Why Social Performance Management? A Note for Investors, MIVs, and Donors

This paper elaborates on the benefits to investors and donors in encouraging social performance management (SPM) among their investees.

SPM demonstrates the social outcomes of financing/funding. Investors engaged with the social performance of their investees benefit from:

• Making prudent investment decisions;
• Investing in true performance;
• Adhering to a social mission;
• Understanding the local context;
• Gaining a competitive fundraising advantage;
• Improving partnerships with investees;
• Reducing reputational risk;
• Promoting funding diversity.

Investors and donors have considerable power over the MFIs they support, and can leverage it to promote SPM, including client protection, a focus on the double bottom line, and increased monitoring and transparency around social outcomes. They can consider social performance during due diligence and partnership consideration processes. Finally, donors can track and report social performance measures alongside financial performance dimensions.