Methods for applying the SPI tool

Internal or external audit

Centralized or participatory approach

Methods for applying the SPI

Methodological options

Depends on:

1) MFI’s objectives

2) who proposes the audit

Internal audit

Self-assessment; a stock-taking exercise to get

people thinking about SP

Results not validated by an external auditor don’t hold

the same value for external communication as those

that have been validated

External audit

More objectivity; results more credible in the eyes of

outside stakeholders

If MFI not involved, little appropriation of results

Applying the SPI

Internal vs External

Different levels of support for the MFI

Purely self assessment: The MFI fills up the questionnaire alone

Accompanied self-assessment:The MFI fills up the

questionnaire with support from an external reviewer

The external reviewer knows the SPI tool and can answer to

the questions of the MFI

Final doc= full questionnaire / excel data-graphs

Self-assessment with external audit

The auditor verifies the quality of the information

At least one day for external audit

Final doc= full questionnaire/ Excel data-graphs/2p summary

Purely external assessment: done by the external auditor

Applying the SPI

Qualities of an external auditor

Independent from the MFI

Expertise in social auditing / accreditation by

CERISE (training on SPI, previous positive

experience in using the SPI tool)

Inquisitive

Holistic perspective

Who can be an external auditor?

Discussion

Centralized

Quick (1.5 days)

Limited perspective (of the auditor and top

management)

Low appropriation of concepts (few persons only)

Participatory

More representative of different stakeholders

Greater appropriation of concepts (all those involved)

Takes longer, more organization involved

Applying the SPI

Centralized vs Participatory approach

Applying the SPI

What’s the difference in approaches?

Timeframe

Depth of information

Appropriation of concepts

Outputs

Discussion

Which options to choose?

Centralized versus participatory

Internal versus External

1. Preparation (2-3 steps)

2. Implementation (2-4 steps)

3. Reporting (2-3 steps)

Applying the SPI

Three phases

Number of

steps depends

on the

approach

Preparation phase

1. Get familiar with the tool

Auditor / reviewer should be familiar with the

tool, and able to inform top management or

other participating stakeholders on the process

Applying the SPI

2. Prepare documention

For accompanied self assessment: list given to

MFI

For external audit, ask for documents e.g.,

Portfolio data, annual reports, financial audits;

FGD guides (if necessary)

Applying the SPI

Implementation phase

3. Conduct interviews to fill in Q

Interviewees depends on approach

External auditor may ask MFI to fill in Q and then

discuss the answers.

4. Enter data into Word doc (questionnaire)

then Excel file The word doc should include all the “please specify”

sections

Excel generates diamond and radar graphs

automatically

5. Discuss preliminary findings for feedback

Varies with approach:

Internal audit/ Self assesment: may skip

altogether

External audit: VERIFIES INFORMATION

Centralized with top management only

Participatory: in workshop with stakeholders

Applying the SPI

Implementation phase (cont’d)

optional for internal audits

Completed SPI questionnaire (Word doc)

enhanced with comments, details, feedback

from step 5 and graphs (Excel)

Peer group analysis cerise@cerise-

microfinance.org

2 p. summary for external dissemination and

reports SPS to MIX

(optional for internal audits, required for external audits)

Applying the SPI

Reporting phase

Output 1

Output 2

Output 3

ALL DOCUMENTS MUST BE GIVEN TO THE MFI

Quality Control

Preparation and implementation phase

Auditor must know the SPI tool and

companion guide, and be accredited by

CERISE

MFI management fully associated:

understands the purpose of the exercise

agrees with the objective of the audit

willing to give auditor access to all information sources

Auditor has a resource person to contact if in

doubt

Quality control

Implementation and reporting phase

Check consistency between responses

(checked boxes and “specify” sections)

When possible, cross-check with social

rating, data from Mix Market (Social Performance

standards)

Open and frank discussion with MFI

management for review and analysis

When possible, have the questionnaire

reviewed by someone who knows the MFI

Quality control

Classical consistency checks

Lack of information

Future project

Round number

Over or under estimations

Reference to existing documents

Misinterpretation on targeting

Classical procedures

Administering SPI to a group of MFIs : transversal elements for quality control

Share experiences/FAQ among different teams

Formalize and document simple procedures

Randomly crosscheck SPI assessments

Quality control

Feedback from Kiva’s pilot

Not an impact study

Which answer when weaknesses are

recorded?

Kiva accreditation

Time for self-assessment and external review

Requests from examples of SPI report / Best

practices on key issues

Social impact star rating system?

