1. Introduction to Social Audits

2. Assessing Social Performance Process Results Audit ToolsRating Tools Intent & Design Internal Systems/ Activities OutputsOutcomes Impact Client Assessment Tools

3. Social Audit 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.

4. MFIs Use Social Audits to: Diagnose where where they are in social performance Prioritize what to improve Provide evidence for supporters Get staff on board Prepare for a social rating

5. Donors, and investors use social audits to: Diagnose social performance of investees/partners cost-effectively Identify areas for improvement that require TA and other types of support Monitor improvements in social performance Example: Oikocredit

6. Social audit tools Quality Audit Tool (QAT) ▫Microfinance Centre (MFC): www.mfc.org.pl/spm Social Performance Indicators (SPI) ▫CERISE: www.cerise-microfinance.org Global Reporting Initiative (GRI) ▫http://www.globalreporting.org/Home

7. Social Performance Indicators (SPI) Tool Focuses on process management, looking at an MFI’s stated objectives and how effectively its systems achieve them. Uses a wide range of indicators (12 criteria), giving an MFI an exhaustive overview of how its mission and actions size up against a number of common social objectives. Each SPI indicator is simple, directly attributable to an MFI, and based on data that is easily available to an MFI and that can be quickly checked by an external auditor. The indicators are grouped under four dimensions: ▫Outreach to the poor and excluded populations ▫Adaptation of products and services for targeted clients ▫Economic and social benefits for the clients ▫Incorporate social responsibility

8. Comparative review: How does it look? QATSPIGRI Duration on site5 days½ - 5 days0-2 months External consultants 0-211 MethodologyQualitative interviews, Document review, Audit panel QuestionnaireResearch on indicators ReportFinal report & recommendations Indicators integrated into MIS

9. Introduction to Social Ratings & the Rating Initiative

10. Assessing Social Performance Process Results Audit ToolsRating Tools Intent & Design Internal Systems/ Activities OutputsOutcomes Impact Client Assessment Tools

11. Social Ratings Purpose: Provides an external opinion on an MFI’s capacity to put their mission into practice and achieve social goals. Motivation: ▫Financial performance is only half the story for most MFIs ▫Systematic, relatively quick approach ▫Quicker and cheaper than ‘impact assessment’ ▫Focuses on improving management rather than trying to prove impact ▫Demonstrate social performance to external stakeholders

12. Most ratings examine six areas of Social Performance: Country development indicators Microfinance regulation and competition Socioeconomic context Balance between social and financial objectives Systems’ adequacy to achieve social mission Mission, Strategies, Systems Target clients- geographic distribution, gender, etc. Client retention Outreach Data collection and feedback from clients MIS for social data Client monitoring Toward clients (consumer protection), staff, community Environmental performance analysis Social Responsibility Diversity and appropriateness of products and services Transparency and costs Mechanisms for redress of client grievances Quality of services

13. Two Types of Social Ratings Standard Social Rating: As described on previous slide Social Rating Plus Field Data Collection: ▫Survey of clients and focus groups with clients ▫Adds field evidence for opinions on: client poverty levels, client awareness of institution’s policies and pricing, client ability to submit grievances, etc. ▫This data is usually not available from the MFI

14. The Social Rating Process MFI fills out standardized forms prior to visit from the rater Rater on-site: meets with managers and select staff; Reviews MIS and available documents Rater visits several branch offices; Interviews with staff and clients; Review of available documents Optional: Rater conducts focus groups and surveys with staff and clients for deep, field- level data Final report reviewed by MFI then published with standardized rating

15. Social Rating Benefits For the Industry ▫Increases transparency in the industry ▫Allows comparisons in social performance across MFIs For MFIs & Associations ▫ Provides a clear diagnostic of social performance strengths and weaknesses, an important step towards the establishment of an effective social performance management system ▫Facilitates access to financial capital For Investors and Donors ▫Provides information for resource allocation decisions ▫Supplements the due diligence process

16. Social Audit vs. Social Rating Social AuditSocial Rating Not graded, usually not public Focuses on improving practice within the MFI Guided self evaluation Internal: Used by the MFI to examine its own strengths and weaknesses Good for MFIs at all stages— especially those getting started with SPM For MFIs of all kinds– regardless of size, or commercial orientation Graded, can be published Provides an opinion on existing practices Independent evaluation External: Used by investors, donors, public to appraise the MFI Great for MFIs with established SPM For MFIs of all kinds– regardless of size, or commercial orientation

17. The Rating Initiative Co-funding service designed to encourage at least 800 MFIs to engage in regular social and financial ratings Runs 2008-2012 Funds 70% of a first-time social rating; 50% of a second-round social rating 89 social ratings approved as of December 2009 Visit: www.ratinginitiative.orgwww.ratinginitiative.org

18. Social Rating Agencies ▫M-CRIL: www.m-cril.comwww.m-cril.com ▫MicroFinanza Rating: www.microfinanzarating.com www.microfinanzarating.com ▫MicroRate: www.microrate.comwww.microrate.com ▫Planet Rating: www.planetrating.comwww.planetrating.com User Reviews ▫http://www.sptf.info/page/user-reviews-of-sp- toolshttp://www.sptf.info/page/user-reviews-of-sp- tools

19. Introduction to Client Assessment Tools

20. Assessing Social Performance Process Results Audit ToolsRating Tools Intent & Design Internal Systems/ Activities OutputsOutcomes Impact Client Assessment Tools

21. Purpose: Assess social performance outcomes at the client level. Including: changes in poverty and quality of life indicators as well as satisfaction. Motivation: Who are our clients? Are we affecting them? How can we prove it to others? How can we improve our products and services? Are they satisfied? Types: Poverty assessment, food security survey, PWR, client satisfaction surveys, exit surveys, focus groups

22. Uses of Client Assessment Tools Track performance against targets Signal early warnings Segment the portfolio Help clients & staff reflect on changes in lives over time Analyze clients’ use of services Ongoing and Annual reporting

23. Poverty Assessment Tools Measure the relative or absolute poverty level of clients Profile clients at entry and exit Track changes over time Use for targeting & client placement into programs