Alliance for a Responsible, Plural and United World

Workgroup on a SocioEconomy of Solidarity

Meeting of the workshop coregroup
FINANCE OF SOLIDARITY

January 9th and 10th, 2003
Paris, Charles Léopold Mayer Foundation

Minutes written by Elisabeth Bourguinat

Present: Oriol Alsina, Philippe Amouroux, Elisabeth Bourguinat, Renée Chao-Beroff, Sunimal Fernando, Yves Fournier, Benoît Granger, Morgane Iserte, Reynaldo Marconi, Ben Quiñones, Teshome Yohannes.
Absent due to a good reason: Isabel Cruz Hernandez, Ruth Egger, Paul Kampakol.

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Summary

Introduction 
I – The dynamics of the Alliance PSES
1) The Alliance for a Responsible, Plural and United World
2) Workgroup on a SocioEconomy of Solidarity
3) To favor the transverse approaches within the Workgroup on a SocioEconomy of Solidarity
4) To promote the proposal notebooks
II – The approaches proposed by the participants
1) Sunimal´s proposal 
The proposal of CERISE
Reynaldo´s proposal 
Ben´s proposal 
Benoît´s proposal 
III – Debate on the field of study definition.
1) The new Reynaldo´s proposal
2) To establish limits in order to advance in the exploration
3) To start from the definitions or from the indicators?
	4) Definitions already available
	5) A “standard” IMF?
6) What to study first: the social capital of the target populations or the social performance of the IMFs?
7) Two workgroups in parallel
IV – Workgroup on CERISE indicator
1)	To identify the core of the theme
2)	The IMF performance is related to its environment
3)	To define IMF mission
4)	To mention the target groups in the IMF by-laws.
5)	To expand the definition of the target segment known as “poor”
6)	Evaluation of the solidarity through a financial analysis
7)	Mobilization of local resources
8)	Efforts of the institution and noticeable results
9)	The offer of non-financial services: an indispensable assistance?
V – Workgroup on the definition of the finance of solidarity
1) Solidarity, finance of solidarity and indicators of the finance of solidarity
2) And the individual microfinances?
VI – Strategy and methodology
1)	The thing without the word
2)	An ambitious strategy
3)	To confirm the indicator before releasing it 
4)	To gather other partners
Conclusion: Plan of Action and Agenda 

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Introduction

Renée: This workshop is an extension of our meeting in Dourdan, and intends to reach a consensus on our working program for 2003 and 2004, being aware that the goal is to develop indicators, which can be used within the sphere of the finances of solidarity.

At the end of Dourdan meeting, representatives of each continent had nominated the people who would integrate the coordinating group that is gathering today. This group is made up of: Isabel Cruz Hernandez and Reynaldo Marconi representing Latin America and Caribbean; Sunimal Fernando and Ben Quiñones representing Asia; Teshome Yohannes and Paul Kampakol, Africa; Benoît Granger representing the Northern finance of solidarity and, finally, the "Group of Paris", comprised by Ruth Egger, Yves Fournier, Renée Chao-Beroff, Elisabeth Bourguinat, Philippe Amouroux and Morgane Iserte. Some of them could not come and they apologize for their absence. Thanks to all who came, and some came from very far, to participate in our work. Oriol Alsina, responsible for the co-financing of the Workgroup on a SocioEconomy of Solidarity has also joined us. 

Before we start, Philippe Amouroux, member of FPH (Charles Léopold Mayer Foundation for Human Progress) and facilitator of the Workshop on a SocioEconomy of Solidarity of the Alliance for a Responsible, Plural and United World will explain us how the “Workshop on the Finance of Solidarity" integrates the Workgroup on a SocioEconomy of Solidarity (PSES) of the Alliance. 

Next, we will work on the approaches proposed by some of our companions in order to define our objectives and our methodology; after, we will start to explore the chosen paths, and finally, we will define our plan of action.

I – The dynamics of the Alliance PSES

Philippe: Dourdan meeting was organized by the "Group of Paris" that, since two years, has been working on the theme "Microfinance and social bonds." During the same period, the Alliance for a Responsible, Plural and United World has been organizing several workshops, as the workshop on the Finance of Solidarity, facilitated by Renée Chao-Beroff. 

It seemed judicious to us to group these two parallel initiatives, as we knew that some people who were present in Dourdan had participated in both. Thus, we had put them together, and the group that will continue the work started at Dourdan meeting constitutes now the workshop on "Finance of Solidarity" of the Alliance for a Responsible, Plural and United World. 

1)	The Alliance for a Responsible, Plural and United World

The Alliance gathers several thousands of people from more than 115 countries, whose works are divided into four thematic axes: Values, Education, Culture; SocioEconomy of Solidarity; Governance and Citizenship; Humanity and Biosphere. The Alliance members also organize their reflections accordingly to socioprofessional groups (university students, farmers, militaries, religious, artists.) and finally accordignly to regional groups. 

The Alliance is not an institution, it is a network that operates around a collective agenda and communication tools and methods for a common work. It neither has a decisional body nor any hierarchy or offices and, therefore, it does not have only one address, except for the "website".  This website remits to many other "sites" that, for the time being, are still essentially thematic, as the one of the Workgroup on a SocioEconomy of Solidarity, or geocultural, as the South America, India or Catalonia ones. 

In December 2001, an international meeting in Lille gathered 400 people, who represented several world regions, different socioprofessional groups and the different thematic approaches. In order to prepare this meeting, the "allies" were invited to write the proposal notebooks, which were translated into several languages and are available at FPH or on-line, on the Alliance site. 

Those proposal notebooks, written to prepare 2001 Assembly in Lille, represented an effort to conceptualize and build an intellectual corpus. Now, this work must continue with more concrete procedures, encompassing experimentation phases, which will be followed again by sharing and conceptualization stages, etc. 

I must add that, up to now, the thematic and the other groups tended to work independently, without much interaction. However, the Alliance has an ambitious goal: to get a global vision, that may lead to another kind of globalization; and for that, it is important that the work of each area does not close upon itself, but that it admits an opening and transverse dimension to other fields. 

2)	The Workgroup on a SocioEconomy of Solidarity

The Workgroup on a SocioEconomy of Solidarity is facilitated by a five-people team: Philippe Amouroux (France), Marcos Arruda (Brazil), Laurent Fraisse (France), Heloisa Primavera (Argentina), Yoko Kitasawa (Japan). Françoise Wautiez (France) and Oriol Alsina (Spain) perform the secretariat functions. 

It includes the following workshops: 

1.	Work, job and activity 
2.	Business and solidarity 
3.	Production, technology and investment 
4.	Ethical consumption
5.	International trade:
6.	Fair trade:
7.	Fiscal policy and social protection 
8.	Economic policy, ideology and geocultural dymension 
9.	Women and economy 
10.	Economy of solidarity 
11.	Social currency 
12.	Debt 
13.	Finances of Solidarity 
14.	Heading for sustainable finances 
15.	Sustainable development

Most of these fifteen workshops started in 2000-2001. They resulted in electronic forums and in the writing of the proposal notebooks that were presented at the world meeting of the Alliance in Lille, in December 2001. 

The site of the Finances of Solidarity workshop provides the participants' list, named "Promo", and that comprises around eighty people: 

-	the people who had participated in the original workshop on the "Finances of Solidarity" and in Finsol forum; 
-	the participants of Findhorn meeting (see below); 
-	the members of the “ Group of Paris” on "Microfinance and Social Bonds". 
-	the participants of Dourdan meeting.
-	other people, from different places, who wished to participate in the works of this workshop (in fact, the participation in the Alliance workshops is open to all). 

The site also makes available the workshop files (particularly those of the electronic forum), the history of the events that took place in 2001, as well as reference documents for our future work, as, among others, Jean-Pierre Worms's contribution, in Dourdan, that was translated into English; the texts that some of you have sent in order to prepare this workshop; the proposal of creation of a world financial system of solidarity, coordinated by Henri Rouillé d’Orfeuile and that will be presented at the 2002 Social Forum, representing the workshop on Finance of Solidarity. 

3)	To favor the transverse approaches within the Workgroup on a SocioEconomy of Solidarity

As other workshops of the Alliance, the workshop on the "Finance of Solidarity" must make an effort towards other workgroups on the same theme and, eventually towards other thematic workgroups. 

In June 2001, facilitators of all the workshops on a SocioEconomy of Solidarity gathered in Findhorn, Scotland, in order to define the tranverse axes of work.

