Assessing and Managing Social Performance in Microfinance

This document offers a framework for International Fund for Agricultural Development (IFAD) to develop internal systems that monitor progress towards its social objectives in rural finance. This information could then be incorporated into operational practice, and provide the basis for social performance management (SPM) among rural finance institutions (RFIs). The paper draws upon the work of Improving the Impact of Microfinance on Poverty: Action Research Programme (Imp-Act) that has developed a five-step framework to manage social performance. These include:

• Clarify the MFIs mission, objectives and activities;
• Plan the SPM system;
• Develop a routine monitoring component;
• Develop ad hoc assessment components; and use and institutionalize the social performance information. 

IFAD should begin viewing impact assessment as part of a broader social performance framework. The paper suggests the following steps that might form an appropriate strategy for IFAD:

• Selecting rural finance partners;
• Aligning information needs;
• Supporting rural institutions in developing SPM capacity;
• Conducting in-depth research.