In the past social performance for microfinance has been defined as “the effective translation of an institution’s mission in to practice in line with the accepted social values”. In other words, it is about making an organization's social mission a reality, whatever that social mission is. While this definition appears sound in theory, it leaves the issue of articulating what social mission MFIs can pursue effectively un-addressed. This has resulted in a situation where MFIs social performance strategies have lacked focus, and essential issues such as MFIs’ conduct with their clients have been ignored.

M2i can assist MFIs in implementing effective social performance management using a comprehensive approach which, on the one hand takes into account all aspects of social performance and, on the other, allows MFIs to plan specific interventions that can have a discernible impact on their clients. Our approach includes

1. Defining social mission and setting social goals and objectives
Clear definition of social mission and objectives is the first step towards an effective social performance management. M2i helps MFIs in articulating their mission and objectives in a manner that enables them to have a sharp focus on social performance and plan such interventions which leverage their institutional character and strengths.

2. Designing appropriate products and services
We undertake market research to identify products and services which clients demand and value and which the MFIs can sustainably provide within the relevant legal framework.

3.Designing processes and control systems
Key processes need to be attuned to ensure achievement of desired social objectives. Relevant aspects of supervisory monitoring and internal audit systems also need to ensure that the processes being followed are as per design. We help MFIs in designing appropriate processes and control systems.

Example: We incorporate Progress out of Poverty Index-PPI (developed by Grameen Foundation) in the operational processes as a tool to measure poverty. We also ensure that the supervisory monitoring and internal audit systems check if the required data for PPI are being collected and analysed properly.

4. Measuring outputs and outcomes
We offer a number of services to measure achievements against desired social values and objectives. Some of these are

Analaysis of PPI data: Analysis of PPI data can reveal how successful the MFI in reaching out to the low income clients is. Analysed over time, it can also reveal change in poverty profile of the clients.

Designing Social Performance Scorecard: A customised social performance scorecard is designed to compare actual performance with the targets. This involves developing indicators for measuring various social objectives and measuring performance against the objectives. The scorecard provides a snapshot of overall social performance.

Code of Conduct Assessment: Code of Conduct assessment is undertaken to check compliance of the MFI to the accepted norms of ethical behaviour. We assess the performance of the MFI on the following important dimensions.

• Client origination and targeting
• Loan pricing
• Loan appraisal
• Client data security
• Staff conduct comprising of:
• Communication with clients
• Loan collection and recovery process
• Relationship management and feedback mechanism

Client satisfaction surveys: Ensuring client satisfaction can be an important social objective. We undertake client satisfaction surveys to assess the status of client satisfaction. Results of client satisfaction surveys can help the MFI in improving its products and processes.

Client case studies: Sustainable microfinance growth requires that MFIs learn continually from the experiences of their clients. It is important for MFIs to explore and understand the reasons that make it possible for some clients to grow their business manifolds utilizing the loans they receive from MFIs. Similarly it is also important to investigate why some clients go into a downward spiral and end up borrowing beyond their debt capacity. These insights can help MFIs design and deliver better product and services and align their businesses more closely with their social objectives.

M2i can help MFIs in drawing these important lessons by developing well researched case studies of successful clients as well as clients who could not improve their economic condition despite having access to microfinance services.

Impact Assessment: M2i can assist MFIs in developing a system of cost effective client surveys to determine the impact of their products and services. The data from these surveys can be used to categorize clients into different groups:

• High favourable impact
• Moderately favourable impact
• No impact
• Adverse impact

MFIs can then refine their products and services depending on whether the proportions of clients in each of these categories are within acceptable limits or not.