Seven axes were identified, and will become new workshops:

1.	To build a tuned and integrated view on a socio-economy of solidarity, based on paradigms and values different from the present dominanting economy; 

2.	To work coordinatedly on socio-economic and new wealth indicators, in order to be able to differentiate this new socio-economy from the neoliberal economy; 

3.	To work upon an integrated project engineering for the economy of solidarity: nowadays, several segments live together under the economy of solidarity flag, as the fair trade, the microfinance of solidarity, the ethical consumption, the socially responsible company. The challenge consists of understanding how these different segments can become integrated in order to form a true economic system. For instance, we could imagine a company that is socially responsible, ethically supplied, purchases accordingly to the fair trade principles, uses solidatiry financing and respects the environment. There are, already, some partial attempts in this direction: in South America, for instance, there are some people who associate micro-credit, local currency issuing and fair trade. What allows integrating these different approaches is their implementation within the sphere of a territorial procedure.

4.	To work on an engineering of pedagogical tools: it is common that people who reflect about the world regulations lack field knowledge, what makes them change their discourse when confronted with the true poverty. On the other side, those who work in field on the alternatives frequently are not aware of the limitations upon the world economic or political systems; thus, it is necessary to think about the creation of pedagogic tools that may answer to those two needs;

5.	To develop models of world regulations, specially of financial regulations;

6.	to develop models of regulation at an economic actor level, for instance, of the consumer, the company, the investor, etc.;

7.	To develop intermediate models of regulations (that is, local, territorial or regional) between the planetary level and the economic actor's level: This refers to all the approaches on subsidies, as well as to those regulations that reduce the impact of international regulations on a territory.

These seven new workshops will join the fifteen already existent. Some original workshops will persist, others will join together, and others will disappear. Each one must redefine its objectives accordingly to the contributions of the notebooks of proposals. Dourdan meeting was a redefining stage for the goals of the workshop on “Finance of Solidarity", since, now, we are directing ourselves towards a reflection on the finance of solidarity indicators.

Once the transvers workshop on the socio-economic indicators is formed, we probably will have to maintain work relationships with it. We will also be able to contact the workshops on alternative currencies, fair trade, debt, integrated projects of solidarity economy and models of world financial regulation, which integrate the Workgroup on a SocioEconomy of Solidarity. With time, maybe this extends to workshops that are external to our workgroup, as the workshops on "Common governance principles" or "Integrated management of territories". 

These crossed exchanges may occur in several manners. The first and the simplest, consists of reading the texts produced by the other workshops: for that, it would be enough, that some of us accept studying the proposal notebooks of other workshops on SocioEconomy of Solidarity, where, certainly, we will find interesting ideas for our own work.

We can also invite a representative from another workshop to attend our meetings, or one of us could participate in another workshop meeting. 

4)	To promote the proposal notebooks

While being a workshop of the Allaince, we must create proposal, but we must also try to promote the existing ones, especially those of the proposal notebooks. 

In March 2002, Ben organized a meeting on microfinances in Bangkok, during which Renée presented the proposal notebook. On her turn, Cécile Lapenu, whom you know from Dourdan, also presented it at the European Social Forum that took place in Florence, in November 2002. 

DEBATE 

A gigantic task! 

Reynaldo: The outlook presented by Philippe is really very ambitious; how can we situate our work within this sphere? 

Renée: This really huge outlok shall not discourage us, nor give us the idea that we are “drowned" in all this. On the contrary, we must convince ourselves that each workshop is important to built the whole; each workshop should bring interesting proposals, so that the whole has a real value within the global plan. On the other hand, the fact of having the possibility of establishing bonds with other workshops shall not be seen as a loss of our autonomy: each workshop defines its objectives, its work plan, its terms, etc. in an autonomous way. Far from this, this situation can bring us a lot of deepening opportunities and opening perspectives; for instance, I am very interested in the territorial approach evoked on the engineering of integrated projects of solidary economy, because, by definition, the social money develops at a given territory level. 

Ben: What I highlight in Philippe's presentation is that the finance of solidarity are not reduced to microfinances. We must be aware of this point, because, up to then, our group focused essentially the microfinances. Our objective must be to contribute to the reflection on the financial system of a socioeconomy of solidarity and, therefore, to debate the world bank system. It is a gigantic task. 

Benoît: I agree with the idea that the solidary finances are not reduced to microfinances, even if both have many common objectives. Particularly in the North, the solidary finances comprehend practices that are very different from the microfinances ones. 

II – The approaches proposed by the participants

1)	Sunimal´s proposal

Sunimal: Before working on the indicators of the solidary finances, I think it is crucial starting from the definition of what we understand as solidarity. In fact, that word may be understood in four different ways. 

The four kinds of solidarity  

In a poverty situation as those of the rural communities in the Southern Asia, the prevalent social capital created by the poor is turned to the individual and it is motivated by instrumental factors, as the benefits originated by the exchange of mutual services. In this case, one speaks about solidarity. 

In the North, in a prosperity situation, until the economic crisis arose, the social capital created among interactive groups were turned to the individual himself; today they intervene within special social groups, as women, migrants, ethnic groups in order to defend their rights and to protect their interests. Here again, one speaks of solidarity. 

It also happens that certain sections of the society are mobilized to help the lacking people, accordingly to the old Christian tradition of charity or, even, the Buddhist tradition of the bestowal. We also speak of solidarity, for instance, between the rich from the North and the poor from the South. 

Finally, still in the North, within the economic recession context, the prevalent capital stock is turned to the others and it is motivated by a civic sense and a sense of a very pronounced public responsibility; the interaction is determined more by the values than by any other kind of own interest, and it goes much beyond the reciprocity or the charity. Once again, one is speaking of solidarity. 

If we want to develop the social capital and the solidarity in the world, we must know what kind of solidarity we are talking about, and which one we want to promote.

The" good" and the “bad” capital stock  

Therefore, my proposal is about how to analyze the kind of existent social capital in a given society, what seems to constitute the first stage of the construction of a system of finances of solidarity.
In my contribution, I exposed a "couple" of notions that allow establishing a distinction between the thick social capital and the thin one; the introverted or extroverted; formal or informal; with trust or without trust; received or created; explored or latent; and between the social capital that unites and establishes a communication; between the one that is centered on itself and the one that is turned to the others; between what is a "club" property and what is a public property; and between the social capital that is mainly turned to the psychological and emotional needs and the one that is turned to physical and economical needs; between the social capital that protects and develops the collective interests and the one that goes beyond the collective interests and is turned to the social solidarity; I also proposed the analysis of the social capital levels and of how to plan it.

Some times to reinforce, sometimes to weaken the capital stock 

In order to intervene with instruments that create social capital or reinforce the already existing one and to reduce the socioeconomic exclusion, we shall have a very clear idea of the types of capital that need to be reinforced, as well, as of the ones that should be weakened in the different stages of the intervention.

For instance, in the communities of the villages of the Southern Asia, there are neighbours subcommunities, friends, family or groups; their capital is centered on themselves, and excludes other similar sub-communities. A social intervention reinforcing this type of capital certainly will contribute to create an economical value and to reduce the poverty. However, this will also reinforce the social fragmentation of the village community and will reduce its negotiation strength with external actors.

After a first phase of consolidation of the introverted social capital of each sub-community, it will probably be necessary to try to develop an extroverted capital, that is, that links the different sub-communities among themselves, and the village community to the other communities, in a regional level. This will detriment the first type of capital, because it will be weakened to allow this second one to develop.

Many intermediations fail because they are put into practice without a previous analysis of the community's internal dynamics and of the capital stock types that are in it. We cannot limit ourselves to act intuitively; it is necessary to implement a methodology to understand the social dynamics before we get involved in an intermediation. 

How to guarantee the respect for the values?

Finally, the last proposal that I would like to mention, refers to the way we keep the values. We all know that the solidarity, the capital and the social bonds lie on a determined number of values. However, at all levels, from the local to international ones, there are some people who do not respect these values. 

For instance, a generation behind, in a village of the Asian Southeast, it was admitted that every individual should sacrifice his/her private interests before the interest of the group to which he/she belonged to and, more particularly, the interest of his/her family group. This value was strictly respected because the structure of the family group was closed and all the economic and religious activities took place inside this group. This kind of structure guaranteed, therefore, that the values would be kept. With the socio-economic changes that are taking place in the last decades, the members of these family groups began to establish professional or other bonds with the exterior. So, the weaker the structure of the family group, more difficulties it has to guarantee the respect for the values. It is a phenomenon verified not just in Asia, but also in Europe. 

