1. SPM Essentials Module 1: The SPM Framework
Insert the date and your name into this slide.

2. Photo credit: Fonkoze, Haiti
Must of us believe that the microfinance industry exists to provide the poor with access to quality financial services that improve their quality of life. But are we actively managing our institutions to achieve real social outcomes? Or are we hoping that by virtue of simply working with clients like this (woman pictured), our programs are changing their lives for the better?
Photo credit: Fonkoze, Haiti
Photo credit: Fonkoze, Haiti

3. Photos credit: Fonkoze, Haiti
Photo credit: Fonkoze, Haiti
Before the industry had developed the practice of social performance management, we talked about the effects of microfinance like this: “I know that my institution is making a difference because this woman [the “before” picture] is now living like this [the “after” picture]. I’m living out my mission!”
We claimed social and used photo, stories, anecdotes, gut feeling to demonstrate our social performance.
While photos like this are powerful and important, it’s becoming clear that storytelling alone doesn’t help an institution manage its business. It may help in the short run, to attract some donors, but even donors and investors now want social data, and they want to see strong performance management, not just good intentions.
It’s also become clear that managing FP exclusively, without knowing how your FP effects clients has led to mission drift, serious questions about the impact of microfinance, OI crises, and simply unbalanced management of institutions—where the institution’s real attention is directed at financial performance, instead of being shared equally between financial performance and social performance.
I think that most of us would prefer to move from a scenario where we are talking about social performance in terms of anecdotes to talking about it like this:
-Our institution knows that this client’s life has improved because we administered a poverty scorecard and a food security survey when she entered the program, and took the same measurements after 36 months. Her scores increased.
-We use these tools on a sample of clients—some clients in urban areas and some in rural areas. We segment these data so we know how urban and rural clients are different.
-In fact, our analysis showed that urban clients actually demand savings more than credit, so we designed a savings product for urban clients.
-We also monitor client satisfaction. We found out that clients in costal areas were unsatisfied about the wait time between loans—they need their loans quickly to keep their fishing businesses going. So we are experimenting with ways to reduce that wait time. We think it will satisfy clients and help our institution retain those clients.
-Finally, we are beginning to see some warning signs of over-indebtedness among our rural farming clients. We discussed this issue with our Board and they are committed to helping us avoid an over-indebtedness crisis.
-In short, our institution feels that we understand client needs, client satisfaction, and how clients experience our products and services, and that helps us serve them better.
What if all institutions could talk about their social performance in really concrete terms like this? That is the goal of the SPTF and many of the members that we work with.
(These photos come from Fonkoze, Haiti. For more information about Fonkoze’s robust SPM system, please see:

4. The Definition of Social Performance
The effective translation of an institution’s mission into practice.
Social performance is the effective translation of an institution’s mission into practice. We recognize that if you take a sample 100 MFIs, they will have 100 different mission statements. So social performance is not about all MFIs achieving the same thing, but it’s about each MFI achieving its own social mission.

5. Common social missions:
Serving increasing numbers of poorer and more excluded people sustainably
Improving the quality & appropriateness of financial services through assessment of clients’ needs
Increasing clients’ social capital, assets, income, and access to services
Reducing clients’ vulnerability
Improving social responsibility of the MFI toward clients, employees, and communities
MAIN POINT: The definition of social performance is “The effective translation of an institution’s mission into practice in line with accepted social goals.” When we talk about commonly accepted social goals, we include:
Serving increasing numbers of poorer and more excluded people sustainably
Improving the quality and appropriateness of financial services available to target clients through systematic assessment of their specific needs
Creating benefits for clients of microfinance, their families, and communities in terms of increasing social capital, assets, income, and access to services
Reducing clients’ vulnerability
Improving the social responsibility of the MFI towards its clients, its employees and the community it serves

6. SP vs. SPM
Social performance—whether or not you achieve your social goals.
Social performance management—how you achieve your social goals.
An easy way to think about the difference between social performance and social performance management is this: social performance is the translation of your mission into practice, in other words, it’s whether or not you achieve your social goals. While social performance management is the process for achieving your social goals, in other words, how you achieve your social goals.
This course will mainly focus on social performance management. While we are very interested in client outcomes and whether or not institutions are actually achieving their social goals, we focus much of our work on management because we believe that how an institution is managed has a huge impact on whether or not it achieves its social goals. It is our assumption—based on experience—that better management means better results.

