TrueValueMetrics ... Impact Accounting for the 21st Century

TPB Note: This material was obtained around 2007, probably from MIX. It has a lot of detail and some critical thinking about key elements of the microfinance arena, but does not have a structure that facilitates effective management. This needs to be added through the TVM initiative.

PART I: PROFILE, SOCIAL STRATEGY & GOVERNANCE

1. BASIC DETAILS OF THE MFI

1.a) Name of the MFI

1.b) Country of operations

1.c) Year microfinance operations began

1.d) Legal form

Bank
NBFI
'Cooperative / Credit Union'
Rural Bank NGO
Other:

1.e) Report for fiscal year ended (DD/MM/YYYY)

1.f) Number of loan accounts

1.g) Number of active borrowers

1.h) Number of savings accounts

1.i) Number of voluntary savers

1.j) Number of members (for member-based organizations)

1.k) Total staff

1.l) Total branches

2. FINANCIAL PERFORMANCE

Exchange rate ... 1 US$ = ???
http://www.xe.com/ucc/
Exchange rate date

2.a)

Gross Loan Portfolio for the reporting year (Local currency)
Gross Loan Portfolio for last reporting year (Local currency)
Gross Loan Portfolio for the reporting year (US$)
Portfolio annual growth rate

2.b) Savings (US$)

2.c) Total Assets (US$)

2.d)

Return on Assets (%)
Return on Equity (%)

2.e) Financial Expense Ratio (as a % of average assets)

2.f) Operating Expense Ratio (as a % of average portfolio)

2.g) Loan Loss Provision Expense Ratio (%)

2.h) Write Off Ratio (%)

2.i) Operational Self-Sufficienciy (%)

2.j)

Portfolio at risk 30 days (%)
Portfolio at risk 90 days (%)

2.k) Average loan balance per borrower (in US$, 2.a/1.g)

2.l) Portfolio Yield (%)

2.m) Does the MFI have a minimum expected level of Return on Assets?

2.n) If so, what is the minimum expected level of Return on Assets?

2.o) Does the MFI have audited financial accounts from the last 2 years?

2.p) Did the MFI conduct one of the following:

Social rating Year of the most recent rating
Financial rating Year of the most recent rating

2.q) Does the MFI report to MIX:

Social data Last reporting year
Financial data Last reporting year

2.r) Has the MFI endorsed the Smart Campaign's Clients Protection Principles?

COMPLEMENTARY INFORMATION FOR PEER GROUPING

Financial intermediation

No voluntary savings
Voluntary savings < 20% of total assets
Voluntary savings > 20% of total assets

Outreach

Number of borrowers > 30,000
Number of borrowers between 10,000 and 30,000
Number of borrowers < 10,000

Lending methodology

Village banking
Individual
Solidarity
Individual / Solidarity

Status

Registered as a for profit institution
Registered as a not for profit institution

Scale (Outstanding Loan Portfolio in US$)

Latin America

> 15 million
4 million to 15 million
< 4 million

Rest of the world

> 8 million
2 million to 8 million
< 2 million

Zone of intervention

Principally rural
Principally urban
Balanced

3. INTENT AND SOCIAL STRATEGY

3.a) What is the MFI's social mission ?

3.b) In which year was the mission statement formulated (or updated) ?

3.c) Ranking of the social strategy

Based on the MFI's social mission, context and history, rank the following dimensions in terms of objectives.
'How does the MFI's context and history facilitate or limit the implementation of a strategy in each dimension?

Please provide justification for each response.'

'Dimension 1: Targeting and Outreach'

Microfinance was developed to serve populations excluded from the conventional financial sector: is targeting the poor and/or excluded an important objective for the MFI?

1. Not an objective
2. Minor objective
3. Important objective
4. Major objective

'Dimension 2: Products and services'

Providing high-quality services that are well-adapted to clients requires product development research, innovative rollout techniques and a proactive strategy combining access to financial and non-financial services. Is this dimension important for the MFI?

1. Not an objective
2. Minor objective
3. Important objective
4. Major objective

'Dimension 3: Benefits to clients'

Economic benefits alone justify access to financial services, but MFIs may also seek to strengthen social networks, build client capacity or involve clients in governance. Are benefits to clients a core preoccupation for the MFI?

1. Not an objective
2. Minor objective
3. Important objective
4. Major objective

'Dimension 4: Social responsibility'

Social responsibility refers to an MFI’s commitment to accountability and ensuring its activities do not have negative effects. Is this a core preoccupation for the MFI?

1. Not an objective
2. Minor objective
3. Important objective
4. Major objective

3.d) What is the poverty level of the clients that the MFI aims to reach ? (Check all that apply)

Very poor clients
Poor clients
Low income clients
No specific poverty target

3.e) Which poverty line does the MFI use?

