicators in English, Spanish and B French: www.spblog.org

Thank you! 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/

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 Headquarters: 1901 Pennsylvania Ave., NW, Suite 307 Washington, D.C. 20006 USA Other Locations Lima, Peru ● Rabat, Morocco ● Hyderabad, India

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Social Performance Program

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