The Demand for Both Financial and Social Performance
Freedom from Hunger has been a leader among non-profit organizations in using scientific research to document program impact. We have developed tools and systems for implementing partners to monitor their own progress as part of what is called Social Performance Management (SPM). We also support or conduct rigorous impact studies to investigate the outcomes of our innovations. While many microfinance institutions target both financial and social results, few actually collect evidence that their services are improving the lives of the people they serve. Our standards of success include healthier families, improved household food security, and groups of women who are empowered with knowledge, motivation and support to make positive and lasting change in their communities. All of these impacts have been documented in scientific studies.
Fulfilling the Promise
People living in poverty have proven they are "creditworthy." Likewise, microfinance institutions (MFIs) have shown they can pay in full for their operations with just the interest they charge for micro-loans. Funding is coming not only from traditional philanthropic donors but also from social investors who see the opportunity for financial return on investment while doing something important and long-lasting to help alleviate poverty. With this profit incentive, it is no surprise that microfinance has grown to serve millions of people and promises to reach many more.
Along with this exciting growth, however, is an unprecedented demand for financial performance. Funders and investors expect MFIs to manage for profit, like commercial retail banks. But there has not been equal emphasis on managing MFIs toward their social objectives, which are so highly valued by clients, funders and investors alike.
Spreading the News and Practice of Social Performance Management
The SPM movement offers MFIs guidance and tools to manage intentionally toward social objectives as well as financial objectives and to measure progress and use this information to improve their management toward both "bottom lines." Regardless of the objectives of the provider, they are most likely to be achieved if management has the tools and systems to be tuned sensitively to the lives and desires of the clients themselves and to respond to this knowledge with appropriate products and services.
Freedom from Hunger was a pioneer in the SPM movement, recognizing early on that SPM would be essential for ensuring that microfinance services have real value for the poor. In 2006, Freedom from Hunger became a founding member of the Imp-Act Consortium, now a group of ten organizations dedicated to developing, promoting and training MFIs in the adoption and the use of SPM. One of our senior staff, Christian Loupeda, has just become the Director of the Consortium. The member organizations seek to help MFIs adopt or develop practical systems, tools and program strategies that fulfill the social promise of microfinance to improve the lives of those living in poverty. Different SPM approaches and tools have been developed by Consortium members to ensure social impact. Consortium members are committed to sharing their experience and learning with their peers and with the larger microfinance community and to spreading the adoption of SPM.
New SPM Resources for Microfinance Practitioners
The Imp-Act Consortium has launched on its website a series of new resources to educate more microfinance stakeholders on how they can manage their social performance and improve the services with relatively small changes. They include the following:
- "Fulfilling the Promise," the above video provides a practical introduction to SPM and why it makes sense, as well as guidance on first steps. It is available in two versions and four languages.
- "Putting the 'social' into performance management: A practice-based guide for microfinance." This practical step-by-step practice guide helps MFIs build a practical social performance management system.
- An online SPM Resource Centre that goes beyond the practice guide to include a self-assessment tool, additional practitioner experience and analysis, and a guide to a wide range of online resources on social performance.
- The SPM Network, the go-to place to engage with practitioners, support organizations, investors and donors active in supporting SPM.
- A series of seven case studies from leading organizations in SPM that has recently been completed and is showcased on Imp-Act's website.
We encourage you to learn more about SPM, the Imp-Act Consortium and about Freedom from Hunger's own approach to ensuring that very poor families benefit from lasting change. Please visit www.imp-act.org for more information.