Examples of application

MFIs

ASC Union Albania = self-assessment

CVECA Mali = accompanied self-assessment with

TA

Networks

Red Financiera Rural = collective self-assessment

Investors

F. Mujer/ Fudecosur Costa-Rica: external

assessment from MIV regional office

Selfina Tanzania: external assessment from MIV

in due diligence process

ASC Union in Albania – MFI self-assessment

SPI Results and strategy

• Not a strong focus on poverty

(but in line w/mission)

• Strong links with the

clients/members

• Could develop services, SR

Towards community/ environment

Context and strategies

• Previous communist period:

need to “build the economic

chain”

• Rural, microenterprise,

• Not the „poorest‟ as a target

• Mature Cooperative network

How ASC Union used results…

Clarify overall social performance strategy

and indicators to be used

Set priorities for improving social

performance: improvement of diversity and

quality of services

Pilot-test PAT to see profile of clients (but low

value-added)

Conduct client satisfaction survey: main demand

on housing loans

Reaffirm a shared vision of governance with

local branches

Example from Mali: CVECA Kayes

Context and strategies

• Village Bank, intervening in poor rural

zone

• Relatively young but growing fast

• Proximity to members is essential for

MFI

SPI results

• Scored well in client benefits

(participative approach)

• Results more diversified in different

sub-categories

Example from Mali

Logo other partners

How CVECA-Kayes used results…

Introduce client studies to track profiles and monitor client satisfaction

Develop training on social performance amongdifferent stakeholders (elected reps and technicalstaff at HQ and branch levels)

Create strategy to federate individual village banks so as to reach the critical mass necessaryto develop SR practices (ex.: salary scale, code of conduct)

A professional trade association -

RFR - Equator

Logo other partners

RFR - Equateur

Context

Mature microfinance sector: NBFIs and banks (regulated) and Coops and NGO-MFIs (self-regulated)

2006, strong populist movement discredits MF, gvt threatens interest rate ceilings

Red Financiera Rural, member of ForoLac network (working on SP since 2005) launches a series of social audits (12 in 2007, 25 in 2008)

How RFR used results…

Crossed data among network members, published results, offered support for MFIs to improve social performance

Internally: share experiences and good practices

Externally: demonstrate MF’s diversity and that MF’s mission cannot be reduced to interest rates

� Negotiated more flexible regulation on interest rates

COOP NGO

SPI used by the MF investment vehicles

Due diligence process

SPI (accompanied self-assessment)

A simplified social scorecard based on the SPI framework / MIV

social objectives

Monitoring

Full SPI with external audit (see 2page summaries)

Workshop/ exchanges with the MFI to give feedback and identify

axis of improvement

Entry point for capacity-building in SPM

Aggregation

Country reports

Portfolio analysis (peer groups)

SP/FP analysis

How investors use the results

Overview of the practices of their partner

MFIs

Quality of the process/ Coherence between

mission and activities for the MFIs

Shared internal vision on objectives and

approach / Common language

Trust, transparency

“Baseline” to measure changes/ trends

What happens after the social audit?

For MFIs

Moving forward with Social Performance Management (SPM)

For networks:

lobbying/ advocacy with government

SPM for members

For investors/ donors

Use influence as governing stake/shareholder to support social

performance and defend social mission

Technical support or advices for SPM tools -- do not exclude

the poor performers--help them improve practices!

Better loan conditions for strong SP

Using results

Reporting the SPS to the Mix Market

The SPI questionnaire allows to report 18 out of 22 SPS

indicators

The 4 remaining SPS indicators deal with results (school

attendance and clients out of poverty)

SPS Part one SPI SPS Part Two SPI(i) Basic details MFI Part 1(ii) RespondentINTENT1. Mission and social goals Part 12. Governance Part 1STRATEGIES & SYSTEMS STRATEGIES & SYSTEMS 3. Range of products P1+Dim 2 14. Poverty assessment D1+D3

4. Training of staff on SP Dim 35. Staff appraisal & incentives Dim 36. Market research Dim 2 7. Client retention Dim 2POLICIES & COMPLIANCE POLICIES & COMPLIANCE8. SR to clients Dim 4 15. SR to community Dim 49. Cost of services Dim 2 16. SR to environnment Dim 410. SR to staff Dim 4ACHIEVEMENT OF SOCIAL GOALS ACHIEVEMENT OF SOCIAL GOALS

11. Geographic outreach Dim 1 17. Outputs of services Dim 212. Women outreach Dim 1 18. Employment NO13. Outreach by methodo/ethnic minorities

P1 + D1 19. Children in school NO

20. Poor at entry Dim 1 21. Clients in pov after 3-5 y NO

22. Clients out of poverty NO

SELECTED CORE SOCIAL PERFORMANCE INDICATORS FOR ANNUAL REPORTING

OF MIVs

I Number of active borrowers

II Number of currently voluntary savers

III Number of women active borrowers

IV Number of women currently voluntary savers

V Number and percentage of clients living in each geographic area (urban, semi-

urban, rural)

VI Percentage of portfolio in each category of loans (microenterprise, SME, housing,

emergency, etc.)