National poverty line
US $1 a day international poverty line
US $2 a day international poverty line
Other (please specify):

3.f) What is the target market of the MFI? Please rank in order of importance. Select only those that apply

Women
Adolescents and youth
Clients living in urban areas
Clients living in rural areas
Other (please specify):

3.g) What kind of enterprises does the MFI support ? (Check all that apply)

Microenterprises
Small enterprises
Medium enterprises
Large enterprises

3.h) Which development objectives does the MFI specifically pursue through its provision of financial and non financial products and services ? Please rank them in order of importance. (Select only those that apply)

Increased access to financial services
Children schooling
Poverty reduction
Health improvement
Employment generation
Gender equality and women's improvement
Development of start-up enterprises
Water and sanitation
Growth of existing business
Housing
Adult education improvement
Youth opportunities
Other (please specify):

4. GOVERNANCE

4.a) What is the total number of Board members ?

4.b) How many women are on the Board ?

4.c) Evidence for active Board involvement

Number of Board meetings last year
Number of Board meetings with minutes last year
Number of Board members attending last meeting

4.d) How is the MFI Board composed ? Number

Government representatives
Community leaders
Clients

Local organizations

Not for profit
For profit

International organizations

Not for profit
For profit

Other (please specify)

Total 0

4.e) How does the MFI ensure Board members' knowledge of, and commitment to, social performance ? (Check all that apply)

A formal Board Committee monitors social performance If checked :

Number of Board members
Number of external stakeholders
Profile of external stakeholders

Training on Social Performance Management for Board members
If checked, please refer to Part II 3.2 for more details

Social performance data are regularly reported to Board members for decision making
If checked, what main indicators are reported ?

Social performance is integrated in the MFI’s strategic and business planning
If checked, what main issues of Social Performance are part of business plan ?

A shareholder agreement integrates achievement of social mission as the core objective to be reached by the Board members
If checked, what are the agreements/commitments on Social Performance among Board members ?

Other (please specify) :

4.f) Is the level of remuneration of the CEO discussed transparently at the Board level?

If yes, please specify the level of transparency :

4.g) Does the MFI have criteria for setting CEO remuneration ?

If yes, please specify the criteria taken into account :

YOU HAVE REACHED THE END OF PART I

PART II: SOCIAL PERFORMANCE INDICATORS

Dimension 1 : Targeting and outreach

Rationale for Dimension 1

Microfinance was developed to serve populations excluded from the conventional financial sector. MFIs may aim to reach socially excluded populations, the poor, persons rejected by banks (but who are not necessarily poor or socially excluded), or simply to offer financial services in unbanked regions. Dimension 1 examines the MFI's strategy for targeting and outreach, and the systems in place to make sure the strategy is working.

Criteria 1 - Geographic targeting

This criteria evaluates whether the MFI provides services in poor or isolated areas, or in areas where no other formal financial services are available.

1.1 Does the MFI identify areas of operations based on poverty/exclusion criteria?

0 = Not a criteria
1 = One of the criteria but not the most important one
2 = One of the most important criteria, reflected in the strategic planning of the MFI

If score is 1 or 2, specify the indicators used to assess whether a geographic area is 'poor' or 'underdeveloped'

1.2 What percentage of branches are located in poor/excluded areas?

0 = Do not know / less than 10% of total number of branches
1 = Less than 50% of total number of branches and representing more than 20% of clients
2 = More than 50% of total number of branches and representing more than 20% of clients

If score is 1 or 2, please specify the source of information

1.3 How does the MFI verify the poverty level of areas where it operates?

0 = No verification is done
1 = Informal verification (eg feedback from staff or stakeholders)
2 = Formal surveys on poverty conditions and exclusion in the areas or use of national data confirming poverty levels

If score is 1 or 2, please specify the method of verification

1.4 Does the MFI serve borrowers living in rural areas ?

0 = Do not know / less than 30% of total number of active borrowers
1 = Yes, more than 30% of total number of active borrowers living in rural areas

If score is 1, specify the source of information

Give the precise definitions used by the MFI for rural

Please specify, for the reporting year, the number of clients living in rural areas

Number
Percentage

1.5 Does the MFI have regular service points located in areas where there are no other MFIs or bank branches ?

0 = No branch or less than 5%
1 = Yes, less than 30% of the branches
2 = Yes, more than 30% of the branches

Please specify, for these areas Clients Service points ... Number

Total 0 0
Percentage

Criteria 2 - Individual targeting

This criteria evaluates whether the MFI selects and/or screens clients based on poverty criteria.

1.6 Does the MFI use a targeting tool to select poor clients ?

0 = No
1 = Yes

If score is 1, please specify the targeting tool

Number of new clients targeted over the last year
Total number of new clients over the last year
Percentage of 'screened' clients

1.7 How does the MFI ensure that the tool is properly used by loan officers ?

0 = Nothing is done, or only informal verification
1 = All loan officers are trained in the use of the tool and/or accuracy and reliability verified through cross checking of information collected by loan officers

If score is 1, specify the method of verification

1.8 Are the loan officers encouraged by the management of the MFI to reach poor or excluded clients?

0 = Not a specific policy
1 = Yes, in the MFI culture and values, product procedures, the loan officers have to know their clients and target poor and / or excluded clients
2 = Yes, the loan officers are trained to target poor and/or excluded clients and they have incentives to reach those clients

If score is 1, what are the specific procedures?

If score is 2, what are the main objectives of training, and criteria for incentives?

