MICROFINANCE PAPER WRAP-UP: Advances in Measuring Social Performance for Microfinance Institutions by Micol Pistelli

Written by Micol Pistelli, Manager of Social Performance at MIX for Workshop 8 at the IDB Foromic 2009 (Inter-American Forum on Microfinance) in Arequipa, Peru. Published October 2009 by the MIX, 2 pages, available at: http://www.themix.org/publications/executive-summary-social-performance-standards-presentation-2009

Micol Pistelli, manager of Social Performance at the MIX Market, the microfinance information clearinghouse, and author of “Advances in Measuring Social Performance- Why Does it Matter?” explains why he believes social performance indicators are necessary for the microfinance industry. Ms. Pistelli asserts that social performance management and reporting allow for increased transparency which is important not only in attracting funds, but also in ensuring that clients’ needs are met [1].

Ms. Pistelli says transparency also allows clients, stakeholders and prospective investors to assess microfinance institutions (MFIs) in a fair and holistic fashion. He also explains that a universal set of indicators helps these individuals to compare MFIs with one another on a level playing field. This universal characteristic allows MFIs to assess themselves vis-à-vis their peers, including their own progress and shortcomings relative to the microfinance industry at large.

A previous MicroCapital story discusses the importance of having a cohesive set of indicators for the microfinance industry. For more information, please visit https://www.microcapital.org/paper-wrap-up-beyond-good-intentions-measuring-the-social-performance-of-microfinance-institutions-by-syed-hashemi/#more-1429.

With respect to the creation and implementation of such indicators, Ms. Pistelli draws attention to The Social Performance Task Force (SPTF). The SPTF is an international multi-stakeholder group established in March 2005 by the Consultative Group to Assist the Poor (CGAP), the Argidius Foundation, and the Ford Foundation. The purpose of the SPTF is to define social performance standards for the microfinance industry and address questions relating to social performance measurement and management. The SPTF consists of over 350 leaders from the microfinance field. It has developed 22 indicators designed to measure an MFI’s internal systems and activities, related outputs, and observed changes in the lives of clients.

A previously published MicroCapital story provides details regarding these indicators. For more information, please visit https://www.microcapital.org/microcapital-story-microfinance-information-exchange-mix-announces-release-of-the-social-performance-task-force%E2%80%99s-sptf-social-performance-indicators-survey/.

In February 2009, MIX sent a survey to all MFIs registered in the MIX Market to collect information on the 22 aforementioned indicators. Since then, over 100 MFIs have reported their social performance information. Half of these reports are now available on the MIX website.

Ms. Pistelli concludes by acknowledging that the integration of social performance into management is a gradual process, one which requires extensive planning and a management information system that can keep track of indicators. For further MicroCapital coverage of this topic, please visit https://www.microcapital.org/paper-wrap-up-beyond-good-intentions-measuring-the-social-performance-of-microfinance-institutions-by-syed-hashemi/#more-1429.

For MFIs interesting in reporting social data, please visit http://www.mixmarket.org/contribute-data.

By: Diya Chopra, Research Associate

Bibliography:

[1] “Advances in Measuring Social Performance: Why Does it Matter?” by Micol Pistelli. October 2009. MIX Market.

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