The Premier Source for Microfinance Data and Analysis This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. Microfinance Information Exchange Social Performance Data Validation An intro guide for MFIs February 17, 2013

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 2 The Quest for Social Performance Data Quality Unlike the majority of financial data on MIX Market, social performance (SP) data is not audited.  Data verification by a third party builds trust in the level of accuracy and reliability of SP data  If data is reliable, it can be used for analysis and investment decisions MFIMIX Valida- tion MIX

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. MIX verifies: The existence of policies, strategies, procedures, products, and services at an MFI corresponding with the indicators reported. MIX does not verify: X The suitability of products and services to clients’ needs, the appropriate implementation of policies, or the accuracy of data generated by an MFI’s surveys/MIS reports. 3 What does the SP validation methodology verify?

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. Every MFI that has reported SP data to MIX should review this Compendium and submit the supporting documents needed to verify their data to MIX’s analysts or MIX’s partners.this Compendium 4 Using the MIX SP Validation Compendium MFI X Staff Manual Page 5 RECRUITMENT POLICY / PROHIBITION OF ALL KINDS OF DISCRIMINATION: No discrimination is permitted in the work place made on the basis of race, color, sex, religion, age, family status, political opinion, national extraction or social origin, language or union membership which has the effect of nullifying or impairing equality of opportunity or treatment in employment or occupation. Any distinction, exclusion or preference in respect of particular job bases on the inherent requirements therefore shall not be deemed to be discrimination. ……..

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 5 The SP Data Validation Process MFI reports SP data to MIX MIX or MIX’s partner requests validating documents for certain data points MIX or MIX’s partner checks documents against SP data reported by MFI MIX publishes selected documents on MIX Market (only with MFI consent) MIX publishes a document summarizing the validation status of each indicator on that MFI’s MIX Market profile

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 6 External Validation: Social Ratings and the CERISE SPI One way that MIX reviews MFIs’ social performance data is by comparing them with the information contained in social ratings. The social rating should be not be dated more than two years prior to the year that the MFI reported SP data to MIX. MIX accepts social ratings from the following agencies: Planet Rating, M-CRIL, Microfinanza Rating and Microrate. MIX also collects the latest version of the CERISE SPI (social audit), which is compatible with MIX’s qualitative (“profile”) SP indicators. MFIs with an externally validated CERISE SPI do not need to report SP profile indicators to MIX Market — these data will be imported directly from the SPI. (If the MFI has already reported this information to MIX, MIX uses CERISE SPI as an additional way to verify the information the MFI reported.)

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 7 MFIs Without External Validation MFIs whose indicators are not validated through a CERISE SPI or a social rating are required to submit additional supporting documentation in order to validate their information. For a complete list of the documents required, see the Compendium.the Compendium In the case of qualitative (“profile”) data, if an MFI has already submitted a supporting document to MIX in the past, it does not need to resubmit the same document. Data reported on an annual basis (e.g. client poverty measurements) must be validated via separate documents for each year of data submission. Program Administration Manual MFI X October 2011 PROHIBITED INVESTMENT ACTIVITIES LIST Projects that involve conversion or degradation of critical forest areas or related natural habitats. Projects involving commercial manufacturing of ozone-depleting substances or the production or use of organic pollutants. Extraction or infrastructure projects in or impacting protected areas. …………

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 8 The USSPM and MIX SP Indicators 2 MIX indicators 5 MIX indicators 9 MIX indicators 4 MIX indicators UNDER CONSTRUCTION ! 5 MIX indicators Not included in USSPM: 1 MIX indicator on environmental policies

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 9 MIX Indicator Validation: USSPM 1b USSPM 1b: “The institution collects, reports, and ensures the accuracy of client-level data that are specific to the institutions social goals.” 3 areas of validation: 1.Poverty outreach data 2.Enterprises financed 3.Employment creation

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 10 “Define and Monitor Social Goals” Poverty Outreach Data Poverty outreach data subject to validation: 1.Poverty measurement tool used (e.g. PPI, per capita HH expenditure, etc.) 2.Poverty line of reference (e.g. national poverty line, US $1/day, etc.) 3.Number of clients surveyed during poverty measurement (“sample size”) 4.Percentage of clients below the poverty line of reference

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 11 “Define and Monitor Social Goals” Poverty Outreach Data There are three ways to validate an MFI’s poverty data: 1.Submit a Grameen PPI Certification (PPI data only) 2.Submit a social rating containing a field poverty survey 3.The form used by field officers to collect poverty data 4.A source document showing aggregate client poverty figures. Can be any of the following:  MIS report  Database extract  External survey OR AND

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. Employment creation data subject to validation: 1.Number of people employed in financed enterprises 2.Number of microenterprises surveyed for employment data Enterprises financed data subject to validation: 1.Number of enterprises financed 2.Number of start-up enterprises financed 3.Number of clients surveyed for enterprise data 12 “Define and Monitor Social Goals” Enterprises Financed/Employment Creation NOTE: Employment sample is in terms of enterprises but enterprise sample is in terms of clients!

