Social performance

Laura Foose, SPTF: “Microfinance is not necessarily about the business. The ultimate goal of microfinance is about the client. So at the heart of social performance is bringing it back – bringing microfinance back to the client.” [NpM film, 2011] 


Measuring the social agenda of a microfinance institution (MFI) is assessed by their social performance. The Social Performance Task Force (SPTF) stimulates social performance management as a standard management in which client’s protection is at its heart. The SPTF consist of 1,300 members from all over the world and every microfinance stakeholder group, ranging from practitioners to donors and investors, rating agencies and networks.

Because of the close involvement of NPM members with this organization, SPTF has organized its annual meeting of 2011 in the Netherlands.

SPTF, founded in 2005, develops, promotes and spreads standards and good practices. The SPTF Universal Standards for Social Performance Management (the standards) are a set of management standards that apply to all MFIs pursuing a double bottom line – a financial as well as social return.  “Meeting the standards signifies that an institution has “strong” social performance management (SPM) practices” (SPTF, 2012). The standards include: 

  1. Define and Monitor Social Goals;
    The institution has a strategy to achieve its social goals. The institution collects, reports, and ensures the accuracy of client-level data that are specific to the institution’s social goals. 
  2. Ensure Board, Management, and Employee Commitment to Social Goals;
    Members of the Board of Directors are committed to the institution’s social mission. Members of the Board of Directors hold the institution accountable to its social mission and social goals. Senior management sets, and oversees implementation of, the institution’s strategy for achieving its social goals. Employees are recruited, evaluated, and recognized based on both social and financial performance criteria. 
  3. Treat Clients Responsibly;
    The institution determines that clients have the capacity to repay without becoming over-indebted and will participate in efforts to improve market level credit risk management (Client Protection Principle 2). The institution communicates clear, sufficient and timely information in a manner and language clients can understand so that clients can make informed decisions (Client Protection Principle 3). The institution and its agents treat their clients fairly and respectfully, and without discrimination. The institution has safeguards to detect and correct corruption as well as aggressive or abusive treatment by their employees and agents, particularly during the loan sales and debt collection processes (Client Protection Principle 5). The institution respects the privacy of individual client data in accordance with the laws and regulations of individual jurisdictions and only uses client data for the purposes specified at the time the information is collected or as permitted by law, unless otherwise agreed with the client (Client Protection Principle 6). The institution has timely and responsive mechanisms for complaints and problem resolution for their clients and uses these mechanisms both to resolve individual problems and to improve products and services (Client Protection Principle 7). 
  4. Design Products, Services, Delivery Models and Channels That Meet Clients’ Needs and Preferences;
    The institution understands the needs and preferences of different types of clients. The institution designs products, services, and delivery channels in such a way that they do not cause clients harm (Client Protection Principle 1). The institution’s products, services, delivery models and channels are designed to benefit clients, in line with the institution’s social goals. 
  5. Treat Employees Responsibly;
    The institution follows a written Human Resources policy that protects employees and creates a supportive working environment. The institution communicates to all employees the terms of their employment and provides training for essential job functions. The institution monitors employee satisfaction and turnover. 
  6. Balance Financial and Social Performance;
    Growth rates are sustainable and appropriate for market conditions, allowing for high service quality. The institution’s financing structure is appropriate to a double bottom line institution in its mix of sources, terms, and desired returns. Pursuit of profits does not undermine the long-term sustainability of the institution or client well-being. The institution offers compensation to senior managers that is appropriate to a double bottom line institution.