7. The Definition of “SPM”
The processes an institution uses to translate its mission into practice. These include:
Setting social targets;
Measuring the progress toward these targets;
Using the results for strategic decision-making- namely, to improve products, services, and delivery channels.
This is the definition of SPM.

8. Achieve Your Mission Through Performance Management
Social Performance
Financial Performance
MAIN POINT: To achieve its mission, an institution must carefully manage both social performance and financial performance. They are equally important to the success of the institution.
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Talking points:
In microfinance institutions with a social mission, managers build a successful MFI (the house in this diagram) by managing two types of performance - financial performance and social performance (the walls of the house). Each is equally important to the success of the institution. MFIs that manage both their financial performance and social performance are more likely to achieve their mission (the roof).
Look at the walls of the house. Right now, they are divided between social performance and financial performance. For your institution (or those that you work with), how would you re-draw that line to reflect the current situation in your institution? Does your institution give equal weight to both social performance and financial performance, or would that line move up and to the right, so that financial performance has the larger share of the MFI’s attention? Where would you like that line to be in 6 months? 1 year? 2 years?
Someday we will refer to Microfinance Performance Management and it will be clear that we are referring to measuring, tracking and improving all aspects of the mission. For now, we have to designate social and financial performance separately to be sure we focus on the social as well as the financial.
Performance Management

9. Managing for Social Results
Attendance recorded by LO’s and reported to HQ
Use performance results to improve products, services, & systems
90% attendance by borrowers
Measure progress toward desired performance
MAIN POINT: It is not sufficient to rely on client stories, photos, and observations to demonstrate your institution’s social performance.
Solid performance management requires that institutions define their desired social performance, measure their progress toward these goals, and use the performance information to improve products and services.
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Talking points:
There are three primary steps in the process of managing your institution’s social performance:
Performance is not incidental, so your institution must define desired performance. For social performance, this could mean that we set goals for rural outreach, client protection, and environmental impacts.
Institutions value what they measure (in other words, institutions pay attention to the aspects of performance for which they have indicators), so your institution must measure progress toward desired performance. For social performance, this means that an institution quantifies and then tracks its social goals.
Sound management requires informed decision-making, so institutions must use client data to inform decisions about products and services. For example, if an institution found through interviews with clients that many did not understand the pricing of their loans, they might use that information to improve the sales process so that they offer better customer service, and have better-informed customers.
Notice that these steps would be similar if we replaced “social” with “financial.” The concept of performance management is the same for both, but many of us are not used to thinking about defining and measuring social objectives, and using social performance results to manage our institutions.
LO training led to better attendance
Define desired performance

10. Social Performance Pathway
Information use
Results
Reaching target clients
Meeting target clients’ needs
Change in target clients’ lives
Strategy
Operations
MAIN POINT: Social performance is not just about results or impact—it is also about the process of acheiving results. This graphic shows how information about the insitution’s social results (typically, client data) can be used to improve overall institutional performance—strategy, operations, and results.
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Talking points:
In order to acheive desired results, an institution:
Sets strategies by: establishing social goals and objectives, and deciding on the range of products and services it will offer.
Manages its operations with: a good MIS, well-designed products and services, client-centered service delivery, and well-trained human resources.
Uses the results to continually improve performance.
a. Social results include outputs, for example:
-Reaching target clients
-Offering non-financial services such as health education and financial literacy
-Lowering client exit rates
b. Social results also include outcomes, for example:
-Improving the poverty levels among clients
-Increasing the literacy rates among clients
Institutions can use these results—both good and bad—to continually make adjustements and improvements to their
strategy and operations. 10