VII Which of the following financial products/services does your institution offer

(credit, savings, insurance, services)?

VIII Which of the following non financial products does your institution offer to its

clients? (enterprise services, adult education, health services, women

empowerment)

IX What does your institution do to avoid client over indebtedness?

X How does your institution ensure transparent communication with clients about

prices, terms, and conditions of financial products?

SPI and SPS

Reporting to the SPS gives visibility to the

MFI and support the definition of

benchmarking for the sector

The SPI audit tool should help in the near

future to verify the quality of the SPS

reports

Does the MFI want to report on SPS/

Kiva’s position => SPI may have optional

questions

Using SPI Results

Reporting and summarizing

information

6 Internal dissemination of findings

Completed SPI questionnaire (Word doc)

enhanced with comments, details, feedback

from step 5 and graphs (Excel)

7. Send Q and Excel file to SPI database

CERISE conducts peer group analysis cerise@cerise-microfinance.org

General outputs

Output 1

Output 2

Using results

8. Auditor prepares 2 p. summary for

external dissemination and reports SPS

to MIX

Applying the SPI

Reporting phase (cont’d)

optional for internal audits, required for external audits,

with recommendations

ALL OUTPUTS MUST BE GIVEN TO THE MFI

(Questionnaire, Excel file, 2p. Summary)

Output 3

Output 3: 2 page summary report

Using results

Communicate on SP in a transparent,

standardized manner

Orient SP priorities based on strengths and

weaknesses

Make operational decisions

Further possibilities

Social Performance report

Ex of CIF: by MFI, by network

Social dashboards

Ex CIF, AMK

Lobbying with social data/report

Ex RFR

Example of Social Performance

Report Consolidated

annual social report

for a network of

member MFIs

=> CIF in West Africa

48

49

Complementarities

SPI + other assessment tools

Main questions Process

Intent - Activities

Results

SPI-CERISE tool Impact tools

Q1: Who are the

clients?

Dim 1:

Targeting and Outreach

Poverty Assessment Tools:

PPI, PAT, scorecards

Q2: Are the products

adapted?

Dim 2: Products & Services AIMS/SEEP tools:

N°2: client drop-outs, N°3 Use of services;

N°4: client satisfaction;

Q3: Do the clients

benefit from the

products?

Dim 3: Eco and social

benefits to clients

AIMS/SEEP tools: N°1: Impact; N°5:

Empowerment

Combi quanti – quali: HH strategies &

budget / typologies / Participation / role of

elected members (CERISE)

Q4: Does the MFI do

no harm ?

Dim 4: Social responsibility Consumer protection

Decent work

Wider Impact; socio-anthropologic studies;

environmental approaches

Complementarity in Assessment tools

Internal or external tools to estimate client poverty profile

PA Tools

PPI (Progress out of Poverty Indicator, Grameen Foundation)

PAT (Poverty Assessment Tool, IRIS-USAID)

Own MFI’s poverty scorecard (ex: Busaa Gonofaa in Ethiopia)

Other aspects: rural finance, exclusion (PwD, minority

groups)

1 Expanding outreach & Poverty Assessment

Tools

SPM Path

SPI + PAT = Full assessment of Dimension 1-

Outreach

=> Useful for MFI with poverty focus

Internal or external studies to assess client needs,

demands, satisfaction

Qualitative tools (questionnaires, focus groups, mapping

exercises) that reveal client perspective

Client study tools

Microsave Market Research for Microfinance toolkit.

Microfinance Opportunities’ Listening to Clients series.

2. Understanding clients and Market Studies

SPM Path

SPI + Client studies = Full assessment of

Dimension 2-Products & Services and criteria 2,

Dimension 4-SR to clients

Usually external studies that measure changes to clients’

situation and determines if they can be attributed to the

MFI (requires a baseline)

Impact Tools

Operational: Learning from Clients (SEEP, AIMS): combination of

quanti and quali indicators; free toolkit on Microfinance Gateway.