If we want to implement a social transformation in which the individual behavior is strongly influenced by the values, we should think about practical mechanisms that allow guaranteeing the respect through sanctions, in case this doesn't happen. In another way, we will have, on one side, an ideological system based in values, and on the other side, a practical system which won't respect them.

DEBATE

Ben: I agree with Sunimal. Not all the capital and/or social bonds are positive. We must analyze the good and bad values upon which the networks are based. We should work much more on values than on procedures. 

The empiric base of the solidarity concept 

Renée: In the workshop in Paris as well as in Dourdan, we worked very much on values, and it seems to me that we are not very far away from a consensus on these issues; undoubtedly, as  Sunimal suggests, we will have to define what is a good social capital and which is the superior form of the solidarity; but also we will have to work on what, at the electronic forum, we called as “empiric base of the solidarity concept”; only a good number of clear and believable examples will allow us explaining what we understand as solidary finances and in what these are different from the microfinances or from the pre-bank finances. So, to put this empiric base together, we need indicators, because we will be able to highlight this new concept if we measure and compare several experiences.

Solidarity: in which scale?

Reynaldo: I think it is important not only to define what we understand as finance of solidarity, as well as to determine the sacle on which we are going to work: Are we going to situate at a given territory level? Will we remain in the sphere of the Southern countries? Will we consider the interrelations between North and South? 

2)	The proposal of CERISE

Renée: In 2002, Argidius Foundation, in a partnership with CERISE (Comité d'Échanges, de Réflexion et d'Information sur les Systèmes d'Épargne-crédit – Committee of exchange, reflection and information on the saving-credit systems) and CGAP (Consultative Group to Assist the Poorest – an advisory Group to assist the poorest), promoted an initiative to define the indicators of social performance for the microfinance institutions. Manfred Zeller (Göttingen University, Germany), Martin Greeley (Institute of Development Studies, Manchester, Great-Britain) and Cécile Lapenu (CERISE, France), who unhappily could not be here today, accomplished a sudy As I, with Syed Hashemi (CGAP, USA) and Koenraad Verhagen (Argidius Foundation, Switzerland), take part in this committee, I am going to summarize the contents of this contribution.

This study tries to develop a conceptual vision and a matrix of indicators for the social performance that the IMFs (Institutions of Microfinance) could use to complement their present indicators of financial performance and to offer more transparency to their financiers.

The document proposes four items to assess the social performance: 1) the IMF strategy to reach the poor populations; 2) the adequacy of the services and products to the excluded populations; 3) the improvement of the social and political capital of the customers and communities; 4) the social responsibility of IMF.

In the third item, we recognized the first issue of our workgroup, in other words, the social capital and, therefore, we can interpret this presentation as an invitation to expand our issues to other aspects of the social performance of the company.

These four items can be divided in subitems. 

The first item encompasses the definition of the target segment as those excluded by the classic banks and the poor populations; the definition of the geographical target as the rural or distant areas; the definition of the socioprofessional target segment; and the analysis of the operating means of IMF to reach these populations. 

The second item includes the different kinds of financial servicesoffered; the financial services not offered; the satisfaction rates of the customers, essentially assessed by their fidelity to the institution. 

The third item refers to empowerment, that is, to the consolidation of the capacity and power of the customers; to the IMF lobby performance to help their customers; and to the transparency of the institution and the access to the information that it offers to its customers. 

The fourth item comprises the IMF codes of conduct while employer and its efforts to adapt to the local values and culture.

These subitems, on their turn, decompose into tens of indicators together with several proposals of variables that allow measuring them.

The exercise proposed by CERISE consists in asking to those who really act, to the researchers and to the managers of the finance of solidarity to evaluate the appropriateness of these indicators in the measurement of the social performance of IMFs. The goal, after consulting the IMFs, is to produce a reduced number of dimensions and indicators (ideally, 15 to 20 simple indicators).

DEBATE

To simplify or to take into account the variety of situations?

Yves: I recognize that it is necessary to simplify the things to make them operative, but the situations are so different from an IMF to another, that I wonder if it is possible to build this kind of references.

Renée: Obviously, it is essential to take into account the situation of each IMF, but on the other hand, we must be able to compare the IMFs amongst themselves. The different situations among the IMFs should not make us give up the comparison. 

The microfinance are addressed to the excluded, not only to the poor

Yves: The heading of the first item implies that the microfinance are reduced to the fight against poverty; one forgets, and this is usual, that the microfinance customers are not only the poor, but also those excluded from the bank system, who are not necessarily poor; it also includes those who, due to a bank crisis, went away from the banks and turned to the IMFs. Would not it be better to change the heading of the first item to “The IMF strategy to reach the populations excluded from the bank system"

Renée: In fact, the definition of the target segment in this document maybe tends a little much to the poverty; the underlying idea is that an IMF that aims at the poor has a better social performance than another that does not look at the poor. Even so, the referential includes criteria that are concerned, for instance, to the small companies; therefore, microfinance customers are not identified as comprising only the poor. 

The IMF offer cannot be confounded with its impact

Reynaldo: The proposal of Cerise seems to mix two kinds of indicators that are totally different and to evaluate, at the same time, the IMF offer and its impact on the customers.

Renée: Maybe I had been a liitle innacurate in some proposals; however, the initial ideal was to evaluate the IMFs offer and its impact on the customers. This fast deviation maybe was due to the fact that we wanted to use the analysis of the IMF impact on their customers in order to evaluate its effectiveness.

Poor and not poor

Sunimal: The fact of defining the poor and the excluded from the bank system as the target segment, makes us understand that there is no other chance for those populations except to join forces, strenghten their social capital and to develop an informal economy to fight against globalization. However, more than remaining with the poor, they usually try to establish bonds with the not poor in order to escape the poverty. I have worked at a Tamil village with 15,000 inhabitants, of which around one thousand had immigrated to France and England as refugees. Some instruments had been implemented to allow those refugees establishing commercial bonds with the inhabitants of their village and thus help reducing the poverty. One should look for the integration of whole society and the development of civic values that go much beyond the reciprocity. 

Renée: The problem with Sunimal is that he doesn't stop reflecting and going ahead! However, once in a while, we must stop in certain postulates and to deepen the reflection in order to assess its validity. In the case, we agreed, in Paris, and later in Dourdan, with the fact that the consolidation of the social capital was relevant for the poor and that an IMF that would strenghten the social capital of the poor would be an IMF of solidarity. Nowadays, Sunimal tells us that, in fact, the development of the social capital is not always positive, and that the poor do not want to remain among the poor, and so on. But if we do not stop changing our basic hypothesis, we cannot go deeper in our work!

Ben: Back to Sunimal´s intervention, we really have the impression that the social capital as it is considered in this instrument means the internal social capital of a given group, nothing else, and that a broader integration is not considered.

Renée: Some indicators proposed in subitem 3 refer not only to the social capital of the customers and their community, but also to the social capital that grows thanks to the relationship between customers and institution.

And the preexistent social capital?

Yves: The fact this instrument studies the social performance of the institution under the perspective of its offer to customers and of the impact on the latter surprises me. Apparently, there is nothing pointing to a previous existence of social capital in the customers or to the way how it is formed. Consequently, it seems preferable to take into account the social capital to develop it, and to act as if starting from zero.

An insufficient indicator for the finance of solidarity

Ben: Once again, I have the impression that we focused too much the microfinances, which are not a synonim for finance of solidarity. This indicator certainly is a good basis to evaluate the IMFs social performance, but the finances of solidarity include much more than the microfinances; so we must fill it in with other criteria that may be applied to the finance of solidarity in general.

3)	Reynaldo´s proposal

Reynaldo: If the microfinance actors have been interested in the development of the social capital of their customers for some years, it is because they have realized that the search for the IMFs permanence sometimes occurred to the detriment of these. This made, many of us resolutely stand on the customers´ side to evaluate an IMF. I stress that the approach of Cerise is on the side of the IMF offer; on the other hand, as I have already said, it includes some impact indicators mixing up a little the referential.

I also notice in the referential of Cerise a confusion between evaluation of impact and evaluation of market. For instance, the satisfaction of the customers and the fact of knowing if they leave or not the institution refer to a market evaluation; to evaluate the impact on the customers means to measure the changes caused by the IMF intervention, and not to assess the acceptance or refusal levels of the offered products.