11. How the major initiatives fit together
Social Performance
Client Protection
+ Institutional Commitment
Invest in systems to manage double / triple bottom line
Measure client outcomes
Tailor services to client need and vulnerability
Smart Campaign
MFT
Different Actors
This slide is intended to help practitioners begin to see how several of the major SP initiatives fit together.
Start at the bottom left-hand of the slide. At the far left, we have the world of responsible finance. This is the part of microfinance that is concerned with providing access to clients without harming them—we also talk about this as client protection. As you move to the right, you enter the part of the industry that is concerned not only with financial inclusion that does not harm clients, but also with inclusion that is committed to improving client’s lives. Together, these two industry concerns (client protection and improving client’s lives) make up social performance.
Move back to the left side. Two of the most important initiatives that inhabit the client protection space are the Smart Campaign—which advances the 7 principles of client protection and is setting industry standards for client protection, and MFTransparency, which promotes pricing transparency in the industry. It is pictured inside the Smart Campaign circle because pricing transparency is one part of a larger client protection movement. The Smart Campaign and MFT work very closely together.
Moving across to the space of institutional commitment to improving client’s lives, we would find all of the initiatives that are designed to help MFIs and other stakeholders:
•Invest in systems to manage double / triple bottom line
•Measure client outcomes
•Tailor services to client need and vulnerability
We can list on this slide all of the initiatives that fit this description, but we will talk about several of them throughout the course. What’s important to recognize is that this is where we would put initiatives that are expressly concerned with the management and results of institutions that have a stated social mission to improve clients’ lives. In order for an institution to have this intention, it must first practice responsible finance. Client protection is the foundation.
Finally, there are three important initiatives that span both spaces.
The Imp-Act Consortium offers very practical guidance on how to implement SPM. Most notably through the SPM Practice Guide, “Putting the ‘Social’ into Performance Management; the SPM Resource Centre; and the SPM Network. (Links to all three can be found in your Resource Handbook.
The SPTF Universal Standards for SPM are currently in development and will establish industry standards for SPM. See Module 0, as well as the SPTF website for more information.
The MIX Social Performance Report allows MFIs to report their social performance alongside their financial performance. See Module 4 in the Resource Handbook for more information, as well as the MIX website (
Guidance: Imp-Act Consortium
Standards: SPTF Universal Standards for SPM
Reporting: The MIX SP Report
Responsible Finance (do no harm)
Improve Clients’ Lives

12. Save the Date for Module 2 Subject: Translating your mission into social targets Date/Time: Thursday, November 1st at 9:00 EDT Don’t miss it!
Slides 10, 11, 12, and 13 may be useful to you during the question and answer portion of your presentation. They answer the following questions:
Slide 10: what are the tools used to evaluate and improve social performance?
Slide 11: what is the difference between responsible finance and social performance?
Slide 12: How do you define the different dimensions of SP?
Slide 13: How does the SP pathway affect operations?

13. Additional Slides
These slides were not discussed during the training but may also be useful.

14. Main Stakeholders Invested in SPM
Financial service providers (MFIs) invest in SPM to:
Inform management decisions
Preempt problems (e.g. unethical staff behavior, client drop-out)
Retain clients
Attract investors/donors
Avoid reputational risk
Three of important stakeholders invested in social performance are: MFIs; Investors, MIVs & Donors; and Microfinance Associations.
NOTE TO PRESENTER:
MFIs are increasingly interested in managing and reporting their social performance.
MFIs benefit from measuring social performance because the data inform management decisions—such as adjusting loan products or reaching new target clients, and preempt problems such as client drop-out and staff turnover.
MFIs that use social performance to create client-centered products and strong client protection will be able to attract and retain their clients.
MFIs that demonstrate strong social performance are good investments for donors and investors.
Investors, MIVs, and Donors: Investors and donors are concerned with the social performance of their investees because:
Social performance data helps them make good investment decisions.
Investors and donors find that client-centered MFIs make good investments because they attract and retain their clients.
Social performance data is vital to those fund investors who demand a social return on their investment.
Investors in Practice: “We want our investments to go to the best problem solvers, not the best storytellers.” - Acumen Fund
Microfinance Associations: have begun supporting their members by:
Offering training, technical assistance, and other support for social performance,
Encouraging their members to report social performance data to MIX Market,
Developing Codes of Conduct for members, and
Fundraising to support the social performance initiatives of their members.

15. Main Stakeholders Invested in SPM
Investors, MIVs, and Donors invest in SPM to:
Ensure they invest in social institutions
Get data, not stories
Preempt problems & attract and retain clients
Attract & report to their own investors
Avoid reputational risk
Three of important stakeholders invested in social performance are: MFIs; Investors, MIVs & Donors; and Microfinance Associations.
NOTE TO PRESENTER:
MFIs are increasingly interested in managing and reporting their social performance.
MFIs benefit from measuring social performance because the data inform management decisions—such as adjusting loan products or reaching new target clients, and preempt problems such as client drop-out and staff turnover.
MFIs that use social performance to create client-centered products and strong client protection will be able to attract and retain their clients.
MFIs that demonstrate strong social performance are good investments for donors and investors.
Investors, MIVs, and Donors: Investors and donors are concerned with the social performance of their investees because:
Social performance data helps them make good investment decisions.
Investors and donors find that client-centered MFIs make good investments because they attract and retain their clients.
Social performance data is vital to those fund investors who demand a social return on their investment.
Investors in Practice: “We want our investments to go to the best problem solvers, not the best storytellers.” - Acumen Fund
Microfinance Associations: have begun supporting their members by:
Offering training, technical assistance, and other support for social performance,
Encouraging their members to report social performance data to MIX Market,
Developing Codes of Conduct for members, and
Fundraising to support the social performance initiatives of their members.

