Most microfinance institutions (MFIs) have explicit social goals within their mission statements, but these are rarely seen as part of a deliberate and managed strategy. This is because achieving the social goals of microfinance is assumed to be an automatic process. As with financial goals, it is likely that your MFI will more successfully achieve its social goals if you monitor, assess and manage progress towards them. Social performance needs to be managed and reported as systematically as your financial performance. Financial and social performance are of equal importance in Microfinance – this goes for the MFIs as well as for Microfinance Investment Vehicles (MIV).
Social Performance Management for MFIs:
- Develop innovative ‘Social Performance Management – SPM’ practices to help MFIs improve the social and economic impact of their practices while enhancing financial viability.
- Strengthen capacity and support structure for local networks as a way to optimize, expand and sustain MFI capacity to manage social performance.
- Contribute to improving transparency so that MFIs with strong social performance have increased visibility, enabling them, for example, to capture SRI funds that require tangible social returns on their investments.
Social Performance Instrument for MIVs:
With over 150 million customers worldwide and growing strong, microfinance is increasingly in the public eye. The enthusiasm has boosted capital flows, especially in recent years. The sector’s dynamic growth has not been without pitfalls, however. There is a need for caution, especially in today’s financial context. It is time to go back to the basics: client proximity, simple and well-designed services, risk accountability and the double bottom line.
- Help investment funds define and implement their social strategy in developing a social audit tool for investors.
- Build a common framework for socially responsible investment in microfinance through creating synergies among actors developing audit, rating, reporting frameworks and certification initiatives. The framework will promote standardized, complementary approaches and good practices for the funds and contribute to improving transparency so that funds with strong social responsibility gain visibility and value their support to MFI investees towards a better impact on final clients.
Various funders and stakeholders are involved in the project. MIL is supporting the project with 100’000 Swiss Francs for 2010. The ressources are provided by the Liechtenstein Development Service (LED).
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