As both an innovative financial instrument and a means of fighting poverty, microfinance has generated excitement and some $1 billion in annual investments. But as the industry’s reach expands, a number of questions have emerged:
- How can microfinance be used most effectively?
- How do we assess impact and measure success?
- How do we ensure it’s reaching and helping its intended clientele?
- And most importantly, how do we ensure responsible practices in the face of expansion?
Part of the complexity stems from the dual goals of microfinance institutions (MFIs.) They must deliver returns on both financial investment and social change. And while established norms govern the financial side of the equation, there has historically been little discipline around measuring and reporting on social returns.
To help close this gap, we’ve joined a global consortium of microfinance donors working to establish and drive industrywide adoption of objective microfinance social performance indicators. These indicators:
- Provide reliable, comparable, publicly available information on the social performance of different microfinance institutions
- Establish universal standards and benchmarks to protect against exploitative lending practices
- Establish a universal methodology for estimating household poverty levels
- Provide actionable metrics to improve the social impact of microfinance
- Increase access to capital at below market rates with extended terms
Implemented responsibly, microfinance can empower the poor to transform their lives and the lives of their children. We’re committed to ensuring that it does.
SOCIAL PERFORMANCE INDICATORS STRATEGY
We collaborate with a global consortium of microfinance donors to endorse and support the adoption of industry-accepted standards of microfinance social performance indicators. Our goals are to ensure increased industry accountability and transparency, and to establish a truer measure of the industry’s impact on the lives of customers.