Social Performance
Management (SPM) - What is it?
- Where did it come from?
- How does it Impact Credit Unions?
Partners Conference
Dublin, Ireland
September 18th 2014
Agenda
• Financial Institution Missions • Common Social Missions • Social Performance - Definition • Unbanked Opportunity • Microfinance Experience • Microfinance Crisis • Core Problem - NATO • Sector Reaction – Focus on SPM • Mature SPM Framework Example • ILCUF SPM Assessment Questionnaire • Q&A Discussion
ILCUF IPC September 2014 - SPM Workshop
Missions
• Banks ▫ Maximize profits / shareholder value
• Credit Unions ▫ Alleviate Poverty ▫ Help clients build livelihoods, improve
wellbeing ▫ Build democratic institutions with strong
common bond
• Microfinance Institutions ILCUF IPC September 2014 - SPM Workshop
Common Social Missions:
• Serving increasing
numbers of poorer and
more excluded people
sustainably
• Improving the quality &
appropriateness of
financial services
through assessment of
members’ needs
• Increasing members’
social capital, assets,
income, and access to
services
• Reducing members’
vulnerability
• Improving social
responsibility of the
institution toward
members, employees,
and communities
ILCUF IPC September 2014 - SPM Workshop
The Definition of Social Performance
• The effective translation of an institution’s
social mission into practice ▫ No Social Mission
▫ No Social Performance
▫ No Social Performance Management
ILCUF IPC September 2014 - SPM Workshop
Huge Market/Opportunity
ILCUF IPC September 2014 - SPM Workshop
Demand for many Products/Services
Financial literacy
Business Development
Services
Savings Micro Insurance
ILCUF IPC September 2014 - SPM Workshop
Big Problems?
ILCUF IPC September 2014 - SPM Workshop
What went Wrong ?
Commercial Mission Drift:
Fast growth (15-30% + p.a)
High competition
Market saturation
Coercive collection practices
Over-indebtedness …
Financial Mission Drift:
High return on investment
expected
Minimize costs, maximize profits
Fast profitability
Few products
IPOs …
ILCUF IPC September 2014 - SPM Workshop
Core Problem
• If you can’t measure it, you can’t manage it
• No Action Talk Only – NATO
• Social Performance Measurement
Backlash ▫ Donors
▫ Investors
▫ TA Advisors
ILCUF IPC September 2014 - SPM Workshop
• Client protection
• Development
standards, good
practices,
certification
• 7 principles
• 1 750 endorsers
from 120 countries
Responses of the Sector …
• Microfinance
Transparency
• Campaigns for fair
and transparent
pricing
• 28 countries
• More than 1000
different loan
products
• Seal of Excellence
for poverty outreach
and Transformation
in Microfinance
• To recognize those
institutions doing
the most to help
families lift
themselves out of
poverty
• Platform for dialogue,
learning and
collaboration
• Facilitating
engagement and
advocacy
• setting industry
standards for social
performance
management
• Promoting good
practices
• Gathering quality
evidence and research
ILCUF IPC September 2014 - SPM Workshop
Achieve Your Mission Through
Performance Management
Mission
Performance Management
Social
Performance
Financial
Performance
ILCUF IPC September 2014 - SPM Workshop
SP Assessment vs. SP Management
SPA
a measure of how well CU uses its
systems and operations to
generate social benefits
SPM the use of this
measure to make decisions
ILCUF IPC September 2014 - SPM Workshop
AMK Company Profile
• Largest number of borrowers in Cambodia : > 300,000
• Outreach to > 10,000 villages: > 70% of the villages in Cambodia
• Absolute Commitment to Mission: 50% of new clients in 2011 were
below the Cambodia Rural Food Poverty Line
• Leader in Social Performance Management and Responsible Finance
• Finance at Your Doorstep Methodology: Loan disbursement and
collection at community level
• Average Loan Size lowest of nationwide MFIs in Cambodia: USD 172;
94% of loans are for less than USD 300
• Lowest interest rates in the group lending market
Key Stats
• Population: 14.1 million
• GNI per capita, Atlas method: USD 750
• Poverty Level: 30%
Mature SPM Example – AMK Cambodia
AMK Client Profile
• 50% are below Poverty Line
• 87% of clients are female
• 63% of clients are literate, and 81% attended some school
• Average household has 5.2 persons including 3 income earners
• Clients are predominantly rural, but 63% of clients’ main source of cash
inflow is non-farm activity; 35% is farm activity
• Food is one of the top three expenditures for 96% of clients ILCUF IPC September 2014 - SPM Workshop
Levels of support for SP Assessement
• Purely self assessment: CU fills in questionnaire alone
• Accompanied self-assessment: CU with support from external reviewer
Reviewer knows the SPI well
• Self-assessment with external audit Auditor verifies the quality of the information
At least one day for external audit
• Purely external assessment: Done by external auditor
ILCUF IPC September 2014 - SPM Workshop
ILCUF SPM Assessment Questionnaire
- Outreach & Inclusion
- Member benefit & welfare
- Governance
- Responsibility to Staff & Volunteers
- Community & Environment
- Cooperation amongst Cooperatives
ILCUF IPC September 2014 - SPM Workshop
ILCUF Social Performance Assessment Questionnaire
Sample questions from the Excel based questionnaire.
Section 1: Outreach & Inclusion
Poverty Outreach Goals
Question: Does the credit union sets out and manages its poverty outreach goals?
The Credit Union chooses the most appropriate answer from these choices
•Less than 10% of members are classified as poor based on the poverty line or Apex Body Guidelines.
•More than 10% but less than 30% of members are classified as 'poor' based upon the poverty line or Apex Body Guidelines
•The percentage of poor members in your credit union is greater than the overall poverty level nationally as defined by the government or the Apex Body
ILCUF IPC September 2014 - SPM Workshop
Section 2: Member Benefit & Welfare
Savings Products
Question: Does the credit union actively offer a variety of savings products to meet its members needs?
The Credit Union chooses the most appropriate answer from these choices
•The credit union has only one single standard savings product
•The credit union offers several savings products, but staff are not clear about how or who to promote each product
•The credit union offers a variety of savings products and staff know about how each product can benefit individual members
ILCUF Social Performance Assessment Questionnaire
Sample questions from the Excel based questionnaire
ILCUF IPC September 2014 - SPM Workshop
CU Social Performance Assessement Results Basic Data on CU Date Established: 2001 Total membership: 1,340 Savings (Nov 2013): €56,000 Loan (Nov 2013) €44,000 • SPM Dimensions CU Score • 1) 25% Outreach & Targeting: 13% low • 2) 25% Member Benefit/Welfare: 7% very low • 3) 20% Governance: 5% low • 4) 10% Staff & Volunteers: 6% medium • 5) 10% Community & Environment: 5% low • 6) 10% Cooperation among Cooperatives: 8% high
100% Overall SPM Score: 44%
ILCUF IPC September 2014 - SPM Workshop
CU SP Assessement Results
0%
10%
20%
30%
40%
50%
60%
70%
80%
90% Outreach & Targeting
Member Benefits
Governance
Environment
Responsibility to Staff & Community
Credit Union Movement Cooperation
Overall Social Performance
ILCUF IPC September 2014 - SPM Workshop