Now, I am going to present our own procedure for evaluating the impact.

The system of impact evaluation implemented by FINRURAL is part of the Imp-Act Program, sponsored by Ford Foundation, and that benefitted from the help of three British universities: Sussex, Sheffield and Bath. The methodological and instrumental conception of the service was developed by FINRURAL, although it has benefitted from the support of the Imp-Act Program, and mainly from the advices of Professor Paul Mosley's from the University of Sheffield.

This evaluation system is turned to the identification of changes, either positive or negative, that the microfinance programs bring to their customers. It is being tested by 8 IMFs that integrate FINRURAL network. The results will be known in April, 2003.

We can think about two kind of impact assessment: the individual assessment of the impact each IMF has upon their customers; and the aggregated assessment of the IMFs impact, as an industry sector, on a given population. 

We implemented the first kind of assessment, with three types of indicators: 1) economical changes for the customers (income, jobs, patrimony…); 2) social impacts (access to the basic services, home, health, education…); 3) changes in the empowerment of the people (self-respect, participation in the family decisions, leadership, entrepreneurial and economical skills, assessed from indicators of participation in social, political or cultural organizations…).

I must add that I am very interested in the approach of Cerise because I think it may complete ours in a beneficial manner. I would like to invite CERISE to a seminar that we will organize in April when we are going to present all the works we developed and will try to improve our methodology. 
DEBATE

Problems with determination and causality

Renée: We all know the problem with the sudies on impact: they have difficulties in determining the different possible causes and in establishing the causality meaning sentido. The changes that affect the customer may have elements linked to the institution of finance of solidarity, but also to the economical or political changes that took place in the country, to the inflation, etc. It is difficult to determine all of the positive or negative changes, which happened in the life of the people due to the IMF activity.

Reynaldo: I agree that the studies on impact are something more complicated than one usually thinks. On the other hand, we have to start from the hypothesis that the IMFs performance has an impact on their customers, because this is the base of our action! If we think we don't have impact on them, we would not have accomplished everything we did.

The cost of the studies on impact

Renée: The second critic to the studies on impact is their costs: if we want to make a study on impact with scientific value, we must be concerned with the selected sample, foresee testimonial groups, etc. I know that the project AIMS (Assessing the Impacts of Microenterprise Services) tends to reduce these costs, but even so, it seems clear that not all the institutions will be able to use this kind of study. However, this is not a reason to give up the assessment of the social performance of the IMFs. Thus, CERISE has been privileging the assessment of the IMF offer, which allows accomplishing faster and cheaper studies on the social performance, in spite of being more limited.

Reynaldo: It is true that the methodology proposed by the AIMS project is still too expensive, but there are means to reduce the costs, as to develop the local capacity of accomplishing this kind of study. Every time we call consultants, Americans or other, the costs increase, while the presence of local consultants would make the operation cheaper. I know an IMF from Honduras with 30,000 customers that spends 250,000 dollars with the AIMS methodology, because it calls foreign consultants; with our solution, the same methodology applies to an IMF with the same size and with the same number of customers costs only 25,000 dollars, at the most; and we can suppose that, when the tools are experienced and improved, the costs will decrease even more.

To assign the studies on impact to the IMFs?

Yves: One way of reducing these costs would be to assign the study on impact to the IMF; I cannot realize how an IMF could operate correctly without accomplishing regular studies on impact with its customers, at least to question, if necessary, its strategy and intervention methods. Consequently, we could define much lighter and systematic tools than the punctual studies on impact and if the IMFs could manage them more easily; they would allow obtaining continuous information that would feed the strategic reflection.

Renée: In my opinion, there are two kinds of studies on impact. Some are accomplished by the IMF itself and allow it to assess its failures, strength and weakness in order to improve the services offered to its customers. This kind of procedure should be fully integrated to the IMF governance. The other ones are intended to account for the results achieved by IMF to its external partners, financiers, NGOs, governments, and so on. In this case, it is clear that, due to credibility issues, the IMF cannot accomplish its own study on impact.

Benoît: The IMFs need to prove their social impact, otherwise the microfinance tool could move away and harm their customers, as they would be judged by their financial performances. In fact, it should be forbidden to operate microfinances without submitting to the assesment of their social impact.

Renée: I also believe that in one way or another, it is necessary to measure the social performance of IMFs, and not only to measure it, but to foresee penalties. Without them, there is a risk of stimulating the IMFs to be more and more profitable to the detriment of the quality of their social impact. However, this assessment can only be realiably accomplished by independent third parties that make use of rigorous scientific methods. For years, while the debate about the impact measurements was in its apogee, the only IMFs that presented extraordinary impact rates were the Grameen Bank, Cash Poor, Grameen Trust, etc. Was their social performance, in fact, outstanding or this was due to a self-reporting assessement? 

4)	Ben´s proposal

Ben: The proposals that I bring are based on the analyses presented by Jean-Pierre Worms in Dourdan. 

To analyse the pre-existent social capital

For me, the first stage of an IMF social performance assessment consists of analyzing and measuring the preexistent social capital of the involved population: does this lies on belonging to an association? Is this a credit association? Is it based on family bonds? On commercial links? Which are the motivations and needs that make the people cooperate?

This measurement of the initial social capital may also pass through the analysis of the language used: which are the words, sentences or terms that use to appear during the interactions among members of the network? Which is their importance for the network? In the groups that I studied in the Philippines, for instance, the terms cooperation and share appeared very frequently; well, the use of a given terminology reinforces the values and the principles on which this terminology is based and in which the population believes. 

To analyze the formation process for the social capital

The second stage consists of analyzing the process through which the social capital is formed and develops, being it endogenous to the population or a result of the IMF performance. This is a crucial issue, because if we don't know how the social capital is formed, how can we measure the impact of the IMF performance? 

Which are the essential objectives of the social capital development? 

The third stage consists of measuring the impact of the social capital development on the involved population. But, exactly, what shall we measure? For me, one should not measure its effect in terms of improvement of the financial viability of IMF, what is usually the main concern of the financiers. First of all, one shall measure its effect on what I consider as its essential objectives: the increase of the community's social cohesion, the resolution of the conflicts, the increase of confidence, the local mobilization of the financial resources and of the local capacities. After the 1947-1948´s financial crisis, the Korean president exhorted his people to come together and to make everything to save the country. The citizens brought their gold to save the bank system. Only with this kind of social cohesion we will really be able to mobilize the population and to eradicate the poverty. 

A kind of microfinances that is not concerned with the social cohesion would achieve nothing. One of my friends, coming from Eastern Timor, told me that there, the native, furious with the specialists in microfinances who arrived with a computerized paraphernalia and huge cars that they drove very fast, took possession of the computers and cars and burned them. Obviously, the responsibles for that microfinance program were not concerned with the social capital of the populations or with their development.

Another difficulty consists of not restricting this action to a single portion of the population; otherwise, the ones that feel excluded can become resented. For that reason, as Sunimal, I believe that the microfinance should assist the poor as well as the not poor: this is the way for the social cohesion. The microfinance program that we introduced in the Philippines, for instance, does not discriminate poor and not poor: the poor seeked the not poor to organize a common saving system; the not poor accepted to participate, and this strenghtened the community's social cohesion. 

The other aspects are as important as: the development of the social capital should facilitate conflict resolution; and this is particularly strategic in countries that face serious conflicts like Sri Lanka, Cambodia, Eastern Timor, and some African countries. It is necessary to show that the finances of solidarity can really be a factor of social peace. 

They should also prevent the evasion of the community's resources to the exterior. For instance, still in the Philippines, the classic bank system tended to centralize the savings in big cities, where it was at the service of large companies. The microfinance system should allow investing locally the regional savings. 

DEBATE

The social capital at theservice of integration

Sunimal: I agree with Ben's analysis: better than trying to develop the social capital of the poor, it seems essential to favor a social capital that integrates poor and not poor around an ethnic identity, for instance. Poor and not poor should understand that they have a common identity and that should help each other to develop their own economy if they don't want to be squeezed by the globalization.

Teschome: To concentrate in the local can also be dangerous: the globalization marginalizes the local cultures; therefore, one must ask what are the resources available that allow local communities having access to information, especially to Internet, and may take advantage from the globalization. 

