MICROCAPITAL STORY: 85 Percent of Microfinance Institutions (MFIs) and 61 Percent of Microfinance Investors Say MFIs Should Offer More than Financial Services According to Microfinance Insights Survey

A new survey of 150 microfinance institutions and investors conducted by Microfinance Insights, an international print magazine published by Intellecap, shows that 85 percent of microfinance institutions (MFIs) and 61 Percent of microfinance investors say MFIs should offer more than financial services. Of the MFIs polled, 79 percent offer “products and services that are consciously seeking to create social impact beyond simple financial inclusion,” including 63 percent that offer community development, 60 percent that seek inclusion of minorities, and 53 percent that offer better employment and labor conditions. Over 83 percent of the MFIs polled said their primary goal was poverty alleviation and 78 percent stated their main objective was women’s empowerment. Complete survey results can be found in the May/Jun 2009 issue of Microfinance Insights which can be purchased at www.microfinanceinsights.com/magazine_index.asp.

Recent initiatives to achieve double (financial and social) and triple (financial, social and environmental) bottom line goals have included attention to climate change, global health, and recycling. Last year, as reported by MicroCapital, MicroLinks hosted a forum on Microfinance and Climate Change, and there have been many recent initiatives focusing on health and health insurance, including the Princeton Microfinance Organization’s conference on Microfinance, Economic Development and Global Health, also reported by MicroCapital. Other socially responsible initiatives include efforts to tie in microfinance with waste management, highlighted by a recent MicroCapital story on the Canadian International Development Agency’s (CIDA) funding of the Participatory Sustainable Waste Management (PSWM) project in Sao Paolo, Brazil.

47 percent of investors polled in the survey rated social return on investment as important as financial return, but concerns remain over the process of measuring social impact. 63 percent of the investors polled said that an immature measurement framework is a major issue for impact assessment, followed by 60 percent who cited cost and time considerations.

The lack of both social return measurement and promotion of social transparency in the microfinance industry, in stark contrast to progress in financial return measurement, is highlighted in a 2006 report by USAID entitled “Evaluating MFIs’ Social Performance: A Measurement Tool” by Gary Woller. The author concludes that this deficiency is due primarily to the inherent methodological difficulties and resource demands of measuring social performance. According to the paper, a simple, low-cost, and credible social performance measurement tool resulting in a standardized social rating is needed. The SEEP Network Social Performance Networking Group published a Social Performance Map in April 2008, in an attempt to provide a summary of the social performance landscape of the microfinance sector. The Map includes summary information on existing knowledge, experience, initiatives, and tools.

Intellectual Capital Advisory (Intellecap) is a social business advisory firm that publishes both Microfinance Insights and a new magazine, Beyond Profit. Intellecap is the content manager for Microfinance Gateway, a website run by the Consultative Group to Assist the Poor (CGAP), a division of the World Bank Group, and produced the Asia Microfinance and Analysis Benchmarking Report 2008 in collaboration with the MIX Market, summarized in a recent MicroCapital report.

By Laura Anderson, Research Associate

Additional Resources:

IndiaPRWire: 85% of Microfinance Institutions & Majority of Microfinance Investors Say that MFIs Should Offer More than Financial Services

Intellecap: Home

Microfinance Insights May/June 2009 Magazine

CIDA: Home

Participatory Sustainable Waste Management: Home

MicroLinks: Home

Microfinance Gateway: Home

The World Bank: Home

CGAP: Home

The MIX Market: Home