The Social Performance Framework

The PPI™ forms the core of a comprehensive social performance framework. As a social performance tool, the PPI provides management with the ability to:

• Divide clients into distinct poverty bands
• Integrate financial and social indicators
• Correlate product offerings and distribution channels to poverty levels
• Track movement of clients across poverty lines
• Assess how well a social mission is translated into action

More specifically, the PPI can assist MFI managers in the following ways:

• Inform management decisions about processes, programs, products, and provision of services
• Target clients for specific products and services
• Help in responding to competitive pressures, by understanding the balance of financial and social returns
• Provide timely and accurate social performance information to regulatory bodies, social investors, donors and rating agencies

What a MFI's individual social performance framework looks like depends on the specific needs of each organization, but would likely be composed of other objective, quantitative tools as well as customized qualitative assessments in addition to the PPI, as displayed below.

Operational Design of the PPI

The PPI is designed to help users understand and trust it (and thus use it properly). Accuracy is balanced against simplicity, ease-of-use, and "face validity". In particular, MFIs are more likely to collect data, compute scores, and pay attention to the results if, in their view, scoring avoids creating "extra" work and if the whole process generally seems to make sense. This practical focus naturally leads to a one-page scorecard that allows field workers to score households by hand in real time because it features:

• Ten simple indicators
• Only observable, indicators ("flooring material", not "value of house")
• User-friendly weights (positive integers, no arithmetic beyond simple addition)

The PPI can be photocopied for immediate use. It can also serve as a template for data-entry screens with database software that records indicators, indicator values, scores, and poverty likelihoods.

The central design challenge is not to maximize accuracy but rather to maximize the likelihood of programs' using the PPI appropriately. When scoring projects fail, the culprit is usually not inaccuracy but rather the failure of users to accept scoring and to use it properly. The challenge is not technical but human and organizational; not statistics but change management.

"Accuracy" is easier-and less challenging-than "practicality".

Click here for further reading on The Operational Fit

* This description quotes from: The Progress out of Poverty Index^TM: A Simple Poverty Scorecard for Bolivia, Mark Schreiner, December 2009.