1.9 What percentage of all entry clients are estimated to be below the $2/day poverty line (or equivalent), at the end of the reporting year ?

0 = Do not know / less than 10% of the new clients are poor
1 = More than 10% of the new clients are poor
2 = More than 30% of the new clients are poor

If the MFI measures the poverty levels of its clients, please specify which methods it uses (Check all that apply):

Grameen Progress Out of Poverty Index (PPI)
USAID Poverty Assessment Tool (PAT)
Per Capita household expenditure
Per Capital household income
Housing index
Participatory Wealth Ranking (PWR)
Means test
Food security index
Own Proxy Poverty Index
Other (please specify)

Please provide the exact percentage of all entry clients estimated to be below the $2 /day poverty line, at the end of the reporting year

Was it generated from

A sample of new clients
All new clients

Please provide the average poverty rate for the country ($2 /day or equivalent)

1.10 What percentage of clients are women ?

0 = Do not know / less than 30% of the active clients
1 = Less than 50% of the total number of active clients
2 = More than 50% of the total number of active clients

Please specify

Female borrowers

Number
Percentage

Female voluntary depositors

Number
Percentage

Does the MFI’s MIS disaggregate portfolio information by gender ?

1.11 What percentage of clients come from socially marginalized and/or vulnerable groups ?

0 = Do not know / less than 10% of the total number of active clients
1 = Less than 30% of the total number of active clients
2 = More than 30% of the total number of active clients

Please specify for concerned target groups :

Target groups Please specify in local context

Indigenous people or ethnic minority

Number of borrowers
Percentage

Migrants, internally displaced people, refugees

Number of borrowers
Percentage

Castes, religious groups

Number of borrowers
Percentage

Disabled people

Number of borrowers
Percentage

'Other very excluded population

(e.g. small farmers in countries with very low penetration of financial services in rural areas, or young people under 25)'

Criteria 3 - Pro-poor methodology

This criteria examines the specific design of services that target the poor or excluded, including guarantees and loan and deposit size.

1.12 Does the MFI provide unsecured loans ?

0 = For less than 10% of the total number of active borrowers
1 = For less than 50% of the total number of active borrowers
2 = For more than 50% of the total number of active borrowers

Please specify the form of social guarantee(s) used by the MFI

Please specify the percentage of active borrowers concerned

1.13 Does the MFI provide loans with alternative forms of collateral in order to facilitate productive loans ?

0 = No, or less than 10% of the total number of active borrowers are covered with collateral such as leasing, facturing, warrantage, etc.
1 = Yes, for more than 10% of the total number of active borrowers are covered with collateral such as leasing, facturing, warrantage, etc.

Please specify the form of collateral

Percentage of active borrowers secured with such collateral

1.14 Does the MFI provide small loans (≤ 30% GNI per capita) to facilitate access for the poor ?

0 = Small loans for less than 30% of the total number of active borrowers
1 = Small loans for less 50% of the total number of active borrowers
2 = Small loans at least 50% of the total number of active borrowers

Please specify

(1) GNI per capita of the country (USD)
http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

(2) Exchange rate: 1 USD = 0.00
Exchange rate date

(3) GNI per capita in local currency (1) x (2) =

(4) Small loans = 30% of GNI = (3) x 0.3

What is the percentage of active borrowers below (4)?:

1.15 Does the MFI authorize small installments (< 1% GNI per capita) ?

0 = Minimum installment is more than 1% GNI
1 = Minimum installment is less or equal to 1% GNI

1% GNI per capita =

Please specify the size of the minimum installment amount for loans with monthly repayments:

Local currency
US$

1.16 Does the MFI allow the opening of saving accounts with very small amounts (≤ 1% GNI) ?

0 = No, or minimum amount > 1% GNI
1 = Minimum amount ≤ 1% GNI

Please specify the minimum amount in local currency

1.17 Does the MFI cross-subsidize different branches of the institution or different loan products ?

0 = No
1 = Some degree of solidarity, but informal mechanisms
2 = Yes, through formal strategy (funds, difference in interest rates, etc.)

If score is 1 or 2, explain the strategy

Dimension 2 : Products and Services

Rationale for Dimension 2

'Microfinance has the potential to bring financial services to the poor and excluded. But it is not enough to decide to target a population; products and services must be adapted to their needs. Microfinance services are too often standardized: small loans, monthly repayments, solidarity group guarantees. Providing high-quality services that are well-adapted to clients - i.e. suitable to the local context, diversified, efficient and transparent requires product development research, innovative rollout techniques and a proactive strategy combining access to financial and non-financial services.

MFIs need to know their target population to design suitable financial services. Dimension 2 focuses on characteristics of products and services, the design process, and the MFI’s knowledge of clients’ needs. The indicators are simple and standardized, hence may not account for the specific quality standards used in different MFIs. A more in-depth analysis of an MFI’s internal process to adapt services and limit client drop-outs can be conducted through internal discussions with staff or an external audit. '

Criteria 1 – Range of traditional services

'This criteria evaluates the diversity of the traditional services (savings and loans) offered by the MFI. From the client perspective, product diversity is fundamental. Diversity implies a variety of terms and conditions adapted to different financial needs. This criteria assesses the range of products offered by the MFI. An MFI with both savings and credit services will receive a higher score than one with only credit.

