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1998, CERISE is richly diverse, bringing together a variety of practitioners, researchers,

donors and investors from the North and South. CERISE was founded out of the desire of its

five membersto share and learn from each other. Our work is focused on four themes:

1)Impact and Social Performance

2)Agricultural and Rural Finance3)Governance and Social Viability

4)Intervention Methods

In each of these areas, we have reflected on the experiences of our members to draw lessons

and, in some cases, develop operational tools. This process of capitalizing on each others

experiences has created alliances and synergies throughout the microfinance sector.

Coordinating this network of alliances has become a key element of our work.

Impact and Social PerformanceFor many years, sustainabilty was all about "the financials"social performance was takenfor granted. CERISE and its partners were the first to pioneer a social performance

assessment tool for microfinance, in 2001. Developed in collaboration with networks from

the North and South, the Social Performance Indicators is one of the most widely used

social audit tools in the sector today. In addition to the SPI, CERISE has also developed

innovative methodologies for assessing impact.

CERISE has spearheaded a whole new facet of performance assessment to complement

financial analysis. Our goal is to help MFIs become sustainable while genuinely contributing

to development.

In a context of financial turbulence and growing skepticism, these innovative tools offer

constructive solutions for MFIs.

Social Auditing of MFIs

Microfinance is maturing. Its no wonder donors and social investors are demanding greater

accountability from their MFI partners, who do they really serve and what effects are they

are having on clients? Some MFIs also sense that improving social performance will, in the

medium-term, boost their financial performance.

Social auditing tools like the SPI analyze internal processes to assess if the MFI is meeting

its social goals. This approach helps MFIs set objectives for improvement and take the

necessary steps to meet them.

CERISE is a pioneer of social audits. Today, over 500 MFIs have administered the SPI

either alone, with their network, TA provider or social investors.
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CERISE certification for SPI users

The CERISE SPI tool, available for free, was designed using an open, collaborative and

transparent approach. Used by more than 500 MFIs worldwide, the CERISE SPI tool is the

premier social performance audit tool for institutions committed to improving the lives of

their clients. The volume of users henceforth impedes the promoters of the tool to maintainin-depth case-by-case quality control. Moreover, the microfinance sector has changed.

Scandals and increasing criticism have put it under the scrutiny of media, governments,

regulators and the wider public. MFIs both need and want to be more transparent and

improve their practices. The CERISE SPI is useful toward this end, but it also creates a

potential market for free riders. Quality of assessments must be ensured.

SPI now includes Standards of Use , and a Certification process for trainers and auditors. The

Standards of Use formalize the CERISE SPI application process to ensure quality control and

define optimum conditions in which the SPI tool can be used.

Certification is required to be considered as an external auditor and to train otherorganizations on the SPI tool.

Certification aims to

avoid inefficient use of the SPI tool by MFIs and their partners (bad quality, unreliable

information);

ensure quality control and potential benchmarking among SPI users by guaranteeing with

reasonable confidence the process used for the audit;

avoid inappropriate use of the SPI tool by third parties (free riders using SPI for

commercial purposes, duplication of efforts, creating unnecessary reporting burdens for theMFIs);

ensure reliable reporting to MIX.

Added value of the certification

For the audit user (MFI stakeholders): ensures rigorous quality control and reliability of the

audit, increases external credibility of results, and facilitates trustworthy information sharing.

For the auditor: grants international recognition, access to updated knowledge and training

in the efficient use of SPI.

For the MFI: ensures high quality data for decision making, boosts credibility of results,

demonstrates strong commitment towards social performance.

Since 2011, several CERISE partner organizations have successfully completed or have

started undergoing the CERISE-SPI certification process, producing a significant network of

external auditors for MFIs to validate their SPI results


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Socially Responsible Investors in Microfinance

Social utility is the main argument for microfinance investment. Investors who cannot clearly

demonstrate the social impact of their activities risk overstating microfinances benefits and

seeing their own reputation discredited when problematic aspects are publicized. But, for

investors to make decisions based on social value added, they must be able to measure it.

Social audit tools for MFIs have multiplied in recent years, helping MFIs measure and

improve their social performance. While some of these tools have been used by investors,

Socially Responsible Investors (SRIs) deserve an audit methodology adapted to their own

concerns and structures.

CERISEs SPI Investor is a four-dimensional audit tool for investors that draws on the UNs

Principles for Responsible Investment and CGAPs work on aid effectiveness.

Currently being tested by social investorOikocredit, SPI Investor enables SRIs to take stock

of operations, strategies and social impact. Designed to be administered internally, the SPIInvestor can also be used as a management tool to guide investment decisions, and a

communication and benchmarking tool to increase transparency improve credibility of

SRIs in microfinance.

Action-Research on Social Performance

The SPI tool is open access. In exchange for using the tool, users send their findings to

CERISE along with comments on the tool. This user collaboration has led to an improved

version of the SPI and a rich database with results of over 200 social audits.