Sunimal: To illustrate better what I want to say, I will mention the case of a village in which an IMF has created a group of twenty-five people, whose social capital increased, what has been very positive. However, another IMF arrived and created a second group; later a third came, and so on. Nowadays, there are six different groups at that village, and the original bonds of that village society that was fragmented into groups that act independently. Was that the aimed goal? I regard the finance of solidarity as an instrument that should allow consolidating the solidarity not among the poor before the rest of the world, but between poor and not poor, aiming at strenghtening the cohesion of an ethnic group, of an area, or even of a country, and allow them facing the adversity. 

The social cohesion has not only good sides

Teshome: I agree that we need to measure the advances in the social cohesion, in the cooperation and in the team work. The utilized indicators measure the cooperation just in terms of economical results. Saying this, in certain cultures, the social cohesion may be preserving negative and even dangerous practices; in Africa, for instance, there is the excision. In cases as this one, would not it be better to cast doubt on the social cohesion?

Heading for broader forms of solidarity

Sunimal: When people gather and create social capital, they have different motivations; consequently, the quality of the social capital can also be very dissimilar. I believe it is less interesting to strenghten the solidarity where it already exists, than to create a social capital that links different groups and creates a broader solidarity. The values on which this broader solidarity will be based vary from one culture to another. Within the European context, it can be a value related to the public welfare, while in the Third world they can be values linked to the identity or to a regional solidarity. Consequently, it is important to understand the existent mechanisms of solidarity very well, in order to determine what kinds of social capital formation should be stimulated or weakened so that we can achieve the ideal society we all want. For that, we must create appropriate analysis instruments that may be easily used and are not much onerous. 

Ben: I think Sunimal´s intervention goes in the same direction of my proposal: it intends to analyze the different kinds of networks that produce social capital, identifying the values on which these netsorks support themselves and qualifying the kind os social capital they produce (thin or thick, that links or establishes a communication, etc.). Then, we can carry out the three stages of the assessment I proposed: to measure the preexistent social capital in the targeted population, to analyze process of formation and development of the sopcial capital and to measure the impact of the development of the social capital on that population. 

Renée: In general, to build a good methodology, it is always better to start defining the objectives before thinking aboun the means of reaching them. Thus, Sunimal´s proposal of starting with the definition of the ideal society that we all want,  before defining the methods of development for the social capital thatwe may adopt, seems logical. However, in this case, my concern is to know who would define that ideal society: I think neither the IMF, nor the State, nor the finaciers are entitled to this right. Only the social group would have legitimacy to define the ideal society it wishes. However, since in some cases, these wishes are not ideal and it would be desirable to weaken some rights on which they lie, the system becomes "self-blocking". 

Rich and poor: the same battle? 

Renée: On the other hand, I remain skeptical concerning this vision of the poor and not poor supporting each other in order to contribute to the development of their region or country. We cannot forget that the development of the microfinances was due to the idea that the poor had to gather and defending themselves from a scenario that tried to divide them to squeeze them more easily. I don't believe that we are dealing with societies, where the rich are willing to cooperate with the poor to build the best of the worlds. Undoubtedly, this is the ideal and we should try this, but before, we will certainly have to go through several stages and, specially, a first stage during which the poor must gather have the power that will allow them negotiating a place for themselves in the society. I don't think we can skip these stages and go directly to an integration and social cohesion stage.

Elisabeth: Even though, we see several migrants' examples, as the Cameroon people, for instance, that remain solidary with their original village; when compared tothose who remained at the village, they are "not poor", but they worry about the poor.

Renée: It was the poverty that led these Cameroons to migrate to France; besides this, they may be rich when compared to the village population, but in France most of them are among the poorest people. Therefore, it really is solidarity among poor.

5)	Benoît´s proposal

Benoît: Last year, Planète Finance, assigned me a mission that consisted of trying to adapt a tool called Girafe, used by the Southern IMFs, to the tools of finance of solidarity of the North. I had to create a kind of "methodological prototype" and test it later in two IFSs (Institutions of Solidarity Finances) in France.

This procedure made me choose three main criteria for the assessment of the institutions´ performance, that were presented as inquiries. We cannot forget that this work has been ordered by large institutions that were concerned with the social objectives, as well as with the preservation of the capitals invested in the tool of the finances of solidarity. 

a) Is IFS solidary? Are the social mission and the contribution to the commonwealth clearly defined, especially in the by-laws? Are the investments in accordance to the ethical rules adopted by the IFS? 

b) Is IFS a low-risk investment? Do its objectives really aim at the preservation of the capital value? Is the IFS administration balanced and expert in terms of decision-making and of risk management?

c) Is IFS an efficient and productive tool? Is it able to manage the tension between the social objectives and the financial risk? Are the teams (permanent and volunteer) adapted to the production pace? Are the production overcosts covered by stable resources (either public or private)? 

Obviously, we know that in terms of social performance, it is difficult to define what effectiveness is. However, we have two elements of compasrison: on one side, the public services that offer similar services to those proposed by IFS. The public help to create jobs for people in difficulty, for instance, allows asking if the IFS seems to be more efficient and productive than those public policies. On the other hand, the financiers of the private sector: Is the IFS more open and more sympathetic? Does it have broader criteria than those of the private sector? 

As you can see, the fundamental pricniples remain the same as in the South. However, they are different in two points: the collective dimension of the business procedures is certainly much more important in the South than in the North, as well as the collective dimension of the resources. In the South, in fact, a portion of the resources comes from the community in which the IFS intervenes, while in the North, there are very few systems in which the community's savings becomes a credit for that same community.

Concerning the finances of solidarity in the South, I would tend to propose three “negative” assessment criteria. 

First, I think that one cannot speak in finance of solidarity if the social criteria do not explicitly and statutorily integrate the objectives of the institution.

Second, one cannot speak in finances of solidarity if there is not a coincidence between the external financial aid and the projects conceived within the community that will receive it. We see, for instance, financiers injecting considerable amounts in IMFs without worrying with the balance of this offer with the community needs.

Finally, one cannot speak in finances of solidarity if, some years later, a portion of the capitals that circulate in the saving and loan cycle doesn't come from the community itself. In fact, in this case, this would mean that the community was not able to develop in an autonomous and responsible manner.

DEBATE

A micro or a macro approach? 

Ben: For the time being, we have just dealt with the assessment of the finance of solidarity institutions in a small scale; we have said nothing about the articulation between the finance of solidarity systems and the traditional international financial system. Up to now, we have not adopted the broad approach proposed by Philippe. 

Yves: On my part, I am searching operating instruments that may help me in my work. Therefore, my option is to work in a “micro” level rather than in a “macro” one; and even in this “micro” level, it becomes evident that we cannot make everything. Thus, it is necessary to limit the field of our future researches. 

Renée: It is obvious that such an ambitious reflection as Philippe´s proposal will demand much more than one year or one and a half year of work; it will extend for ten or fifteen years! Our contribution to the Alliance project are the concrete results and the advances we can bring in the field that interests us and that we know well, i..e. the finance of solidarity at a "micro" level.

At the moment, I think we could adopt as a basis the proposals of Cerise or of FINRURAL and start by selecting the indicators that seem more pertinent to us. Next, we could query ourselves if these indicators just allow measuring the microfinances or if they may also be applied more generally to the finance of solidarity. Otherwise, what indicators should be added in order to apply tool to the finances of solidarity in general? 

III – Debate on the definition of the field of study.

1)	The new Reynaldo´s proposal

Reynaldo: I propose a small chart that reviews the different possible kinds of assessment of an IMF, either if we are at the institution side or at the customer´s side. 

	Analysis of the institution and of its offer 		

Indicators that still do not exist 	Assessment of the IMF offer in terms of social performance 	Assessment of the IMF financial sustainability	

Indicators that already exist	
	Assessment of the social  capital of the customers and of the impact of the IMF performance on its evolution 	Assessment of the market (satisfaction of the customers, defection rates.) and of the socioeconomic impact of the IMF 		
	Customer´s point of view 		

If we place ourselves on the institution side, many works about the financial sustainability were already made; but very few works dealt with the social performance assessment.

If we place ourselves on the customer´s side, there are several impact indicators, specially about the customers´ satisfaction, the defection rates, etc., but there is nothing to assess the social capital and its evolution. 

If we want to offer some aggregate value, we must concentrate on the left column. The proposal of Cerise about the assessment of the IMF social performance is very detailed and, to deepen this reflection should allow us offering a new and interesting point of view. It will still be missing the study about the social capital, which was object of some scarce works.