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. Validating employment creation data: Submit a document showing aggregate employment data:  MIS report  Database extract  External survey Validating enterprises financed data: Submit a document showing aggregate enterprise/start- up enterprise data:  MIS report  Database extract  External survey 13 “Define and Monitor Social Goals” Enterprises Financed/Employment Creation The validation process is similar for both types of data!

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 14 MIX Indicator Validation: USSPM 2a and 2b USSPM 2a: “Members of the board of directors are committed to the institution’s social mission.” USSPM 2b: “Members of the board of directors hold the institution accountable to its social mission and social goals.”

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 15 “Ensure Board, Management, and Employee Commitment to Social Goals” Board information subject to validation: 1. Members of the Board have been trained on social performance management (USSPM 2a) 2. Formal Board committee that monitors social performance (USSPM 2b) MIX also collects data on Board size and gender composition, as well as multiple staff size and composition indicators, but only the two at right are part of the validation process.

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. For Board training: 3.Details on board SP orientation For Board committee: 3.Board minutes 4.Details on board composition, role, and responsibilities 16 “Ensure Board, Management, and Employee Commitment to Social Goals” There are three ways to validate an MFI’s Board data: 1.Submit a social rating from the last three years 2.Submit an externally validated CERISE SPI (certain versions only) OR AND

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 17 MIX Indicator Validation: USSPM 3a, 3b and 3e Client Protection Principles: MIX breaks the Smart Campaign’s 7 Client Protection Principles (CPPs) into 9 separate indicators.  CPP indicators can only be validated through external verification

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 18 “Treat Clients Responsibly” CPPMIX Indicator Appropriate product design and delivery Not captured through a CPP indicator Prevention of over-indebtedness 1.“The loan approval process requires evaluation of borrower repayment capacity…” 2.“Internal audits check household debt exposure…” 3.“Productivity targets and incentive systems value portfolio quality at least as highly as other factors…” Transparency 4.“Prices, terms and conditions of all financial products are fully disclosed…” 5.“Staff is trained to communicate effectively…” Responsible pricing Not captured through a CPP indicator Fair and respectful treatment of clients 6.“Acceptable and unacceptable debt collection practices are clearly spelled out…” 7. “The organization’s corporate culture values and rewards high standards of ethical behavior…” Mechanisms for complaint resolution 8.“A mechanism to handle customer complaints…” Privacy of client data 9.“Customers know how their information will be used…”

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 19 “Treat Clients Responsibly” There are four types of external CPP validation: 1.A social rating from the last three years 2.A Microfinance Institutional Rating 3.An externally validated CERISE SPI (certain versions only) 4.A Smart Campaign certificate OR Documents other than Smart certificate must corroborate each CPP for which an MFI has reported the associated indicator! OR

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 20 MIX Indicator Validation: USSPM 4a and 4c USSPM 4a: “The institution understands the needs and preferences of different types of clients.” USSPM 4c: “The institution’s products, services, delivery models, and channels are designed to benefit clients in line with social goals.”

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 21 “Design Products... Meet Clients’ Needs and Preferences” – Financial Products and Services MIX collects data on MFI financial product offerings in a number of ways:  Through audited financial statements  Through self-reported client and portfolio breakouts  Through social performance reporting Only product and service data collected as part of an MFI’s “social performance profile” is subject to validation.