16. Main Stakeholders Invested in SPM
Microfinance Associations invest in SPM to:
Offer the most appropriate and relevant information and training to member MFIs
Offer assistance with SP reporting
Offer technical assistance for SPM
Assist members in developing tools and codes of conduct
Ensure that the local industry keeps/develops a client focus
Three of important stakeholders invested in social performance are: MFIs; Investors, MIVs & Donors; and Microfinance Associations.
NOTE TO PRESENTER:
MFIs are increasingly interested in managing and reporting their social performance.
MFIs benefit from measuring social performance because the data inform management decisions—such as adjusting loan products or reaching new target clients, and preempt problems such as client drop-out and staff turnover.
MFIs that use social performance to create client-centered products and strong client protection will be able to attract and retain their clients.
MFIs that demonstrate strong social performance are good investments for donors and investors.
Investors, MIVs, and Donors: Investors and donors are concerned with the social performance of their investees because:
Social performance data helps them make good investment decisions.
Investors and donors find that client-centered MFIs make good investments because they attract and retain their clients.
Social performance data is vital to those fund investors who demand a social return on their investment.
Investors in Practice: “We want our investments to go to the best problem solvers, not the best storytellers.” - Acumen Fund
Microfinance Associations: have begun supporting their members by:
Offering training, technical assistance, and other support for social performance,
Encouraging their members to report social performance data to MIX Market,
Developing Codes of Conduct for members, and
Fundraising to support the social performance initiatives of their members.

17. Dimensions of Social Performance
Intent & Design
Internal Systems/
Activities
Outputs
Outcomes
MAIN POINT: The process of social performance management can be divided into five dimensions. The dimensions describe the process of implementing social performance management in the following way: determine a mission, put in place systems and activities to achieve that mission, work toward and measure social outputs (type of clients reached and how they are reached) and work toward and measure social outcomes (change in clients’ lives). Impact is separated from the process because it involves a statistical study that demonstrates attribution—it is not a key part of the management process.
The industry has developed resources and tools to evaluate and guide institutions during each of these phases. We don’t have time to discuss these resources and tools now, but you can find out more information on the Social Performance Task Force website:
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Talking points:
To demonstrate each dimension, let’s use an example MFI:
This MFI’s mission (intent) is to serve the poor with credit and financial literacy training. Within this mission, the institution’s three objectives (design) are: 1) to reach clients living on less than $2/day, 2) help them to cross that poverty line, and 3) to improve clients’ financial literacy.
2. The MFI’s internal systems and activities are used to meet these objectives. They includes a staff incentive system that rewards the recruitment of clients living under $2/day. It also includes focus groups with clients about the effectiveness of the financial literacy program, and a system for tracking the poverty level of clients.
3. This MFI will want to know it outputs so it will ask questions such as: what percentage of our clients live below $2/day? Have we designed our financial course to accommodate illiterate clients? Do we observe strong client protection practices? The answers to these questions are the institution’s social outputs.
4. Outcomes refer to the changes that occur among this MFI’s clients. For example, after measuring its social performance for 2009, the MFI determines that 43% of clients moved above the $2/day poverty line after 3 years in the program, and 85% of clients reported that they are better money managers after taking the financial literacy course. These are the institution’s social outcomes.
5. Outcomes are not the same as impact. Unlike outcomes, impacts can be directly attributed to the institution’s intervention with the client. Impact studies are expensive and involve a control group of people who are not receiving the microfinance intervention. Therefore, social performance at the MFI level commonly begins with intent & design, and ends with outcomes.
Impact

