Making social impact quantifiable

by Susan Frisbie
Development & Marketing Director

Microfinance investment vehicles like the NICA Fund are proud to offer double bottom-line returns. Not only do social­ly responsible investors make a financial return, but in the case of the NICA Fund, they also provide opportunity to impoverished Nicaraguans—their social return. Most investment vehicles mea­sure performance with equity ratios, asset productivity, liquidity, etc. Howev­er, financial indicators are only half the story. While WCCN has strict financial performance standards, social impact is why we began working in the field in the early ‘90s. Today, our commitment to social impact is as strong as ever.

WCCN’s commitment to social impact

In 2003, WCCN published a social im­pact study, the first of its kind in Nicaragua. Four years later, a second study was published (in Spanish), in collabo­ration with FIDEG, a research organi­zation, and ASOMIF, an umbrella organization of microfinance in Nicara­gua. The results were overwhelming­ly positive, and reaffirmed our focus on women and rural borrowers. According to the study, these two groups had the highest level of empowerment and pos­itive changes in quality of life.

While studies like this provide valuable insight into the success of the micro­credit industry in creating positive so­cial change in the lives of the poor, they are also time-intensive. WCCN’s most re­cent study required almost three years of planning, fieldwork, and analysis.

WCCN believes industry-wide studies are important, but for years, we have been interested in finding a mecha­nism our partner agencies could use to better collect and analyze information about their borrowers to meet their social objectives.

Our partners place strong emphasis on social impact, but few have the tools to capture the wide variety of data that would enable them to measure how well they meet their objectives. Statistics on who they serve, where they serve, the average loan size and dozens of other outreach indicators are easy to calcu­late. The impact microfinance has on micro­entrepreneurs is also apparent on our bi-annual study tours, when we meet borrowers and hear their stories. But, until now, there was no way to track information on how microfinance services are meeting the needs of our partners’ clientele on a large scale.

WCCN and the future of social impact measurement

WCCN is proud to be joining an interna­tional movement that is actively working to systematize social im­pact data. Recently, Catholic Relief Servic­es (CRS), with funding from the Ford Foun­dation, initiated a project called Project Mission. The project is modeled on a Eu­ropean collaboration called Imp-Act.1

Project Mission intends to implement social performance measurement sys­tems in six Latin American countries, one of which is Nicaragua. For the Nicaraguan portion of the project, CRS has partnered with ASOMIF to carry out the initiative in five microfiance in­stitutions, two of which are NICA Fund partner agencies. “The Social Perfor­mance Management (SPM) system will benefit the microfinance institutions because it will help them understand the characteristics, needs, and wants of their clients. This information is key to be able to offer financial products that respond to the needs of the clients.”2

Cover of the Social Impact Study that WCCN published last year in conjunction with several other microfinance organizations.

The SPM system has seven stages. First, Project Mission consultants work with staff members of the microfinance in­ stitution, providing training on how to develop an SPM system that meets their needs, to clarify the objectives of the process, and to initiate the proj­ect. Next, the microfinance institution defines and revises its mission, goals, and the types of changes they would like to see in the lives of their borrow­ers. A self-evaluation stage follows, re­flecting on where the organization stands in regard to its revised mission. Next, an external social audit is done, in which interviews with staff members, as well as current and former cli­ents, are performed. When the self-evaluation and social audit are com­pleted, an improvement plan is prepared, so that the institution under­ stands its weaknesses and strengths. Then, through technical assistance, a system is designed to capture the institution’s social impact data. Finally, staff is trained on the method and in­struments used to gather the data.

In recent months, WCCN and ASOMIF have been in talks to extend the proj­ect to additional microfinance institu­tions and co-ops.

WCCN has agreed to help finance the design of the SPM system and take part in follow-up as needed. Due to varying technological needs, the total cost of the implementation will vary from in­stitution to institution, but the design of the system is a $6,000 flat fee. We are sure that all of our partners would benefit immensely from the SPM sys­tem; however, in this first phase of our involvement, we would like to start with two of our partners. The first is FODEM. WCCN believes FODEM, a NICA Fund partner since 2002, has a tremendous social impact, but may not have the resources that other institutions have to take part in such a ground­ breaking project. FODEM is committed to the social and economic develop­ment of women. In addition to its cred­it services, FODEM offers educational opportunities for its clients (approx­imately 95% of which are women) in topics including civil rights, domestic violence, and business development. In mid-September, we confirmed that the second partner will be the San Antonio Cooperative, which serves rural agri­cultural borrowers.

We understand that fighting poverty is a multi-dimensional process. One does not simply move out of poverty because of access to resources. Rather, access to economic resources is the first step to­ ward poverty alleviation. The social impact of this step is important to un­derstand so our microfinance partner agencies may better provide their services in a manner that allows the work­ing poor to voice and have their expe­riences recorded. Whether these ex­periences are positive or negative, we will all be able to learn how to alter our work in order to make the next step to poverty alleviation possible. We hope you will join us in expressing your com­mitment to economic as well as social development. If you would like to make a donation to this project, you can do so online, indicat­ing you would like your gift designated to Project Mission.

1 To learn more about Imp-Act, visit www.Imp-Act.org.

2 ASOMIF (2007), “Programa Misión Manejo Integral de Desempeño Social en Organizaciones Microfinancieras,” p. 3.