Social Performance Indicators

Reynaldo Marconi, FINRURAL
11.12.02

Dear Colleagues: 

Given that many have already contributed to the discussion, I consider it now useful and timely to reflect upon and share the criteria, experience and outcomes  derived from the methods and instruments that measure the impact of microfinance at the level of the clients of these organisations, and most particularly for us to assess their social impact.
FINRURAL has instituted a service for evaluating such impacts. The FINRURAL system is part of the ImpAct Programme supported by the Ford Foundation and has the participation of three British universities, Sussex, Sheffield and Bath. The service's methodological and instrumental design has been developed by FINRURAL with the support of the ImpAct Programme, and especially with the advice of Professor Paul Mosley from the University of Sheffield. The purpose of the service is to identify the changes, either positive or negative, produced by microfinance programmes for their customers. Through reports authored by FINRURAL, the Service aims to provide timely and objective information about the impact of financial services provided by microfinance institutions (MFIs) to their customers. The service privileges those methodological dimensions that yield outcomes with acceptable levels of validity, trustworthiness and low cost.
This Impact Evaluation Service offers two types of products. The first concerns the evaluation of the individual impact of the MFI upon its customers and consists of a report that allows it to have information extracted from the clients' perspective, which is useful for making decisions regarding planing, strategy and development of products and financial procedures. The "composite report" is the second type of document , which presents the overall impact produced by all the microfinance programmes provided by the institutions using the service and presents the data supporting political and strategic decisions, not only for these institutions but also for private and public bodies associated with micro finances.
FINRURAL and its Impact Evaluation Service currently provide the 8 financial institutions using the service with their corresponding reports. These institutions include 4 NGOs (CRECER, FADES, PRO MUJER, DIACONIA-FRIF), 2 Private Financial Funds  (FFP FIE, FFP ECOFUTURO) and 2 Savings and Loan Associations, TRINIDAD and COMARAPA. The selected approach is provided by the transversal measurement method, which gathers information at a specific moment in time from a sample of long-time customers (those who have been associated with the financial institution for 2 or more years). At the same time, information is collected from a comparison group comprised either of people who have not participated in any microfinance programme, or people who have been participating for less than 3 months.
There are three levels of evaluation: 1) either the economic unit the client belongs to, or the group of companies, businesses or economic activities in which the institution's customer participates; 2) The family unit, or home, basically made up of all the people who share the same roof and "cooking pot"; 3) The customer as an individual or person.
The most relevant indicators considered in the impact evaluation at the level of the economic unit include: a) Income generation measured via the indicators of average amounts of sales, expenditures, earnings and the perception of change over the past year; b) Investment via indicators such as the amount of work capital used, the monetary value of the activity's productive assets and the perceptions of the changes in work capital and investment; Also taken into account is the diversification of the incomes via indicators such as the number of income-generating activities, the participation in new markets or with new products and/or services. The impact evaluation also takes into account variables related to employment, using indicators such as the size of the work force, both salaried and familiar.
To evaluate impact at the family level, variables such as family income and their assets' value in the economic field are taken into account. Inasmuch as the social aspect of the evaluation, the degree of food security is taken into account by looking at whether the homes have experienced either periods of food insecurity or changes in their nutrition and visits to medical centres. Education is also taken into account by looking at indicators such as attendance at educational centres, the maximum level of education as measured by the ratio of minors and elders in the family.
On the other hand, home conditions indicators are also taken into account, such as the household occupancy (degree of crowding) ratio, the existence of basic utilities, and the presence of improvements, repairs, or add-ons over the past year.
Lastly, on the personal level,  variables such as self-esteem, entrepreneurial and economic skills are looked at, which are measured via indicators such as involvement in social, political or cultural organisations, participation in family decisions, the existence of bookkeeping records, level of personal income, among others.
As can be seen, we are working on evaluating economic and social impacts, as well as the impact of empowering.
We would like to share our experiences and visions with you and stimulate an extensive reflection about these issues.