CERISE has used this databank to test the relationship between social and financial

performance to verify synergies between the two.

CERISE has also tested the relationship between SPI and the results of impact studies to

verify synergies between systems and impact.

CERISE works with its investor partners and the Social Performance Task Force working

group on social investors to identify criteria for promoting socially responsible

investment.Rural and Agricultural Finance

Rural areas lack the financial services needed to develop and diversify economic activity.

CERISE strives to find sustainable solutions to meet the huge demand for rural finance.

Microfinance has the potential to play an important role in creating synergy between actors

from the public and private sectors and civil society and ultimately improve access to rural

finance. For example, linking producer organizations to MFIs can not only build producers

capacity to use financial services, but help MFI better understand and satisfy rural demand.

CERISE uses value chain finance and livelihood finance approaches to promote sustainable

access to rural finance.

Microfinance and Producer Organizations
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Producer organizations are key actors in rural areas. And yet, they are virtually unknown to

most financial institutions. The converse is also true. As a rule, producer organizations and

financial institutions ingore each others modus operandi, rules, needs and constraints.

In order to bridge this gap, CERISE has developed an Operational Guide to building

partnerships between producer organizations and financial institutions. Developed inconjunction with FARM Foundation, the Guide draws on action-research carried out by IRC

in Niger. It shows how to analyze the financial needs and constraints of producers and

teaches producer organizations how to effectively access and use financial services.

Because alliances between producer organizations and financial institutions are critical to

meeting the huge need for agricultural finance, this Guide should help increase farmers

financial access.Value Chain Finance and Fair Trade

We believe rural development depends on making finance available for all types of rural

activities. Thats why CERISE is committed to a value chain approach that emphasizessupport to rural entrepreneurs and finance for all segments of the rural market. This approach

encourages MFIs to finance the whole rural economyfrom production, processsing to

commercializationand build relationships with the private sector to ensure market

channels. Its about strengthening the economic fabric of rural regions.

Fair trade adds value to many agricultural exports by securing stable, decent incomes for

farmers. CERISE has joined forces with French fair trade label Max Havelaar to find

innovative ways to bring importers, producer organizations and microfinance together, to

build sustainable solutions to rural finance and expand fair trade.Governance

Governance is a major risk facing the microfinance sector today ("Banana Skins" 2009).

Sustainable requires not only financially viable institutions that operate according to existing

legal frameworks, but [a transparent and efficient organizational structure appropriated by all

the institutions stakeholders(salaried staff, elected officials, clients, members, TA

providers, donors, or shareholders).

CERISEs approach to governance starts by identifying stakeholders and decision-making

processesin order to analyze the MFIs capacity to manage crises, plan strategically andprevent risk.
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Governance in MicrofinanceGovernance is critical to the success of any institution. The "art of governing" goes beyond

the technical relationships between a Board and management. It is about the political stakesof power relationships, conflicts of interest and the clear definition of roles and

responsibilities.

CERISE developed a Handbook to analyze MFI governance based on an approach focused

on stakeholders and their decision-making influence. The Handbook for the Analysis of

Governance of Microfinance Institutions is designed for MFIs and TA providers looking to

align mission with actions.

Governance and Social Performance

Social performance governance refers to the strategic and operational decision-making

processes stakeholders use to pursue the institutions social mission and enact its socialpolicy.

Effective social performance is based on a strong relationship between social strategy and

governance. An MFI that integrates its social mission into governance mechanisms is better

equipped to manage its social performance. It enables the MFI to strike that delicate balance

between financial and social bottom lines and take into account the perspectives of all those

affected by the institutionowners and directors, management and staff, users (clients or

members), the community and the environment.

Deeply knowledgeable of the relationship between governance and social objectives,

CERISE proposes to help take governance analysis a step further, to social performancemanagement.

The Role of NGOs in Microfinance

Innovation remains a challenge in microfinance. Unmet demand is huge; rural populations

and SMEs are largely unserved. Known for their capacity to innovate, NGOs are well-

equipped to take risks: new partners, new financial products, new intervention methods.

Through a series ofPeer Reviews

, similar to those carried out by CGAP with affiliateddonors, CERISE has fostered mutual learning among our members and collectively defined a

series of "good practices" for practitioners.

CERISE facilitates discussions with French NGOs working in microfinance on a regular

basis, at the impetus of public cooperation agencies likeAgence Franaise de Dveloppement

(AFD) and networks of international solidarity organizations like Coordination Sud.

European Stakeholders in Microfinance: Whats our role?

CERISE is a founding member of the European Microfinance Platform, a network of

European organizations and individuals working in microfinance in developing countries.

CERISE coordinates the e-MFPs working group on social performance.CERISE also works with several European universities and research institutes to maintain


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dialogue between academia and microfinance practitioners. Our goal is to promote a

strong microfinance sector capable of meeting client needs.

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