Introduction to Social Audits

Assessing Social Performance

Process

Results

Audit Tools Rating Tools Client Assessment Tools

Social Audit

•A diagnostic tool that assesses whether or not an MFI has the systems in place to achieve its stated social objectives. It identifies strengths and weaknesses to prioritize areas for improvement.

MFIs Use Social Audits to:

•Diagnose where where they are in social performance

•Prioritize what to improve•Provide evidence for supporters•Get staff on board•Prepare for a social rating

Donors, and investors use social audits to:

•Diagnose social performance of investees/partners cost-effectively

•Identify areas for improvement that require TA and other types of support

•Monitor improvements in social performance

•Example: Oikocredit

Social audit tools

•Quality Audit Tool (QAT)▫Microfinance Centre (MFC):

www.mfc.org.pl/spm•Social Performance Indicators (SPI)

▫CERISE: www.cerise-microfinance.org•Global Reporting Initiative (GRI)

▫http://www.globalreporting.org/Home

Social Performance Indicators (SPI) Tool

• Focuses on process management, looking at an MFI’s stated objectives and how effectively its systems achieve them.

• Uses a wide range of indicators (12 criteria), giving an MFI an exhaustive overview of how its mission and actions size up against a number of common social objectives.

• Each SPI indicator is simple, directly attributable to an MFI, and based on data that is easily available to an MFI and that can be quickly checked by an external auditor. The indicators are grouped under four dimensions:▫ Outreach to the poor and excluded populations▫ Adaptation of products and services for targeted clients▫ Economic and social benefits for the clients▫ Incorporate social responsibility

Comparative review: How does it look?

QAT SPI GRI

Duration on site 5 days ½ - 5 days 0-2 months

External consultants

0-2 1 1

Methodology Qualitative interviews,Document review,Audit panel

Questionnaire Research on indicators

Report Final report & recommendations

Final report & recommendations

Indicators integrated into MIS

Introduction to Social Ratings & the Rating Initiative

Assessing Social Performance

Process

Results

Audit Tools Rating Tools Client Assessment Tools

Social Ratings•Purpose: Provides an external opinion on

an MFI’s capacity to put their mission into practice and achieve social goals.

•Motivation:▫Financial performance is only half the story

for most MFIs▫Systematic, relatively quick approach▫Quicker and cheaper than ‘impact

assessment’▫Focuses on improving management rather

than trying to prove impact▫Demonstrate social performance to

external stakeholders

Most ratings examine six areas of Social Performance:

Two Types of Social Ratings•Standard Social Rating: As described on

previous slide

•Social Rating Plus Field Data Collection:▫Survey of clients and focus groups with

clients▫Adds field evidence for opinions on: client

poverty levels, client awareness of institution’s policies and pricing, client ability to submit grievances, etc.

▫This data is usually not available from the MFI

The Social Rating Process

MFI fills out standardized forms prior to visit from the rater

Rater on-site: meets with managers and select staff; Reviews MIS and available documents

Rater visits several branch offices; Interviews with staff and clients; Review of available documents

Optional: Rater conducts focus groups and surveys with staff and clients for deep, field-level data

Final report reviewed by MFI then published with standardized rating

Social Rating Benefits•For the Industry

▫Increases transparency in the industry▫Allows comparisons in social performance

across MFIs•For MFIs & Associations

▫ Provides a clear diagnostic of social performance strengths and weaknesses, an important step towards the establishment of an effective social performance management system

▫ Facilitates access to financial capital

•For Investors and Donors▫Provides information for resource allocation

decisions▫Supplements the due diligence process

Social Audit vs. Social RatingSocial Audit Social Rating

• Not graded, usually not public

• Focuses on improving practice within the MFI

• Guided self evaluation

• Internal: Used by the MFI to examine its own strengths and weaknesses

• Good for MFIs at all stages—especially those getting started with SPM

• For MFIs of all kinds– regardless of size, or commercial orientation

• Graded, can be published

• Provides an opinion on existing practices

• Independent evaluation

• External: Used by investors, donors, public to appraise the MFI

• Great for MFIs with established SPM

• For MFIs of all kinds– regardless of size, or commercial orientation

The Rating Initiative•Co-funding service designed to encourage

at least 800 MFIs to engage in regular social and financial ratings

•Runs 2008-2012•Funds 70% of a first-time social rating;

50% of a second-round social rating•89 social ratings approved as of

December 2009•Visit: www.ratinginitiative.org

Social Rating Agencies

•Social Rating Agencies▫M-CRIL: www.m-cril.com▫MicroFinanza Rating:

www.microfinanzarating.com▫MicroRate: www.microrate.com▫Planet Rating: www.planetrating.com

•User Reviews▫http://www.sptf.info

/page/user-reviews-of-sp-tools

Introduction to Client Assessment Tools

Assessing Social Performance

Process

Results

Audit Tools Rating Tools Client Assessment Tools

Client Assessment Tools• Purpose: Assess social performance outcomes at

the client level. Including: changes in poverty and quality of life indicators as well as satisfaction.

• Motivation: Who are our clients? Are we affecting them? How can we prove it to others? How can we improve our products and services? Are they satisfied?

• Types: Poverty assessment, food security survey, PWR, client satisfaction surveys, exit surveys, focus groups

Uses of Client Assessment Tools•Track performance against targets•Signal early warnings•Segment the portfolio•Help clients & staff reflect on changes in

lives over time •Analyze clients’ use of services•Ongoing and Annual reporting

Poverty Assessment Tools

•Measure the relative or absolute poverty level of clients

•Profile clients at entry and exit•Track changes over time•Use for targeting & client placement into

programs