2)	To establish the limits in order to advance in the exploration

Yves: I agree with the analysis and with Reynaldo's proposal but, even so, I think it would be interesting to establish a link between the assessment of the social performance and of the financial sustainability, that is, between the left and right columns of the chart. In general, the indicators of financial performance of the IMFs hide a social performance, which, in most of the cases, explains this financial performance. Couldn´t we evidence in a better way the relationship between the indicators of inancial performance and those of social performance?

Reynaldo: Of course, it is interesting to look for links between social performance and financial performance, as well as between the social capital of the customers and the IMF impact. However, for the efficiency of our work, it seems better to me to concentrate in one single aspect and only later to look for its incidence on the other ones.

Renée: I also think we have to separate the things in an artificial manner, otherwise everything explains everything and we are not able to make a real analysis. For instance, Reynaldo pointed out that, according to CERISE indicator, the customers´s satisfaction as well as the fact of knowing if they leave or not the institution are more related to an assessment of the market then of the impact; but we could consider both as a criterion to measure the social performance of the institution. However, it is imperative to establish some limits in order to advance in the exploration. 

Yves: In any case, at the end, we will make a parallel between the evaluation of an IMF social offer and of impact of its performance on its customers: the relationships between offer and results interest us more than simply analyze the offer.

3)	To start from the definitions or from the indicators?

Reynaldo: Before starting to reflect on the indicators that allow evaluating the social capital of the customers and the IMF social performance, we should agree on a definition for each one of these terms. 

Renée: In fact, we must be sure that there is a consensus among us about the definition of the social capital or about the finances of solidarity, contrasting with the microfinances or with any other kind of finances. However, we should go forward with the conception of a methodology. Maybe we could share the tasks. Some of us would be in charge of the conceptual search, and the others, starting from a first conceptual postulate, would be responsible for the methodological search, even if this implies in an interactive work. Finally, we must review, whenever necessary, the adopted definitions.

Sunimal: CERISE indicator seems very well made if we consider that the objective of the IMFs is to reduce the poverty. However, if we consider that an IMF mission goes beyond the poverty reduction, and that it also aims at the development of the solidarity through the social capital, then, undoubtedly that document should be completed and also re-interpreted. For that, while we do not have a clear definition of what is solidarity and finance of solidarity,  it will be really impossible to go forward in the assessment of an IMF social performance.

Ben: In my opinion, the networks linked to the finance of solidarity should present the three following characteristics: their members must identify themselves with them and have a strong belonging feeling that allows tham sharing their goals and values; second, these networks should be able to mobilize the community's resources instead of getting them from an external actor; and finally, they must be based on values and objectives that tend to integrate all the society sectors. 

4)	Available definitions

Reynaldo: Actually, we already have very good definitions of the social capital and of the finance of solidarity that were published in the "Finance of Solidarity" proposal notebook of the Alliance, which was coordinated by Renée and Antonin Prébois. 

Renée: This notebook is the result of the electronic forum works and of the workshop of Paris, that is, it is the result of a collective work process.

The social capital can be defined as the capacity of the people to cooperate and to act together, using or creating the necessary social bonds to go in the direction of common solidary and sustainable goals. Therefore, the social capital doesn't refer only to the sum of individual capacities, but to a collective capital that belongs to the group and allows it ensuring its cohesion, its perpetuity and its action. It is the result of the interaction between the values shared by the individuals and the institutions and structures created to get near to these values. 
The finance of solidarity is defined in several levels as a mission, vision, identity, competence, behavior and environment. 
-	The finance of solidarity has the mission of using the financial tool for a fair and sustainable development. 
-	In a long term, they aim at the increase of the social capital. 
-	Their actors are multiple and each one has different techniques and behaviors; all act in a different way, but together they make a specific identity of the finance of solidarity emerge. 
-	Their competence consists of thinking globally, of congreggating individuals and actors around the financial activity, of knowing the individual entrepreneurs' needs and the needs of communities whichever their economical and social conditions are. 
-	The job of the financier of solidarity consists of financing activities and people, within a general interest sphere, caring for the respect towards the social capital. 
-	The finance of solidarity act in a poverty and exclusion environment, or in a situation of where the access to the financial services is difficult.
The finance of solidarity try to answer to the three bigger crises of the society: the one of the man with himself, the one of the men amongst themselves, and the one of the man with his environment. Before these crises, the finance of solidarity, whiole strengthening the social capital, i.e. when it puts the man and the society closer to their values, it contributes to create the conditions for a sustainable development.  

5)	A “standard” IMF?

Benoît: I propose a more operational method: Instead of extending too much on the definition of solidarity, we could take as reference an IMF that, intuitively, we all consider as solidary, or to base ourselves on simple indexes, as the fact of IMF capital partially originate from the local savings. If we are able to identify a real solidary IMF, it would be easier to analyze the pertinence of the criteria proposed by the CERISE indicator. 

Renée: The problem is that we will only know if it is solidary or not after we apply our indicator to an IMF, not before…

6)	To study, at first, the social capital of the target populations or the social performance of the IMFs?

Yves: I wonder if the things would not be clearer if we studied the list of criteria proposed by CERISE and selected the ones that interested us; in my opninon, it would be a more pragmatic way of agreeing on what the solidarity, the social capital stock, or the finance of solidarity mean to us. 

Ben: Personally, I don't agree to start analyzing the CERISE indicator, because I think that it would be better to agree first about the definitions. However, just not to argue, I accept that we try to elaborate definitions starting from the analysis of the indicators. 

However, I think that in this case, it would be more logical to start working on the notion of social capital of the target populations before we pass to the social performance of the IMFs as CERISE did. Before anything, we should know what kind of network we wants to speak about and about which network we wants to be interested in. Once these networks are identified, the work on the indicators of social performance would be much faster. 

Renée: After all, it does not matter the order in which we work. It odes not matter if we will start studying the social capital of the target populations or the social performance of IMF: we have already decided to work on both. 

Reynaldo: I am less optimistic than Ben: the work about the evaluation of the IMFs social performance will demand months, even if we start from the proposal of CERISE; therefore, in my opinion, there is no other solution than to work on both subjects (social capital of the target populations and IMF social performance) in parallel. 

7)	Two workgroups in parallel

Renée: Therefore, I propose to create two workgroups: the first will work on the indicators of social performance based on Cerise´s document and it will try to study how an institution that has a social performance mission and implements it can get nearer to the finance of solidarity. 

The second workgroup will start with the definition of fiancne of solidarity and will try to define the criteria that allow differentiating an institution of solidarity finance, comparign it with all other microfinancial or general financial institutions. 

IV – Workgroup on CERISE indicator

1)	To identify the core of the theme

Reynaldo: In my opinion, CERISE indicator presents two very interesting dimensions in what concerns the evaluation of the IMF social performance: items 1 (the IMF strategy to reach the poor populations) and 4 (the social responsibility of IMF). 

We should add to them one of the elements mentioned by Ben: the local mobilization of the financial resources and of the local capacities, that is, how the IMF collects the local savings and how it includes the local capacities in their governance tools.

Item 2 (the adequacy of the services and of the products to the excluded populations) seems to I refer more to the market assessment than to social performance; item 3 (the improvement of the social and political capital of the customers and of the communities) is more directed to the results observed in the customers and, therefore, to the left column of the chart. 

2)	The IMF performance is related to its environment

Benoît: A criterion that seems to miss in CERISE indicator and that is decisive to qualify the social performance of an IMF, is the context in which it intervenes. It does not matter if it is a big or a small institution, if it intervenes in a given context and positions itself in relation to the main economical and financial stream. 

That kind of benchmarking assessment seems to me particularly interesting for the North, where we see the big banks restricting the access to the poorer populatios or to those with precarious credit. In a certain way, the microfinance institutions become more or less solidary depending on the behavior of the dominant financial institutions that surround them, and this element still presents the advantage of being objectively measured: we can collect facts, numbers, and dates about them. Probably if we analyzed the conditions under which IMFs were created and developed in the South, we would also identify elements that would allow us to assess their solidarity.

3)	To define the IMF mission

Reynaldo: The definition of the institution mission seems crucial to me. In South America, for instance, we saw the IMFs prioritizing the profit and the shareholders´ satisfaction. Therefore, it is necessary to know form the beginning if the institution has an approach strictly commercial or if its objective is to aid some kinds of customers. 

Benoît: Every company should have a commercial approach, without this, it is not sustainable. 