When interpreting the results of this criteria, be sure to consider elements that limit the MFI’s capacity to diversify, noted in the first part of the questionnaire: for example, legal issues (a ban on savings mobilization, for instance) or financial constraints (an MFI may decide to offer a limited range of products to stay cost efficient). A young MFI operating in a restrictive regulatory environment will necessarily receive a lower score, which is why results analysis by peer groups is important.

Please note, the questionnaire is also designed to gather information on services that are not offered directly by the MFI, but that the MFI seeks to facilitate for its clients. The intent is to recognize efforts to partner with other organizations so clients can access services the MFI cannot provide itself.

Example: Promujer in Bolivia, an un-regulated MFI, proposes opportunities for savings to its clients thanks to a partnership with FIE, a regulated non bank financial institution.'

2.1 How many different types of loan products does the MFI offer ?

0 = Less or equal to 3 products
1 = More than 3 products

Which of the following financial products / services does the MFI offer ?

Microcredit loans for microenterprises
Microcredit for other households needs/consumption
SME loans
Loans for agriculture
Loans for education
Housing loans
Other (please specify)

2.2 Does the MFI provide emergency loans ?

0 = No
1 = Yes

If score is 1, please specify

2.3 Does the MFI provide loan products specifically tailored to clients' social needs ?

0 = No specific loan products
1 = One or more specific loan product

If score is 1, please specify

2.4 Does the MFI provide loans specifically tailored to production needs and wealth creation?

0 = No specific loan product, or not based on specific market studies
1 = One or more loan products tailored to productive needs (i.e with longer term/larger amount/specific services), for more than 5% of the loans

If score is 1, please specify

Market studies done
Types of activities targeted

2.5 Does the MFI allow local branches to adapt their products and services to clients' needs ?

0 = No, all procedures are set by headquarters
1 = Some flexibility is allowed in the local definition of products (changes may be subject to headquarter approval)

2.6 Does the MFI propose voluntary savings products, directly or in partnership with other institutions, or actively promote savings ?

0 = No voluntary savings products (or voluntary savings concerns less than 5% of clients or volume of the loan portfolio)
1 = Voluntary savings services are provided by the MFI, or through an operational partnership with another financial institution.

Specify the types of savings products proposed by the MFI (directly)

Checking accounts
Voluntary savings
Compulsory savings (cash collateral)
Fixed term deposits
Special purpose savings accounts
Other (please specify)

Please specify the percentage of rural savers

2.7 Does the MFI (or a partner financial institution) provide voluntary savings specifically tailored to clients' social needs ?

0 = No specific savings products
1 = Specific savings products provided by the MFI (or through another financial institution)

Please specify the types of savings provided

Housing
Education
Retirement
Health
Other (please specify)

Please, describe the savings conditions

Criteria 2 – Quality of services

This criteria evaluates quality through objective and verifiable proxies. Quality of services is an important part of performance, but difficult to measure objectively. The SPI methodology prioritizes concrete and verifiable indicators. Therefore, it is critical to be specific and complete when filling out the questionnaire, and to complement data collection with staff discussions to nuance findings.

2.8 To what extent are the MFI's operations decentralized ?

0 = Low degree of decentralization (ratio ≥ 0.4)
1 = High degree of decentralization (ratio < 0.4)

Please specify the information per branch Click to calculate the ratio

2.9 Timely delivery : On average, how long does it take to disburse a first loan ?

0 = More than 10 days
1 = Less than 10 days

How long does it take the MFI to disburse the first loan ? days

2.10 What is the Effective Interest Rate of the most representative loan product ?

0 = > cost of funds + 30%
1 = < cost of funds + 30%
2 = < cost of funds + 20%

Please specify

What is the MFI's main loan product?
What percentage of the portfolio does it represent ?
Provide the Effective Annual Interest rate for this loan product

If not available, please use the methods developed by Microfinance Transparency to obtain the Effective Interest Rate (EIR)
Click here ??? to calculate the EIR Has the MFI provided its effective interest rate data to Microfinance Tranparency Initiative?

Which costs and fees are taken into account for the calculation of the Effective Interest Rate ?

Please specify:

Average cost of funds 0%
Portfolio yield 0%
Average loan size
Annual inflation rate

2.11 Does the MFI use market research to identify the needs of clients and potential clients ?

0 = No specific procedure
1 = Informally: feedback obtained through field staff interactions
2 = Formal market research: client satisfaction surveys, focus group discussions, interviews with existing clients

If score is 1 or 2, please describe the tools used, type of surveys, etc.

2.12 What was the client retention rate of the MFI during the last accounting year ?

0 = Less than 70%
1 = 70 - 85%
2 = More than 85%

To calculate the retention rate, please provide the following:

Total number of borrowers at the beginning of the reporting period
Total number of borrowers at the end of the reporting period
Total number of borrowers who joined during the reporting year
The MFI retention rate for the last accounting year

2.13 How does the MFI obtain feedback from dropouts on their reasons for leaving ?

0 = No study of the reasons for departure or informal feedback through field staff interactions
1 = Formal exit surveys or regular exit interviews by field staff

If available, please provide the 3 main reasons for drop-out 1 2 3

Criteria 3 – Innovative and non-financial services

This criteria evaluates the MFI’s efforts to adopt innovative approaches and adapt its services to a wide range of client needs. MFIs have long been encouraged to focus exclusively on savings and credit. However, complementary non-financial services can enhance the impact of financial services. It is not necessary for the MFI to provide the innovative or non-financial services directly. They can be offered through another organization, in partnership with the MFI.