18. Dimensions of Social Performance
Intent & Design
Internal Systems/
Activities
Outputs
Outcomes
Impact
INTENT AND DESIGN
What is the mission of the institution?
Does it have clear social objectives?
INTERNAL SYSTEMS & ACTIVITIES
What activities will the institution undertake to achieve its social mission?
Are systems designed and in place to achieve those objectives?
OUTPUTS Does the institution serve poor and very poor people?
Are the products designed to meet their needs?
OUTCOMES
Have clients experienced social and economic improvements?
IMPACT
Can change in client welfare be attributed to institutional activities?
MAIN POINT: The process of social performance management can be divided into five dimensions. The dimensions describe the process of implementing social performance management in the following way: determine a mission, put in place systems and activities to achieve that mission, work toward and measure social outputs (type of clients reached and how they are reached) and work toward and measure social outcomes (change in clients’ lives). Impact is separated from the process because it involves a statistical study that demonstrates attribution—it is not a key part of the management process.
The industry has developed resources and tools to evaluate and guide institutions during each of these phases. We don’t have time to discuss these resources and tools now, but you can find out more information on the Social Performance Task Force website:
___________________________________________________________________________________________________________
Talking points:
To demonstrate each dimension, let’s use an example MFI:
This MFI’s mission (intent) is to serve the poor with credit and financial literacy training. Within this mission, the institution’s three objectives (design) are: 1) to reach clients living on less than $2/day, 2) help them to cross that poverty line, and 3) to improve clients’ financial literacy.
2. The MFI’s internal systems and activities are used to meet these objectives. They includes a staff incentive system that rewards the recruitment of clients living under $2/day. It also includes focus groups with clients about the effectiveness of the financial literacy program, and a system for tracking the poverty level of clients.
3. This MFI will want to know it outputs so it will ask questions such as: what percentage of our clients live below $2/day? Have we designed our financial course to accommodate illiterate clients? Do we observe strong client protection practices? The answers to these questions are the institution’s social outputs.
4. Outcomes refer to the changes that occur among this MFI’s clients. For example, after measuring its social performance for 2009, the MFI determines that 43% of clients moved above the $2/day poverty line after 3 years in the program, and 85% of clients reported that they are better money managers after taking the financial literacy course. These are the institution’s social outcomes.
5. Outcomes are not the same as impact. Unlike outcomes, impacts can be directly attributed to the institution’s intervention with the client. Impact studies are expensive and involve a control group of people who are not receiving the microfinance intervention. Therefore, social performance at the MFI level commonly begins with intent & design, and ends with outcomes.

19. Assessing Social Performance
Intent & Design
Internal Systems/
Activities
Outputs
Outcomes
Impact
Process
Results
Impact
Audit Tools:
CERISE SPI Tool
Quality Audit Tool
MicroSave SPM Audit
Rating Tools:
M-CRIL
MicroFinanza Rating
MicroRate
Planet Rating
Client Data Tools:
Progress Out of Poverty Index (PPI)
Poverty Assessment Tool (PAT)
Client measurement tools (e.g., satisfaction, dropout, food security, focus groups)
Econometric studies
There are a variety of tools available for assessing social performance. The tools fit into three categories.
Social Audit Tools- A social audit is a diagnostic tool that assesses whether or not an MFI has the systems in place to achieve its stated social objectives. It identifies strengths and weaknesses to prioritize areas for improvement.
Social Rating Tools- A social rating provides an external opinion on an MFI’s capacity to put its mission into practice and achieve social goals. The rating provides a score which MFIs, investors, and donors can use to analyze MFIs. There are four specialized rating agencies to choose from, and the Rating Initiative provides funding for MFIs receiving first- and second-round ratings. (
Client Data Tools- Client data tools assess social performance outcomes at the client level, including: changes in poverty and quality of life indicators as well as satisfaction. They help answer the questions: Who are our clients? How are we affecting their lives? Are they satisfied with our products and services? Types of client assessment tools: Poverty assessment, food security survey, PWR, client satisfaction surveys, exit surveys, focus groups.
Where the tools fit in the social performance framework:
Audit Tools focus on the social performance PROCESS—defining the mission, setting goals, and putting systems and activities in place to achieve those goals.
Social Rating Tools cover the process primarily, but also discuss RESULTS- social outputs such as effectiveness of non-financial services, clients with loans for the first time, and client awareness of loan terms.
Client Data Tools focus on social performance RESULTS—social outputs such as the poverty levels of clients, and social outcomes such as the change in client food security over time.