Frequently Asked Questions

  1. What is social performance?
  2. Why is social performance important?
  3. How do I get my institution started in social performance?
  4. How much does it cost to develop a social performance system?
  5. What is the difference between responsible finance and social performance?
  6. What is the difference between social performance and impact?
  7. What is the difference between managing your financial performance and your social performance?
  8. What are the various social performance initiatives and how do they fit together?
  9. What are the tools and resources for measuring and managing social performance?
  10. Are there industry standards for social performance?
  11. What is the difference between a social audit and a social rating?
  12. Why are donors and investors interested in social performance data?
  13. What is Social Return on Investment (SROI)?
  14. What is the Social Performance Task Force (SPTF)?
  15. How can I get involved?

1. What is social performance?

Social performance is defined as “the effective translation of an institution’s mission into practice in line with accepted social values.”

In other words, it is about making an organization's social mission a reality, whatever that social mission is.  Commonly accepted social values include providing financial and/or nonfinancial services to greater numbers of poor and excluded people, improving the quality and relevance of services already being offered, reducing poverty, creating certain benefits for clients (e.g., increased revenue from their businesses, greater sense of empowerment, decreased vulnerability), and improving an MFI’s impact on the environment or the community, among many others.

Social performance management (SPM) is the implementation of management practices that translate social mission into practice. 

SPM includes setting clear goals, incorporating social goals into the institution's strategy, training employees on social performance, monitoring progress toward social goals, and using information gathered from social indicators to improve performance and practice. Social performance management is about achieving your goals and being socially responsible. 


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2. Why is social performance important?

Financial institutions that have a double mission, meaning that they seek to achieve both financial sustainability and one or more social goals, also have a social agenda cannot know whether they are meeting the social goals set out in their missions without deliberately assessing their social performance. Yet, the common performance measures in microfinance focus almost exclusively on an institution's financial performance. As a result, institutions are generally well aware of their financial positions, and have a range of financial data available to guide their strategic decisions, but have no clear idea of how they are performing against their social goals or what steps they would need to take to improve their social performance.

Additionally, social performance management is good for the financial bottom line.  Tracking and using social performance information to tailor products and services to clients' needs and preferences not only improves the usefulness of those products and services to clients, but also increases client retention rates while reducing the likelihood of default due to client over-indebtedness.  Furthermore, data from even relatively simple social performance indicators can be powerful marketing tools, providing tangible indicators of achievement that attract funding from socially minded investors and donors.

Note: Even financial institutions that do not have a social mission will find some of the tools and resources that fall under the umbrella of social performance useful. In particular, meeting adequate client protection standards is necessary to ensure that the institution does not harm clients, and is a non-negotiable aspect of social performance that any financial service provider should observe.  Client protection means, for example, making sure that each client fully understands the terms of a financial product before s/he chooses to use it; securing the privacy of client data; and following ethical practices in debt collection, among other principles.

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3. How do I get my institution started in social performance?

Developing a social performance system is possible for every institution, even those with limited time or financial resources.  Generally, the most important reform will be for the organization to incorporate a focus on social performance in all of its activities. The first step is making sure all management and staff understand what social performance management is and why it is important. Without understanding and buy-in from management and staff, even the most sophisticated social performance management system will not work.  A good way to introduce the topic is for the whole team to review together the Universal Standards for Social Performance Management.

Next, there should be a group exercise to determine the specific social goals (derived from the mission) of the institution, followed by the establishment of clear and realistic social goals and performance targets. Next comes developing the information systems needed to track progress toward your goals, and creating a "feedback loop" so that the institution actually uses the information it gathers.  This typically involves sharing and reviewing the data across departments, assessing performance based on the data, soliciting comments, and making operational changes and strategic decisions based on lessons learned.  Sharing and learning with other stakeholders, such as associations or investors, will also increase the effectiveness of the social performance management system.

To assess your institution's current level of social performance, use the SPI 4 tool.  It is free, fully aligned to the Universal Standards for SPM, and provides analysis of your strengths and gap areas.  You can use this analysis to develop an action plan to improve practice.

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4. How much does it cost to develop a social performance system?

There is not only one type of social performance system, and therefore there is not only one cost. The most cost effective way to make changes is to design them so that they can be implemented using only existing staff and resources. Changes that involve raising awareness and buy-in, such as discussing SPM with Board members, management, and staff, can have no associated costs.  Other changes, such as adjusting staff or client training procedures to incorporate SPM, can be relatively inexpensive.  Buying and implementing an entirely new management information system tends to be one of the more expensive changes, but is not always necessary. 

Though research is still very preliminary, it is also important to note that early anecdotal evidence is showing that the long term financial benefits of a social performance system will offset some, if not all, of the cost of implementing it. See below for ways in which social performance management can help improve financial performance:

  • Higher retention of clients through monitoring of, and responsiveness to, client satisfaction. Higher client retention rates translate into lower costs, as the cost of recruiting and training new clients exceeds that of retaining existing ones;
  • Higher retention of staff, as job satisfaction increases when staff are treated well and can see clearly how their work effects positive changes in clients’ lives.  Higher staff retention rates also translate into lower costs, as organizations spend less on hiring and training new staff;
  • Lower operational costs, as organizations use their resources more effectively when they better understand where their investments (e.g., publicity efforts, additional services offered) have been most or least successful;
  • Improved ability to attract new clients, as the institution’s ability to targets its services more closely to client need leads to positive word of mouth;
  • Demonstration of social performance to stakeholders, thus improving the institution’s ability to attract capital in a competitive funding market.