2.14 Does the MFI provide innovative financial services to more than 5% of its clients (directly or via other specialized organizations) ?

0 = No
1 = One innovative service
2 = More than one innovative service

Which of the following does the MFI provide

Insurance:

Yes
Yes, in partnership
No

If yes

'Credit Life insurance

Voluntary
Compulsory'

'Life insurance

Voluntary
Compulsory'

House insurance
Agriculture insurance
Health insurance
Work place insurance
Other (please specify)

Voluntary
Compulsory

Other financial services:

Yes Yes, in partnership
No

If yes

Debit/Credit card
Mobile banking services
Savings facilitation service
Remittances services
Microleasing
Other (please specify)

2.15 'Do loan officers seek to facilitate transactions so that clients do not have to come to the MFI ?'

a) For regular financial transactions, do loan officers have to leave the MFI's premises to visit clients ?

0 = No, or direct visits to clients for less than 30% of clients
1 = Direct visits for more than 30% of the clients

b) Mobile banking: do loan officers use new information technologies ?

0 = No, or for less than 5% of the clients
1 = Yes, for more than 5% of the clients

If score 1, please provide a short summary of the products or services used

2.16 Has the MFI developed strategic alliances with other sectors and/or other actors outside the microfinance sector in order to improve services to clients ?

0 = No
1 = Strategic alliances to collaborate with other sectors or actors and improve services to clients

If answer is 1, please specify the organization(s) involved and types of alliances developed

2.17 Does the MFI (or partnering institution) offer enterprise training ?

0 = No
1 = Yes

Please specify:

Number of clients participating

Enterprise skills development
Business development services
Other please specify

2.18 Does the MFI (or partnering institution) offer services that address social needs ?

0 = No
1 = Yes

Which of the following social services does the MFI offer to clients: Education :

Financial literacy education
Basic health / nutrition education
Child and youth education
Occupational safety and health in the workplace education
Other (please specify):

Number of clients served during the reporting year

Health services:

Basic medical services
Special medical services for women and children
Other (please specify):

Number of clients served during the reporting year

Organizations that are part of these negotiated alliances

2.19 Does the MFI ensure that the non-financial services are adapted to its clients' needs ?

0 = No verification / Non-financial services not provided
1 = Yes, informally through discussions with clients and flield staff
2 = Yes, in a formal and systematic way

Please specify any studies conducted on the effectiveness of non-financial services on the MFI target market

Dimension 3 : Benefits to clients

Rationale for Dimension 3

MFIs need be sure clients reap benefits from their services. Economic benefits alone justify access to financial services, but MFIs may also seek to strengthen social networks, build client capacity or involve clients in governance.

Criteria 1 – Economic benefits to clients

This criteria evaluates the systems designed to promote and measure improvement in clients’ economic situation. An MFI may monitor economic changes to the household, reduce its operational costs, make sure its loan officers and staff focus on clients’ needs or share profits with clients.

3.1 Does the MFI track changes in the poverty levels or economic status of clients over time ?

0 = No information is collected on changes of the economic status of clients; only anecdotal evidence of changes; not systematic use of information or low quality
1 = Regular monitoring giving clear and useful information on changes of the economic status of clients

If score is 1, please specify the types of changes the MFI aims to observe

Has the MFI conducted impact studies over the last 3 years ?

3.2 Did any staff participate in training or orientation sessions related to social performance management, during the reporting year ?

0 = No
1 = Yes

If yes, which of the following have been trained on social performance management during the reporting year? (Check all that apply)

Board members
Managers
Loan officers
Back office staff (MIS, accounting administration)
Other (please specify)

On which area(s) related to social performance does the institution offer staff training ?

Mission / Social goals
Over-indebtedness prevention
Code of ethical conduct
Collecting good quality social information
Customer service
Policy and procedures on safeguard of clients data
How to communicate terms of loan agreement
Being responsive to clients' needs
How to handle client complaints
What are appropriate debt collection practices
Other area of training on social performance (please specify)

Organization / person who provided the training

3.3 Does the MFI have a staff incentives scheme related to social performance goals ?

0 = No
1 = Yes

If score is 1, what areas does the MFI reward ? (please consider that portfolio quality alone is not enough and should be combined with other areas of social performance incentives)

Ability to attract new clients from the target market
Outreach to remote / rural communities
Outreach to women
Quality of interaction with clients based on client feedback mechanisms
Quality of social data collected
Client retention / drop-out rates
Portfolio quality
Other (please specify)

3.4 Has the MFI taken corrective measures (e.g. modification of products) due to negative impacts on social cohesion or client welfare? (does not include problems with indebtedness, addressed in dimension 4)

0 = No changes made so far / no information collected on negative effects
1 = Changes made after identification of problems / No problems identified after careful investigation of effects on clients

If score is 1, please describe the changes made

3.5 Does the MFI have an explicit strategy to reduce costs of services as much as possible (without compromising quality) ?

