Paper

Why Social Performance Management? A Note for Microfinance NGO Networks

Why should NGO networks encourage MFIs to adopt social performance management?
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This note lists the benefits to NGO networks of encouraging social performance management (SPM) practices and reporting among partner MFIs.

NGO networks recognize that microfinance does not automatically produce social returns. SPM helps them to improve and demonstrate social outcomes among their MFI partners. Networks engaged with the social performance of their partners benefit from:

  • Understanding the local context;
  • Aligning activities on a social mission;
  • Providing relevant services;
  • Improving partnerships with MFIs;
  • Supporting pro-microfinance policy;
  • Supporting balanced growth;
  • Reducing reputational risk.

Networks offer a global perspective and are able to share industry experience and best practices, offer informed technical support and provide the resources to develop new approaches to SPM. Additionally, pressure and support from networks may help MFIs to justify the cost of implementing SPM. Networks can:

  • Consider SP during the new partnership process;
  • Deliver training to partner MFIs and investors to raise awareness about SPM, and increase MFI capacity to implement SPM initiatives;
  • Provide technical assistance and financial support for SPM;
  • Publish social performance data from MFIs to publicize their successes.