MFIs typically assess the success of their missions by charting the financial progress of their clients. Grameen Foundation is a leading voice in an industry movement to focus more on a double bottom line - both financial and social-to measure the success of MFIs in reducing poverty. "Social performance" takes into account the changes in clients' lives, or their social progress. For poverty-focused MFIs, clients' movement out of poverty means the MFIs are fulfilling that part of their missions. According to the Social Performance Task Force (SPTF), an action-oriented group of over 200 members representing microfinance practitioners, donors, investors and raters worldwide, social performance is defined as the "effective translation of an institution's social mission into practice in line with accepted social values." For MFIs, this translates into the need to collect and analyze poverty outreach and alleviation data, as well as data on other important social indicators such as the existence of consumer protection policies for poor clients and fair treatment of employees.

While the collection of social performance data is a fairly new effort in the microfinance sector, investors can begin to ask for this information. For example, MFIs from the countries listed here are collecting poverty outreach and alleviation data. Social performance information can give investors confidence in knowing that their investments are actually targeting poor families and potentially providing the resources for a life-changing impact.

The Value of the Progress out of Poverty Index ^TM

How is social performance information collected? A valuable tool for gathering these data is the Progress out of Poverty Index^TM. Grameen Foundation commissioned the development of the PPI in 2005. The PPI is based on an approach developed by Mark Schreiner of Microfinance Risk Management, L.L.C. The Consultative Group to Assist the Poor (CGAP), Grameen Foundation and the Ford Foundation endorse the use of rigorous poverty assessment tools and believe the PPI is a highly effective tool for those institutions interested in measuring client poverty. The PPI allows MFIs to create organizational profiles on poverty outreach and highlight their track records on poverty alleviation.

The PPI uses ten indicators that predict poverty, listed on a simple scorecard that is easy to administer and analyze. The PPI is reliable and transparent. PPIs are created at the country level and results are linked to national and international poverty lines through country-level household surveys. This allows for comparisons of likely poverty levels of clients within a country as well as globally.

To learn more about the PPI, click here.