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 22 “Design Products... Meet Clients’ Needs and Preferences” – Financial Products and Services While MIX Market contains detailed data on loan and savings products, only MIX’s SP data set expands this information to include other financial services! There are three ways to validate financial product and services offering: 1.Submit a social rating from the last three years 2.Submit an externally validated CERISE SPI (certain versions only) 3.Provide a detailed description of financial products and services OR

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 23 “Design Products... Meet Clients’ Needs and Preferences” – Nonfinancial Services MIX’s SP profile data collects information on four common types of nonfinancial services offered by MFIs...  Enterprise services aim to improve clients’ businesses or business-related skills  Education services seek to improve client skills or knowledge in areas not directly related to business or entrepreneurship  Health services comprise any and all health care provision  Women’s empowerment services include anything aimed at increasing the autonomy of women or dealing specifically with crimes against women

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 24 “Design Products... Meet Clients’ Needs and Preferences” – Nonfinancial Services Nonfinancial services offerings are validated in the same way as financial products and services! There are three ways to validate nonfinancial services offering: 1.Submit a social rating from the last three years 2.Submit an externally validated CERISE SPI (certain versions only) 3.Provide a detailed description of each nonfinancial services (this should include info on any partners involved as well) OR

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 25 “Design Products...” Poverty-oriented Products/Services MIX’s SP data asks MFIs to list any financial products and/or services that have been specifically designed to meet the needs of the poor or very poor. The key word in the above is designed. Products or services that fall into this category:  Are the result of specific research into the needs of poor and very poor clients  Usually involve assessing satisfaction and incorporating client feedback

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 26 “Design Products...” Poverty-oriented Products/Services If an MFI reports offering products or services specifically designed for the poor or very poor, it will be asked to provide a short description of these. The description of each product or service should not exceed 500 words and must contain:  Details on market research conducted in relation to the product or service  A summary of the client needs addressed by the product or service  The rationale for any changes made to the product or service

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 27 MIX Indicator Validation: USSPM 5a, 5b, and 2d USSPM 5a: “The institution follows a written HR policy that protects employees and creates a supportive working environment.” USSPM 5b: “The institution communicates to all employees the terms of their employment...” USSPM 2d: ”Employees are recruited, evaluated, and recognized based on both social and financial criteria.”

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 28 “Treat Employees Responsibly” Human Resources Policies and Staff Incentives MIX’s SP profile data contains multiple categories of HR policy and staff incentive basis.  HR policy categories: (1) transparency on salary, benefits, (2) protection at work, (3) equality, (4) other (write-in)  Staff incentive categories: (1) ability to attract new clients from target market, (2) outreach to rural/remote communities, (3) outreach to women, (4) quality of interaction with clients, (5) quality of social data collected, (6) client retention/drop-out rate, (7) portfolio quality, (8) other (write-in)

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 29 “Treat Employees Responsibly” Human Resources Policies and Staff Incentives For HR policies: 3.Original policy document and details on employee rights For staff incentives: 3.Original policy document 4.Summary of incentives given to current employees There are three ways to validate an MFI’s HR policies and four ways to validate staff incentives data: 1.Submit a social rating from the last three years 2.Submit an externally validated CERISE SPI (certain versions only) OR

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 30 MIX Indicator Validation: Social Responsibility to the Environment Although there are no USSPM covering protection of the environment, MIX’s SP profile indicators also contain environmental policy data... MIX collects information on whether an MFI: 1.Raises client awareness about environmental impacts 2.Trains/educates clients on environmental improvements 3.Includes specific clauses in loan contracts to mitigate specific environmental risks 4.Identifies enterprises with environmental risk 5.Offers lending lines linked to alternative energies 6.Offers lending lines linked to environmentally friendly products

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 31 MIX Indicator Validation: Social Responsibility to the Environment There are four ways to validate environmental policy data: 1.Submit a social rating from the last three years 2.Submit an externally validated CERISE SPI (certain versions only) 3.A policy document detailing all pro-environment activities (e.g. training, education, specific lending lines) 4.A list of the activities prohibited from financing on environmental grounds OR MFIs not reporting environmental data are still eligible for a certificate of data quality!

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. MIX partners with a dedicated group of industry leaders: MIX Global and Project Partners 32

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. Visit us on the Web:  Contact us: Interested in learning more about MIX? Sign up to receive our free newsletters!Sign up Find us on Facebook Follow us on Twitter: Regional Offices: Baku, Azerbaijan 44 J. Jabbarli st. Caspian Plaza I, 5 th Floor, Baku, Azerbaijan Lima, Peru Jirón León Velarde 333 Lince, Lima 14, Perú Rabat, Morocco Immeuble CDG Place Moulay Hassan BP 408 Rabat Morocco Hyderabad, India Road #12, Landmark Building, 5 th Floor, Banjara Hills, Hyderabad , India Microfinance Information Exchange 33 Headquarters: 1901 Pennsylvania Ave., NW, Suite 307 Washington, D.C USA