Social Performance at Kiva

Kiva Fellows TrainingOctober 2010

JD Bergeron

Session Objectives

1. Trainees will learn why Kiva cares about Social Performance

2. Trainees will learn how SP is defined and utilized within the microfinance industry

3. Trainees will learn about Kiva’s strategy for Social Performance

Mission of reaching the poor, but…

• No use of targeting tools

• Inappropriate product offerings

• No measurement of progress out of poverty

• No focus on client protection

Over-indebtedness & Collection Practices

• Focus on growth provides wrong incentives for MFIs

• Abusive practices

Unaligned Incentives

• Sole focus on small loans or client retention

• Emphasis on financial return / social return marginalized

• Aligning client needs and funder interests

Known Issues for Microfinance

How is Social Performance defined in the industry?

The effective translation of an institution’s

mission into practice in line with accepted social values

Social Performance - Definition

SOCIAL PERFORMANCE TASK FORCE

These values can relate to:

Reaching target market Delivering high-quality and appropriate financial services Responding to the needs of clients, their families, and communities Ensuring responsibility toward its employees, its clients, the

community it serves, and the environment

What is Social Performance?

SOCIAL PERFORMANCE TASK FORCE

These values can relate to:

Reaching target market Targeting and Outreach Delivering high-quality and appropriate financial services

Products and Services Responding to the needs of clients, their families, and communities

Benefit to Clients Ensuring responsibility toward its employees, its clients, the

community it serves, and the environment Social Responsibility

What is Social Performance?

SOCIAL PERFORMANCE TASK FORCE

What is the state of the MF industry in regards to social performance monitoring & auditing?

Social performance in Microfinance

• Social Audits: Quality Assessment tool, CERISE SPI tool• Social Ratings: Planet Rating, MicroRate, M-Cril, Microfinanza• Social Performance Management: Imp-Act Consortium • Poverty Assessment Tools: Progress out of Poverty Index™

(PPI) , USAID Poverty Assessment Tool (PAT) • Client protection: Center for Financial Inclusion SMART

Campaign • Advocacy: Social Performance Taskforce, CGAP Social Impact

Center

• SMART Campaign Client Protection Principles– Avoidance of Over-indebtedness– Transparent and Responsible Pricing– Client Rights and Appropriate Collection Practices– Ethical Staff Behavior– Mechanism for Redress of Grievances– Privacy of Client Data

Do No Harm

What is Kiva’s strategy?

• Measuring– CERISE Social Performance Indicators

• Verifying – Borrower Verification– Client Waiver– Endorsement of Client Protection Principles

• Communicating – Educating Kiva users– Core Justifications for Partnership– Journal updates on borrowers

Core Justifications for Partnership

• Fund unique offerings

• Reward unique offerings

• Expand access to microcredit

$25

$25

Where does my Kiva $ go?

What is Kiva’s strategy?

Kiva SP Scorecard

What is Kiva’s strategy?

Communicating: Kiva SP ScorecardBenefit to clients beyond financial

Promotion of Savings

Transparent PricingGender Focus

Communicating SP Scorecard on Kiva.org

Social Performance Strengths:

In the future