Please see the case studies below for real life examples of financial institutions that improved their financial performance by improving their social performance:

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5. What is the difference between responsible finance and social performance?

“Responsible finance” and “social performance” are not the same, though they do partially overlap.  Responsible finance refers to the delivery of financial services in a transparent and equitable fashion, and the responsibility to do no harm and act ethically (also called corporate citizenship) toward clients, staff, the community, and the environment.  While responsible finance seeks to create an enabling environment for clients to use microfinance effectively, it does not intend or commit to positive change for clients.

Social performance incorporates all of the elements of responsible finance, but also makes an explicit commitment to positive change for clients.  The specific social goals that institutions seek to achieve vary by institution, but they frequently involve goals such as reducing vulnerability, poverty reduction, and empowerment of women.

To summarize, “responsible finance” is about “doing no harm,” while social performance encompasses both "doing no harm" and “doing good.”

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6. What is the difference between social performance and impact?

The concepts of "social performance assessment" and "impact assessment" are often confused and used interchangeably, but there is a distinction.  Impact refers to an outcome (change) that can be directly attributed to an intervention, and is just one element of social performance.  The term “social performance” encompasses the entire process by which impact is created, often broken down into the following elements:

  • declared goals of the institution;
  • internal systems and activities, and their effectiveness in furthering the stated goals;
  • direct outputs of the institution (e.g., range and quality of services offered, numbers of very poor households reached, etc.);
  • outcomes observed in clients’ lives (e.g., increased revenue from their businesses, greater numbers of their children sent to school);
  • impact (i.e., the amount of the observed change in the client’s life that can be directly attributed to the institution’s programs). 
    • For example, a client may enjoy increased revenue from his fruit stand.  In part, that may be due to the products and services provided by the financial institution, and in part, the revenue increase may be due to the construction of a new road to the client’s town financed by the state.  Impact assessment will define what percentage of the total revenue increase is attributable to the microfinance institution’s program.

Another important distinction is that impact assessment is a much more complicated and costly analysis than the observation of outcomes, and is almost always undertaken by an external party, whereas the financial institution itself typically designs and manages all other elements of its social performance.

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7. What is the difference between managing your financial performance and your social performance?

Financial performance management (FPM) focuses on the sustainability of the financial institution. To understand its financial performance, the institution monitors data such as its revenue, costs, and profit level. Social performance management (SPM) focuses on client well-being. To understand its social performance, the institutions monitors data such as client satisfaction and changes in clients' lives (e.g., increased balance in clients' savings accounts). A double bottom line institution can and should use data on both financial and social performance to guide its decisions about prices, products, service delivery systems, and strategies, since success for the institution requires assuring both its sustainability and the creation of benefits for clients.

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8. What are the various social performance initiatives and how do they fit together?

Leaders in the microfinance industry have for years been developing a family of complementary initiatives that promote transparency, best practices, and standards for the wide range of activities that fall under social performance:

Click here for a market map of the responsible investment initiatives.

Click here for descriptions of each of the responsible investment initiatives.

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9. What are the tools and resources for measuring and managing social performance?

Many different tools and resources are available.

See the Resource Center on the SPTF website for resources on how to implement all of the practices in the Universal Standards manual, as well as additional resources on social performance management (SPM).

See the SP tools page for detailed information on audit tools, to help you assess your current performance, and rating tools, to help you demonstrate your performance to external stakeholders.

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10. Are there industry standards for social performance?

Yes!  After a multi-year and highly collaborative process, with input from every major stakeholder group in the microfinance industry, SPTF launched the Universal Standards for Social Performance Management in June 2012. The Universal Standards for Social Performance Management is a comprehensive manual of best practices, created by and for people in microfinance as a resource to help financial institutions achieve their social goals.

Click here to download a copy of the Universal Standards for SPM manual. 

Note that the Universal Standards manual includes the following:

  • an introduction, which explains how the Universal Standards were developed, by whom, for what reason, and how a financial institution can use the Universal Standards as a resource to help achieve its social goals.
  • standards, which are simple statements of what the institution should achieve;
  • essential practices, which are the management practices that the institution must implement to achieve each standard.

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11. What is the difference between a social audit and a social rating?

A social audit is an internal diagnostic tool that the management team of a financial institution can use to assess its social performance.  Generally, an audit explores whether the institution’s stated intentions are aligned with its actions, and whether the institution has the means and processes in place to attain its social objectives.

A social rating is a process conducted by an external organization and provides an objective opinion on a financial institution's degree of success in translating its mission into practice. While different rating agencies use different rating scales for the social rating, the Social Rating Guide provides a general comparison of each agencies’ rating grades.

