Microfinance Industry Takes Action To Report Client Poverty Levels, Changes to Clients' Lives

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2010 Social Performance Reporting Awards launched, recognizing microfinance institutions' commitment to reporting and social performance

22 April 2010 — Amid tightening government budgets and a tough investment climate in the wake of the financial crisis, microfinance institutions (MFIs) are recognizing the need to clearly show that their activities target and benefit the poor.CGAP, with its partners theMichael & Susan Dell Foundation, the Ford Foundation, and theSocial Performance Task Force, is encouraging MFIs to show their commitment to transparency through the Social Performance Reporting Awards, administered by theMicrofinance Information Exchange(MIX). Now in their second year, these awards promote greater transparency in MFIs' social performance by acknowledging MFIs with a strong commitment to accountability for how their activities change the lives of poor clients.

Over the past decade great strides have been made in developing indicators and creating standardized financial reporting across microfinance institutions. "A few years' ago the focus was on improving financial reporting," said Xavier Reille who heads CGAP's transparency work. "Today the focus is shifting to social performance reporting since for a microfinance business to operate effectively it must take account not just of the financial bottom line, but also of the impact it is having on its clients and the community. Institutions that can demonstrate benefits for the community will be able to attract socially-responsible investment."

The Social Performance Reporting Awards provide a yardstick for those wanting to assess an MFI's commitment to showing progress in helping their clients, supporting their staff, and protecting the environment.

As such, the awards reward openness and accountability in reporting, not the actual performance of MFIs on these measures. More than 200 MFIs submitted reports on their social performance in 2009 to MIX and this number is expected to increase significantly in the second round of awards.

To qualify, MFIs provide reports on a set of social performance monitoring indicators that have been developed and refined through the Social Performance Task Force in cooperation with industry leaders. One of the most important indicators is the degree to which MFIs are measuring the poverty level of their clients and which poverty-measurement tools they are using.

The awards featurethree levels of recognition:

• Certificate:awarded to MFIs that complete the Social Performance Standards Report

• Silver Award:awarded to MFIs that complete the report, and also provide data on poverty measurement

• Gold Award:awarded to MFIs that complete the report, provide data on poverty measurement, and have a social rating that includes auditing of the poverty tool used by the MFI

An award will also be given to microfinance networks or associations that have more than 50 percent of their affiliates reporting on social performance to MIX.

Winners will be recognized on the CGAP and MIX web sites and at special events, with certificates to be awarded in two rounds between June and December 2010. The MFIs will have until September 30, 2010, to report their social performance data to MIX.

To download the social performance report click here:http://www.themix.org/standards/sp-reportor contact Micol Pistelli, Manager of the Social Performance Program at MIX:mpistelli@themix.org

For media, please emailjthomas1@worldbank.org

The Ford Foundation is an independent, nonprofit grant-making organization. For more than half a century it has worked with courageous people on the frontlines of social change worldwide, guided by its mission to strengthen democratic values, reduce poverty and injustice, promote international cooperation, and advance human achievement. With headquarters in New York, the foundation has offices in Latin America, Africa, the Middle East, and Asia.

News Source : Microfinance Industry Takes Action To Report Client Poverty Levels, Changes to Clients' Lives