Research: new approaches with “randomization”

3 Benefits for the clients and Impact Studies

SPM Path

SPI + Impact studies = Full assessment of

Dimension 3-Benefits to Clients

Consumer protection => level of awareness (repayment,

price, grievance procedures, etc.) / satisfaction of clients

Decent work: work conditions for staff

Environmental audits: example from the FMO approach

4 Measuring social responsibilitySPM Path

SPI + verification SR= Full Assessment of Dim 4

Complementarities with social ratings

Ex post: External verification

Ex ante: Same framework allowing to « pre-

fill » the SPI questionnaire

With SPI, priorities are identified,

what’s next? SPI and other assessment tools identify

strengths and weaknesses as well as priority

areas

How to define the next steps to end up with a

concrete workplan to improve practices?

What can be the role of Kiva in SPM?

SPI with other SP management tool

SPI and SPM

An MFI wants to…

2. Understand high drop-out rates

1. Expand outreach to the very poor

4. Verify decision making processes

integrate SP data

5. Improve overall SP - Avoid mission

drift - Track SP progress

Market research

Poverty score /

specific products

Governance analysis

Scorecard for decision-

making

SPM Path

3. Protect clients Financial Education

CPP tool kit

Ex of SPM in practice for better outreach Strategic planning

Identify better target group

Tools & trainings to reach target group incorporated in procedures

MIS and SP data monitoring

Regular data on client profile (scorecards)

Information used for decision-making

Products and services development

New products/ adaptation of current products to fit constraints &

demand by target group

Client-focused management

Physical access for PwD / Material for illiterate clients

Staff training and incentives

Social Performance Management

Example of SPM in practice for better

products and services

Strategic planning

Identify needs of clients and develop product diversification strategy

Mix of widely used classical products + innovative products

MIS and SP data monitoring

Monitor client satisfaction / use of products

Staff training and incentives

Training on new products

Incentives to diversify loan officer portfolio

Social Performance Management

Ex of SPM in practice for better

impact Strategic planning

Reduce operational costs

Share of profits

MIS and SP data monitoring

Track change on client status

Products and services development

Reduce interest rates

Diversity of products for range of needs of clients

Adapt products if negative impact

Staff training and incentives

Staff put client first

Social Performance Management

SPM in practice for better social responsibility

Strategic planning

Human resource policy linked to decent work conditions

Integration of the consumer protection principles in business plan

MIS and SP data monitoring

Client and staff satisfaction monitoring

Products and services development

Exclusion lists for decent work and for environment

Specific products for environment and climate change

Client-focused management

Financial education to clients

Microfinance Transparency: disclosure on effective interest rates

Staff training and incentives

Training to loan officers on CPP

Diagnostic tool for identifying the key actors

Evaluates key elements of good governance

Determines bottlenecks in decision-making processes,

gaps between intention and results

Governance Analysis tool

CERISE’s Handbook for Analysis of the Governance of MFIs

Governance Analysis

From SPA to SPM: the main actors

Governance: all the mechanisms by

which stakeholders define and

pursue the institution’s mission and

ensure its sustainability.

SPI + Governance = full assessment of the decision

making processes that must integrate SP data

Process for Kiva with the SPI tool

Collection of data

Management of data

Communication

Collection of data Due Diligence

accompanied SPI?

social scorecard based on SPI?

key indicators?

Monitoring/ Verification process

role of Kiva Fellows

role of local staff/credit analysts

Using SP data for becoming a Kiva active MFI?

Links with other MIVs/networks using SPI/other

SPA tools (SPS, ratings, etc.)

Coordination

Economies of scale

Management of data

For Kiva:

analysis of portfolio, peer groups, trends

rating scale,

used in strengthening relationship with field

partners? How?

For the MFIs:

Feedback on results, next steps

accreditation

Communication

Aggregating information at Kiva’s level

Reporting data on MIV disclosure guidelines

Communication on Kiva.org

Where To Go For Further Information? Social Performance Resource Center

http://microfinancegateway.com/resource_centers/socialperformance

Management training, Technical Assistance, Tools, Rating, audit and other

forms of assessment

Social Performance Task Force http://www.sptf.info/

SPTF meeting minutes since 2005, SPS, blog on SP, tool reviews

CERISE‟s website http://www.cerise-microfinance.org

SPI tool, Governance tool, Learn more about ProsperA, Case studies

SEEP social performance Map – chapter on audit tools

http://communities.seepnetwork.org/sites/hamed/files/SPMap_06_Social_Auditing_1.

pdf

Imp-Act SPM practice guide:

http://www2.ids.ac.uk/impact/support/practiceguide.html

Mix SPS reports http://www.themix.org/standards/sp-reports

European Microfinance Platform (eMFP ) http://www.e-mfp.eu

European Dialogue on the role of the Social Investors, MF Award 2008