Elisabeth: But, at first, a “common” company does not choose its customers. For instance, a salesperson of copiers accepts selling to all those who want to buy. An IMF, however, may decide to serve some classes of customers and do not serve other ones. 

Yves: Therefore, it is necessary "to qualify" the commercial vision of an IMF. 

4)	To mention the target groups in the IMF by-laws.

Benoît: To assess the mission proposed by an IMF, the reference or not to the target groups in the by-laws, in the management speeches, etc would be a simple criterion. 

Yves: An IMF may speak about its target populations and to behave in a very different way. 

Renée: Of course! However, if the target populations are mentioned in the institution by-lwas and the latter does not assist them, we can denounce it and demand for sanctions; if the bay-laws do not mention anything, the IMF can adopt a purely commercial procedure and this is perfectly legitimate.

Reynaldo: In CERISE indicator, we found some criteria regarding the fact of an IMF being intended or not to target groups in subitems 1.1. and 1.4.. I think we could group these criteria. 

Benoît: Numbers 1 to 7 of 1.4 subitme could get neareer to the numbers 1 to 4 of subitem 1.1.; all are about the vision or the mission of an IMF. 

5)	To expand the definition of the target segment known as “poor”

Yves: I would like to go back to this definition of the “poor" target segment of item 1.1: on one side, the target public of the microfinance does not comprise only poor, but, in a broader way, the excluded from the classic bank system or those who abandoned it due to a lack of confidence. On the other side, no microfinance system would be viable if worked only with the poor. Therefore, we must take into consideration the IMF need of having also customers who are not poor. 

Benoît: The indicator simply requires that one checks if the IMF is intended for the poor. This does not mean that it is addressed only to them. 

Yves: In this case, O.K. 

Benoît: On the other hand, at number 4 of subitem 1.1, the presentation of the category “the poorest” as a target group for the microfinance seems an absurd to me: How to defend that the microfinance should allow remedying all the consequences of the natural catastrophes or of the civil wars? It is not obvious a public help is required before such serious situations. 

Yves: We should not mention this kind of exceptional situations, but it is better to restrict the field to the populations usually excluded from the bank system. 

Elisabeth: In a lecture given at the École de Paris du Management (School of Administration of Paris), Renée stressed that the microfinances were not addressed to "the poorest", but to the "poor, that are economically active” defined as "those that perform activities that generate income, even if little and precarious, that allow them to supply their needs and the needs of their family".  She also said that even in the case of people who are indigent, as for instance, abandoned elderly living on the streets without resources, we couls think about "starting from the beginning and gradually creating bonds and social capital to take them away from this situation."

Reynaldo: It would be better to speak about "more vulnerable groups", without specifying. 

6)	Assessment of the solidarity through a financial analysis

Reynaldo: There are many other criteria besides mentioning the target groups in an IMF by-laws to see if it really considers certain target populations or not. One may, for instance, check the interest rates, profitability rates, etc. 

Benoît: The administration speech or the by-laws text can be, in fact, analyzed in itself and later compared with the financial objectives of the IMF.

Some years ago, I participated in a vast financial analysis work that intended to compare the three year-old annual bills of something that, in France, is called of "insertion company” with the accounts of classic companies for comparable segments. The insertion companies are PMEs (Small and Middle size companies) that commit themselves in using a certain number of unemployed and excluded people and for that, they receive subsidies from the State. Although those subsidies cover just part of the overcosts because they use excluded people, the result of the analysis showed that these companies of solidarity were more strictly managed than the classic companies; Thus, the financial results of the different kinds of  companies very not very different from each other.

I think the financial analysis of a company is highly instructive. In this case, we should find informative differences between the accounts of a IMF of solidarity and those of a classic IMF. The CERISE indicator, numbers 8 to 15 of subitem 1.4, remit to a financial analysis. One may suppose that a IMF of solidarity would give less importance to the balance of its accounts than to the fact of achieving its objectives.

Reynaldo: Not always where there is a deficit there is solidarity! The financial balance is a necessary condition to the sustainability, it is a prerequisite. For that, I would like to take that criterion out from subitem 1.1.

Benoît: Therefore, could we consider the financial balance of the institution as a pre-condition for studying its social performance? 

Reynaldo: It is not exactly this, because the financial balance of an institution many times cannot be achieved in some years. However, the sustainability objective should be an integral part of the IMF mission. 

Oriol: One element of social performance that seems to be missing here is the loan collecting strategy, i.e. the kind of pressure the institution applies on the customers that don't pay it back. 

7)	Mobilization of local resources

Reynaldo: In tem 4, I believe there are two interesting things that refer to the element brought by Ben about the mobilization of the local resources: the codes of conduct of the IMF while an employer, obviously supposing that the IMF offers labor agreements to the village people (subitem 4.1); and the adaptation to the culture, to the values and to the local traditions (subitem 4.2). In the same spirit, as a sign of the social performance of the IMF, it would be necessary to mention the fact it favors the financial engagement of its customers, either through the savings funding or through the association to the institution. 

Yves: In item 4, the fact of taking into account the local values seems very interesting to me. However, I am not sure that the codes of conduct of the IMF while an employer are a real part of the field we want to assess. 

8)	Efforts of the institution and noticeable results

Renée: If I understood well the procedure adopted by this workgroup on CERISE indicator, you have tried to introduce a distinction between the study of the institution offer, i.e., its operating ways, and the study of the results achieved by the customers. For instance, an institution may foreseen procedures to approximate their services of the real needs of the poor, but one must still know on if the poor are satisfied with the offered services and if these really offered them some wealth. 

I believe that in dimensions 2 and 3 there are many elements that relate to the efforts of the institution to improve its social performance, as the offer of non-financial services (2.2), or even the efforts towards a transparent management and to the access to information (3.3). Why do not consider them? 

9)	The offer of non-financial services: an indispensable assistance?

Some institutions really want to struggle against the poverty, but they don't have conditions of offering non-financial sevices. Is it possible that the offer of non-financial services is an indispensable characteristic for the microfinance of solidarity? 

Renée: In my opinion, CERISE indicator does not judge buy itself: It does not state that it is indispensable or not to offer non-financial services, he simply tries to provide an "x-ray" of the IMF. However, it becomes clear that those who want to struggle against poverty, and not only against the financial poverty, need to offer solutions for needs different from financial needs; besides, nothing compels the IMF to offer these services. Therefore we could take into account the fact it has partnerships with other institutions that can offer this kind of service.

Benoît: I wonder to what extent it is right to extend the services offered by a microfinance institution to all the social problems that their customers might face. The microfinances are just a tool, and the fact of being solidary does not imply that they should serve as a basis for the reconstruction of the whole society. 

Renée: If one IMF proposes credits to company founders and does not accompany them in their procedures, the latter have few chances of succeding alone. Therefore, it is necessary to offer them non-financial services complementing the financial ones.

Benoît: That is the point. In my opinion, it is a mistake to assign the financing and the project follow-up to a same institution. In France, the aid to the foundation of a company always operates in a couple: on one side, for instance, the ADIE (Association for the Right to the Economical Initiative) or the "local initiative platforms" in what refers to the financial support; and on the other side, the management “boutiques” (specialists that accompany the founders of a company before, during and after its creation) for the accompaniment. 

Renée: I think we all agreed with the fact that we need to worry in offering an accoompaniment to the customer: we cannot grant credits to him and to leave him alone. It is necessary that both services are articulated and coherent, otherwise we will be half working, and it won't be a surprise if we do not succeed. 

V – Workgroup on the definition of the finance of solidarity

1)	Solidarity, finance of solidarity and indicators of finances of solidarity

Ben: As agreed, we strat from of the definition of solidarity to define the finance of solidarity and its indicators. For us, the solidarity notion remits to four key elements: 

1.	common objectives, 
2.	cohesion, 
3.	a feeling of belonging to something, 
4.	unity.

From this definition of solidarity, the finance of solidarity may bew defined accordingly to these four key elements: 

1.	The finance of solidarity strengthens the individuals' capacity in cooperating to achieve common objectives. 
2.	The finances of solidarity consolidate the capacity of the groups and of the communities to overcome the exclusion and the discrimination and to integrate all the people involved within territorial levels. 
3.	The finances of solidarity strengthen the feeling of belonging of the personnel and of the customers of the institution. 
4.	The finance of solidarity reinforces the unity of institutions amongt themselves so that they can work together at regional, national, global levels, and to implement socioeconomic changes. 