Social audits and social ratings typically consider the same dimensions of an institution’s performance (e.g., effectiveness of internal systems, depth of outreach, quality of services, etc.), but there are important differences:

  • The primary audience for a social audit is internal.  Also, the process of the audit is interactive, it typically involves staff at all levels, and it results in suggestions for internal use.  The focus of the audit is improving practice within the financial institution.
  • The audience for a social rating is external.  The rater does not provide recommendations for improving practice, but reviews documents and assigns a rating based on its findings.  One important use for social ratings is to verify data that were self-reported to MIX Market.  A good rating may also attract interest from investors and donors.

For a list of social audit tools and social rating tools, see the SP Tools page.

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12. Why are donors and investors interested in social performance data?

Donors and investors are well aware that investment in microfinance does not automatically produce positive social returns.  Therefore, those who are committed to supporting institutions that are both financially sound and successful in their social mission demand credible data.  In the early years of microfinance, anecdotal stories of client transformation were often accepted as such evidence, but investors and donors today are generally too sophisticated in their due diligence to base investment decisions on anything less than comprehensive, high quality data and analysis.

Specifically, investors and donors tend to use social performance data in these ways:

  • To make prudent investment decisions: Invest in financial institutions that treat clients and staff well, and offer products and services that clearly serve clients' needs and preferences
  • To establish the true performance of a financial institution: Get data, not stories
  • To support a particular social mission: Invest in financial institutions that have success in certain, prioritized areas
  • To establish social performance standards and benchmarks: To gain a better understanding of how to measure success, and what degree of success is plausible, across the spectrum of social performance indicators
  • To build reputation / reduce reputational risk: Demonstrate positive social effects to peers and critics
  • To improve relationships with investees: Build trust and loyalty
  • To compare investees: Compare social performance among institutions, contexts, and countries to guide portfolio decisions

Additionally, experience in a variety of sectors suggests that social performance and financial performance can be mutually reinforcing.  Thus, investors whose primary focus is the financial health of an institution may still be interested in social performance data, particularly in areas such as client retention, avoidance of client over-indebtedness, and social responsibility.

For further information on this topic, see the article, "Why Social Performance Management?: A note for Investors, Donors, and MIVs."

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13. What is Social Return on Investment (SROI)?

SROI is a financial concept that incorporates principles from return on investment and cost-benefit analysis to derive an estimate of net social benefit. Typically, the net social benefit would be expressed as either the dollar value of social benefits minus social costs, or the ratio of social benefits to social costs.  The microfinance industry has not yet reached consensus on how to calculate SROI, but some organizations have developed and pilot tested their own methodologies.

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14. What is the Social Performance Task Force (SPTF)?

The Social Performance Task Force (SPTF) consists of over 1,500 members from all over the world and every microfinance stakeholder group: practitioners, donors and investors (multilateral, bilateral, and private), global, regional, and national associations, technical assistance providers, rating agencies, academics and researchers, regulators, and others.  Day-to-day operations of the Task Force are run by the SPTF Secretariat, while a 15-member Board of Directors with representatives from all major stakeholder groups provides strategic leadership and oversight.

SPTF defines social performance as the effective translation of a microfinance organization's mission into practice in line with commonly accepted social values, such as:

  • Serving increasing numbers of poorer and 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 vulnerability, and fulfilling basic needs;
  • Improving the social responsibility of the MFI towards its clients, its employees and the community it serves.

Vision: Social performance management is standard business practice and considered fundamental to achieving the social promise of microfinance.

Mission: To engage with microfinance stakeholders to develop, disseminate and promote standards and good practices for social performance management and reporting.

To achieve its vision and mission, SPTF pursues the following activities:

  • Providing a platform for dialogue, learning and collaboration;
  • Facilitating engagement and advocacy across the industry at all levels – practitioners, networks, support agencies, donors, investors, regulatory authorities;
  • Promoting implementation of the Universal Standards for Social Performance Management
  • Working toward setting industry standards for social performance, measurement, monitoring, reporting and training;
  • Promoting good practices and demonstrated success of financial institutions engaged in social performance management; and
  • Gathering quality evidence and research to demonstrate the business case for social performance management.

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15. How can I get involved?

To start, read the Universal Standards for Social Performance Management.  If you agree to make your best efforts to implement the Universal Standards in your institution (if you are a direct service provider), or promote them among your partners (for all other stakeholder groups),  click the Sign Up button on the SPTF homepage (www.sptf.info) and sign up to be a member of the Task Force.  This will keep you updated on the latest social performance research, conferences, and online trainings.  If you are interested in a particular topic within the umbrella of social performance, you may also join one of the Task Force working groups.  See the working groups page for a list of currently active working groups. 

Additionally, please share information regarding any social performance initiatives with which you are familiar that you do not yet see represented on the SPTF website.  We would welcome as well any impact studies you could share that have been conducted on your organization.
You are also invited to attend SPTF’s annual meeting.  Open to all Task Force members, the annual meeting usually takes place in June and provides a forum to update members on progress made in the previous year, to set the Task Force’s agenda for the upcoming year, and to explore/debate in detail particular areas of interest within the field of social performance.

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