0 = No explicit strategy to reduce costs of services
1 = Efforts to reduce costs of services while maintaining quality integrated into the operational strategy of the MFI

If score 1, specify the policy dealing with operational cost reduction and whether it has led to a drop in interest rates

Please indicate:

Operating Expense Ratio for the reporting year
Operating Expense Ratio three years ago

3.6 Does the MFI have a formal policy on how to use the profits generated by the MFI to benefit clients ?

0 = No formal policy regarding how clients benefit / profits shared only among shareholders and / or kept in the MFI's reserves
1 = No formal policy but occasional decisions have been made in favor of clients (involving < 15% of profits)
2 = Formal, open and transparent policy to allocate profits to the direct benefit of clients (involving > 15% of profits), in particular in reducing interest rates

If score is 1 or 2, please specify the policy

Please provide figures in case of interest rate reduction

3.7 Does the MFI adopt special measures or have special funds in case of collective disaster ?

0 = No measures or funds exist / measures taken on a case by case basis
1 = Funds or reserves are earmarked in case of collective disaster

If score is 1, please specify the measures adopted

Criteria 2 – Client participation

'This criteria analyzes to what extent clients are involved in decision-making (at the client level and institutional level). Microfinance is often associated with client participation. Many MFIs strive for proximity to clients and well-adapted products in view of engendering development. Internal actors often have (or are capable of having) a strategic vision on how credit can contribute to the evolution of the MFI and its operating environment; this vision is critical to institutional growth and sustainability.

However, in practice, the degree and ways clients participate in governance varies considerably. Including clients (or staff) in governance takes time, learning, and sustained efforts to train and monitor. Errors are likely. Moreover, institutions must define governance structures in a way that limits risk of cooptation but includes marginalized groups.

Sometimes, participation is impossible because the MFI is incapable of making the necessary investments in training and time, either due to financial constraints, geographical dispersion of clients, social conflicts or bad experiences with participation.' 3.8 Can MFI clients participate in decision-making ?

a) Decision-making at the client level (for instance, within the self-managed group, joint liability group, or self-help groups)

0 = No
1 = Yes

b) Supervision and decision-making at board level

0 = No
1 = Yes

Does the MFI have regular all-member meetings ?
Not applicable

Are there elected client representatives at the governance level (board of directors) ?

3.9 Do client representatives sit on any committees (SPM committee, audit committee, etc.) ?

0 = No
1 = Yes

If score is 1, please specify the name of the committees, number and role of clients:

3.10 Does the MFI ensure that clients have the opportunity to express their opinion towards the top management and/or Board ?

0 = No specific meeting or opportunities
1 = At least one meeting took place during the last 2 years with all clients invited / management / board members

If score is 1, please specify the date and main subject shared between clients and top management / Board

3.11 What percentage of all client representatives are women?

0 = No women representatives or less than 20%
1 = More than 20% of women among the client representatives

Please specify

Actual number
Actual percentage

3.12 For the representative(s) at the client level or management level, does the MFI provide training and capacity building on rights and responsibilities of elected members in their respective committees?

0 = No
1 = Yes, on an irregular basis (or only at the client level)
2 = Yes, on an regular basis, in accordance with a defined policy

If score is 1 or 2, please specify the policies on capacity building of elected client representatives

3.13 Are these participatory bodies effective?

0 = No, they do not exist, are more symbolic than active, or they are not effective
1 = They are mostly effective, with elected members and some rotation of representatives, but members lack training, are insufficiently informed or do not have enough opportunities to meet / they are mostly informal / they are only effective at the clients’ level
2 = They are effective, with elected members, effective rotation (every 2 or 3 years, fixed in by-laws), and client suggestions/decisions are implemented

If score is 1 or 2, please specify the measures/criteria in place to ensure that member governance is effective:

Criteria 3 –Social capital/client empowerment

'This criteria assesses activities designed to build clients’ social capital, i.e., activities that reinforce social ties and client capacities, such as group formation, collective action, working together to reach common goals, fostering links with other development programs and facilitating access to previously inaccessible services. Stronger social ties can create new opportunities for clients, greater mutual protection against economic and social hardship, and improved ability to cope with crisis. This is turn can reduce vulnerability of individuals and groups.

The indicators in this section measure trust and solidarity between clients and the institution. They also evaluate the MFI’s efforts to mobilize clients, make their voices heard (within the institution, the community, local and national governments) and encourage them to take on responsibility. ' 3.14 Does the MFI help clients resolve problems beyond access to financial services?

