Small Money Big Impact

CHAPTER 8Social Performance Management

I've seen the power of micro‐finance all over the world in the eyes of mothers and fathers. It's unmistakable – joy and deep satisfaction they feel from being able to work hard and provide for their children and their future.

Rich Stearns ¹

The microfinance sector distinguishes itself by means of its rapid growth and innovative potential. Profitability is an easily identifiable variable. However, new instruments are continuously being developed for the measurement of social performance and therefore the assessment of the social mission and outreach of MFIs as well as its impact. This is done to ensure that MFIs fulfill their social mission, contribute towards the fight against poverty and promote the financial inclusion of the poor.

Social performance is measured by MFIs and MIVs alike. There is no trade‐off between social performance and profitability. Microfinance institutions do not have to decide on one or the other, as both goals can be met simultaneously. The double bottom line thus becomes even more significant.

8.1 SOCIAL PERFORMANCE

There is no doubt that the sustainable funding of MFIs has been instrumental in their success. Clearly, an MFI that is able to cover its costs, will in turn be able to fund growth and, as a result of that, supply an ever‐increasing client base with loans. Despite the fact that a major part of the ...