Governance: Integrating SPM into Microfinance Capacity Building

This Guidance Note focuses on the role of the board of directors in ensuring effective MFI governance. The note discusses how integrating social performance management (SPM) into microfinance capacity building around governance is critical to achieving balanced performance management. It stresses on the importance of the board in deciding an MFI’s policy and guiding strategy.

The note states that the board should regard achieving the MFI’s social mission and values as an integral aspect of its responsibilities. SPM in governance is reflected in the choice of investors, and the systems put in place to enable the board to maintain the right balance between financial and social performance. The note discusses emerging best practices on integrating SPM into governance. They include:

• Clearly define the board’s role in balancing financial and social goals;
• Create a balanced perspective and understanding of SPM among board members
• Demystify the mission to clarify social goals and objectives;
• Adopt and implement a statement of values or code of conduct;
• Track progress towards social goals, and monitor values;
• Consider setting up a social performance committee.