0 = No
1 = Anecdotal evidence
2 = Yes regularly

If score is 1 or 2, describe the problems dealt with:

3.15 Does the MFI or partnering institution offer support services that specifically aim at women’s empowerment ?

0 = No, offers services for women but none that aim at empowerment (neutral objective)
1 = Yes, offers one or two products/services designed for women with a “transformative objective”
2 = Yes, offers more than two products/services designed for women with a “transformative objective”

Financial services

Special loan products for women
Special timing and repayment procedures
Special type of collateral concessions
Special health insurance products for women clients or client spouses
Special strategies for graduation to higher loans
Special savings products for women
Other (please specify)

Number of clients who received services related to women's empowerment

Non-financial services

Business training to enhance women’s market opportunities
Leadership training for women
Women’s rights education/Gender issues training
Counseling/legal services for women victims of violence
Other (please specify)

3.16 Does the MFI have effective strategies to communicate policy decisions to clients / ordinary members?

0 = No
1 = Yes, general publications accessible on the web (via MIX, affiliate networks) or available from the MFI upon request
2 = Communication through means specifically adapted to client: workshops, general assemblies, presentations, leaflets, etc.

If score is 2, describe the communication strategy:

3.17 Is the MFI affiliated to a network/professional association and does it actively support advocacy strategies to increase clients' influence with local or national government? 0 = Not member of a network 1 = Member of a network but no specific involvement in advocacy role 2 = Member of a network and actively advocating on behalf of the clients towards local or national government If score is 1, please specify the domain and forms of advocacy:

Dimension 4 : Social Responsability

Rationale for Dimension 4

'There is a difference between social responsibility and social performance. The first term can refer to any sector (sectors without a social mission can be socially responsible) and involves limiting an activity’s negative impact on stakeholders (employees, clients, community) or the environment. The second refers specifically to the microfinance sector: its double bottom line and social mission to serve the excluded with well-adapted services that bring social and economic benefits. Social responsibility is often summarized by the expression “do no harm”, and social performance as “do good”. In this sense, social performance includes social responsibility.

In the SPI, social responsibility refers to an MFI’s commitment to accountability and ensuring its activities do not have negative effects.

Social responsibility extends to employees (decent work conditions, appropriate human resource policies), clients (consumer protection policies), the community and the environment (respect of local cultural-socio-economic contexts, environmental protection policies). '

Criteria 1 – Social responsibility to employees

This criteria evaluates the MFI’s working conditions. Human resources have often been slighted in microfinance, with emphasis on client services and cost-effectiveness instead. Employee commitment to serve the poor is expected to compensate for low salaries, despite high demands. This leads to dissatisfaction and high turnover when competition increases. Increasingly, human resources are recognized as a key element of social responsibility, essential to maintaining high-quality, well-trained and motivated employees.

4.1 Does the MFI have a transparent salary scale based on market salaries and the legal minimum wage?

0 = No
1 = Yes

Does the fixed part of the salary for the loan officers cover the minimum legal wage in the country?

What is the legal minimum wage ?

Local curr.
US$

What is the minimum wage applied by the MFI ?

Local curr.
US$

Are working expenses of staff fully reimbursed ?

4.2 What percentage of staff is employed with a permanent contract?

0 = Less than 50 %
1 = More than 50 %
2 = More than 80 %

Please specify number of staff with a permanent contract:

Number
Percentage

Does each of the MFI employees have a written work contract ?

What is the percentage of employees with a written contract ?

4.3 Are training programs accessible to all types of employees?

0 = Less than 50% of the staff is concerned
1 = More than 50% of the staff is concerned, with each staff member receiving an average of at least 2 days of training

Click here to complete the chart

Percentage of employees concerned by training programs

4.4 Can employees participate in decision-making regarding strategic decisions of the MFI?

0 = No or through informal mechanisms such as meetings between staff and senior management
1 = Through a formal mechanism, such as an elected consultative body or another governance mechanism

If score is 1, specify the policies:

4.5 Does the MFI provide medical insurance for all its employees?

0 = No
1 = Yes

Which of the following are included in the human resources policy of the MFI ?

Pension contribution
Practices and procedures which ensure safety of the staff
Rights to organize in a staff union
Anti-harassment
Anti-discrimination
Awareness raising / fight against AIDS
Other (please specify) :

4.6 Does the MFI have a specific policy with regard to women staff?

0 = No
1 = Yes

Specify the policies in place to support women staff (Check all that apply):

Equal opportunity policies for staff
Set quota for women staff
Worktime adapted to family constraints
Maternity leave policies
Specific policies that support women’s mobility in the field
Equal pay for men and women with equivalent skill levels
Other (please specify) :

Presence of women staff (for reporting year)

Total staff

Total number (men and women) 0
Number of women 0
Percentage of women

Managers

Total number (men and women) 0
Number of women 0
Percentage of women

Back office
Total number (men and women) 0
Number of women 0
Percentage of women

Loan officers

Total number (men and women) 0
Number of women 0
Percentage of women

4.7 What percentage of the MFI staff left the MFI during the last 12 months?

0 = More than 15 %
1 = Between 5% and 15%
2 = Less than 5%

Total number of staff at the end of the reporting period
Total number of staff at the beginning of the reporting period
Number of exit staff during the current reporting period

Staff turnover rate:

Does the MFI monitor employee satisfaction?

If yes, how does the MFI monitor employee satisfaction?