One can then define the criteria to allow assigning the finances of solidarity starting from these different characteristics: 

1.	Consolidation of the individuals' capacity in cooperating to reach common objectives: 
o	the individuals' participation in the institution, either through adhesion or through the property, that is, while member customers or holding members; 
o	the individual's participation in community and municipal levels, as for instance elaborating the community or municipal budget.
3.	The solidary finances strengthen the feeling of belonging to something of the personnel and of the customers of the institution.
o	tax of defection of the personnel and of the customers 
o	on the part of the customers and of the personnel, the feeling of having achieved results thanks to the institution, of they have if" accomplished", of having had success 

4.	Consolidation of the unity of the institutions among themselves so that they may work together in regional, national, global levels and implement socioeconomic changes: 
o	representation and dialogue in the regional, national and international networks 
o	sharing of resources (funds, know-how, information) with other actors and other networks. 

2)	And the individual microfinances?

Reynaldo: In certain countries, the microfinances are addressed to individuals, as small businesses or small farmers. Should they be considered, in this case, a kind of finance of solidarity? 

Renée: The finance of solidarity can admit different methodologies; but they don't necessarily presuppose to work with groups. If they improve the capacity of the people to cooperate and to gather to achieve common goals, one can very well imagine an IMF helping an individual to create his own business, and later join in a local group of entrepreneurs; but this group not necessarily must be customers of the institution.

In Africa, the farmers´ funds also lend to individuals: if there is enough solidarity in the village to exercise a social control on the individual, the IMF is not forced to constitute groups.

VI – Strategy and methodology

 Now we should determine our plan of action for one or two years: if we want to do field work, we need to do it well; and furthemore we have to establish a time to validate the progress of our work. 

On the other hand, we should not only distribute the tasks among the people that are around the table, but to think in the networks that nominated us and to reflect on how they would engage in this work. 

Finally, we should also think about the people that, in spite of not belonging to our nteworks want to participate in this workshop: as Philippe explained, the workshops are public and open to all. Therefore, the procedures we will propose should be clear enough for those who want to join us and participate in our work. 

1)	The thing without the word

Sunimal: I am deceived because we did not arrive at a clear and consensual definition of the finance of solidarity. In Asia, this notion is not clear for most of the people; very few would know what it is about and some would speak about them in an inappropriate manner. If we cannot explain this concept, I won't be able to work correctly with them. 

Ben: Maybe the concept itself is problematic, but the thing not. I have a friend in Thailand that would not understand what I mean when I speak about the “finance of solidarity”; he could even have a rejection reaction. On the other side, if I ask him “How to improve the capacity of the institutions in order to reach their goals? How to stimulate the participation? Do you ask your customers to be partners of the institutions?”, he will understand very well about what I am speaking and in what I am interested. Therefore, this difficulty can be overcome by giving up these words, until they are better understood. 

2)	An ambitious strategy

Ben: If we limit our goal to a simple research of one year on the indicators of the fiancnes of solidarity, we won't have much impact. I propose that we are much more ambitious. We shall, at once, start to create an alternative vision for the world financial system. In 2004, the Asian Pacific Development Center will organizes an international summit on solidary finances in Kuala Lumpur (Malaysia); in the next six months, we could identify the leaders of many networks and present them our proposals concerning the indicators so that they give an opinion starting from their own experience.We would gather all these documents and present their synthesis during that summit, saying: "Ready! Finance of Solidarity is this! We could expect to create a real alternative movement. We can also organize a workshop on that theme for the next Summit of Microcredit, or for the World Social Forum. It is necessary to know how to take advantage from this kind of opportunities. 

Philippe: I am fully in favor of the idea of participating in the summit organized by the Asian Pacific Development Center. However, that meeting will be limited to Asia. It would be necessary for us to participate in similar meetigns in Africa and in South America and also to organize them. 

Oriol: The subject is so captivating that it is really worth to organize such meetings; it would not be difficult to find financings, because this is a theme that interests a lot of institutions and financiers. 

3)	Check the indicator before divulging it

Renée: I don't believe that it is so simple to ask several networks to use the indicator that we would be proposing and to make an appointment for 2004, in Kuala Lumpur. 

Reynaldo: I am also not very optimistic about the possibility of asking the people to test this indicator in a great scale, even in my own network: each institution its their activities, concerns, program, and to get something, it is not enough to ask. 

Renée: Besides, in the current stage, we risk receiving very literary and unequal results. For the time being, we have several types of indicators; for some of them, we have criteria and, for the CERISE indicator we still have have variables, i.e. of indications on how to measure each criterion. In the present stage, I fear that if we ask a lot of networks to use these indicators in the assessment of their institutions, they will answer us with "literature", that is, with reports explaining what they are doing, but that we cannot compare, and the goal of the indicators is to allow comparing them.  

For instance, the “capitalization” of INASIA about popular economy is a corpus of literary texts, very interesting to read. But we cannot extract elements from them that allow us comparing institutions among themselves. 

Even if we want to establish quantitative measures, we need to find assessment methods tuned in, so that each one can make the reports on the same bases and that we can compare the different institutions. 

Therefore, I propose, on one side, that we group the different indicators that we evoked taking advantage of their complemental aspects; that soon afterwards, we work on the mesuring units for each criterion; and then it is necessary improve and reinforce our indicator with an interactive procedure that we started in some studies of a pilot IMF. After the validation of our indicator in an experimentation basis, and the elaboration of a protocol, we can think about its diffusion and about proposing it to the other partners. 

4)	To add other partners

Philippe: It is probable that many people get interested for this project: how to aggregate them? How to go beyond our small group and to join other networks, not only to divulge our ideas, but also and above all, to enrich them? 

Renée: In my opinion, at a first moment, we should conclude our document internally; soon afterwards, we can communicate it to the whole Internet community and, in case other actors intend to confront us our indicator with theirs, or even to test our indicator with other pilot IMFs, we will accept with a lot of pleasure. 

Reynaldo: After Elisabeth finish writing the minutes of these two days, it would be necessary that a small team be in charge of preparing a work document, that could be object of a validation by e-mail. It would be necessary to find some pilot institutions in Africa, in Latin America and in Asia, that accept to test this indicator. Finally, we could organize an international meeting to assess the results, to improve the methodology and to propose to  other institutions to adopt it. 

Sunimal: Nothing impedes that we match Reynaldo's proposal with Ben´s: if we finish this work before Kuala Lumpur's meeting, we can present it during that summit and start pushing many networks to adopt this kind of approach. 

Conclusion: Plan of Action and Agenda

1.	Elisabeth will prepare the minutes of these two days for the end of January. 
2.	Renée will re-read it and it will be sent to all the participants of the workshop in the middle of February. 
3.	Ben and Sunimal will conclude the work they began to define the finance of solidarity (contrasting it with the microfinance and with the other kinds of finances) the work on the indicators of social money, and they will communicate it to Reynaldo and Yves in the end of March; 
4.	From these inputs, from CERISE indicator, and from the records of this workshop, Reynaldo and Yves will prepare, for the end of April, the work document that shall contain: 
•	the definitions (solidarity, finance of solidarity,social money); 
•	a presentation of the hypotheses on which the experimentation of this new indicator will be based; 
•	the indicator, presented according to the model of CERISE indicator, that is, as an operating tool, with indications on how to measure each criterion; it shall include a part about the assessment of the social aperformance of the IMFs and another about the evaluation of the preexistent social money and its evolution; 
•	an enclosure that allows evaluating the financial effort that will be necessary, particularly for case studies. 
5.	The work document will be published at FINSOL electronic forum in May of 2003, to be discussed and validated (that forum will be open not only to the participants of that meeting but to all the members of the workshop on the Finance of Solidarity).
6.	In July 2003, we will publish the studies on pilot IMFs recruited by our networks. Up to now there were proposed (to be confirmed):
•	2 cases in Africa (CIDR. Renée and Yves)
•	1 case in Africa (Teshome)
•	2 cases in Africa (CIDR. Renée and Yves)
•	1 cases in Asia (Ben)
•	1 case in South America (Reynaldo)
•	1 case in France or in Europe (Benoît)
•	1 case in Catalonia (Oriol)
7.	In January 2004, we will organize a meeting to evaluate the results and to validate the methodology. This meeting will gather the coordinating committee and the reporters of the studied cases.
8.	Then we can improve our proposal and present it in Kuala Lumpur in June 2004, as a first communication basis with other networks. 
9.	Soon afterwards, we can present it in other international summits, more particularly in Latin America and in Africa.