Assessments of employee satisfaction and/or satisfaction as part of regular staff appraisal
Periodic systematic surveys of employee expectations and/or satisfaction
Established system to address staff grievance
Interview with exiting staff
Other (please specify):

Criteria 2 – Social responsibility to clients

'This criteria evaluates some principles of consumer protection widely accepted in the microfinance sector:
This section draws in particular on the work done by the SMART Campaign “Getting Started Questionnaire: Client Protection Self Assessment for Microfinance Institutions”'
http://www.smartcampaign.org/tools-a-resources/2/41

4.8 What does the MFI do to avoid client over-indebtedness?

0 = The MFI does not fulfill the basic requirements or just partially
1 = The MFI has put in place key procedures to prevent over-indebtedness
2 = The MFI has systems of compliance to ensure prevention of over-indebtedness

Please check all the actions implemented by the MFI:

If score is 1, please specify the key procedures (at least 3 options must be checked in the key procedures)
If score is 2, please specify key procedures and compliance systems (at least 3 options must be checked in the key procedures and 2 in the compliance systems)

Key procedures:

The financial institution offers multiple loan products or flexible ones that address different business and family needs
The loan approval process requires evaluation of borrower repayment capacity & loan affordability. Loan approval does not rely solely on guarantees (whether peer guarantees, co-signers or collateral) as a substitute for good capacity analysis.
Credit approval policies give explicit guidance regarding borrower debt thresholds and acceptable levels of debt from other sources.
Productivity targets and incentive systems value portfolio quality at least as highly as other factors, such as disbursement or client growth. Growth is rewarded only if portfolio quality is high.

Systems of compliance:

Management regularly monitors levels of borrower over-indebtedness and uses that information to improve products, policies and procedures (clear example can be provided).
When available, the financial institution checks a Credit Registry or Credit Bureau for borrower current debt levels and repayment history. When not available, the financial institution maintains and checks internal records and consults with competitors for same.
Internal audits check household debt exposure, lending practices that violate procedures including unauthorized refinancing, multiple borrowers or co-signers per household and other practices that could increase indebtedness.

If score is 1 or 2, please provide a short summary of the policy:

If score is 2, what is being done to ensure these measures are effective?

4.9 Does the MFI ensure transparent communication on costs and fair pricing of its products?

0 = No written statement; information on costs is not standardized /complete / easily accessible to customer
1 = Complete information is made available to customer in clear language that is not misleading and that the customer is able to understand.
2 = Fair pricing of products for customers is favoured over short-term profit maximisation

Specify how the MFI states the interest rate:

Declining balance interest method
Flat interest method

If score is 1, specify how the MFI ensures transparent communication with clients about prices, terms and con-ditions of financial products (at least 3 options must apply):

Prices, terms and conditions of all financial products are fully disclosed to the customer prior to sale, including interest charges, insurance premiums, minimum balances, all fees, penalties, linked products, third party fees, and whether those can change over time.
Staff is trained to communicate effectively with all customers, ensuring that they understand the product, the terms of the contract, their rights and obligations. Communications techniques address literacy limitations (e.g., reading contracts out loud, materials in local languages).
Multiple channels for disclosing clear and accurate information about the product are used, such as bro-chures, orientation sessions, meetings, posting information in the branch, websites, etc.
The financial institution follows truth-in-lending laws and required APR or effective interest rate calculation formulae. In the absence of industry-wide requirements, information is provided that shows the total amount that the client pays for the product.
Loan contracts show an amortization schedule that separates principal, interest, fees; define the amount, number and due dates of installment payments and include fees and conditions for early repayment, late pay-ments and default. Debt collections practices are revealed to the borrower prior to the time of sale.
Clients are given adequate time to review the terms and conditions of the product and have an opportunity to ask questions and receive information prior to signing contracts
Clients regularly receive clear and accurate information regarding their accounts (e.g., account statements, receipts, balance inquiries).
The MFI provides its EIR data to MFTranparency initiative.
Other (please specify):

If score is 2, specify how, beyond transparency, the MFI ensures fair pricing (at least 2 options must apply):

The financial institution does not charge clients for its own inefficiency. Its pricing and efficiency compare favorably to its peers and competitors.
The institution earns a reasonable rate of return to support operations and grow, while allowing the client to do the same. (please see Part 1. 2d. Return on Equity)
Pre-payment penalties or account closure fees and other penalties are not excessive. For example, they would not prevent a client from changing to another product or provider, or unreasonably compound debt.
Other (please specify):

If score is 1 or 2, please provide a short summary of the policy:

4.10 Does the MFI offers transparent and fair credit conditions and collection practices to its customers?

0 = The MFI does not fulfill the basic requirements or just partially
1 = The MFI has put in place key procedures to ensure appropriate collection practices
2 = The MFI has systems of compliance to ensure appropriate collection practices

Please check all the actions implemented by the MFI:

If score is 1, please specify the key procedures (at least 3 options must be checked in the key procedures)
If score is 2, please specify key procedures and compliance systems (at least 3 options must be checked in the key procedures and all 2 in the compliance systems)

Key Procedures:

Acceptable and unacceptable debt collection practices are clearly spelled out in a code of ethics, book of staff rules or debt collection manual.
Staff is informed in advance of penalties for non-compliance with collections policies and violations are sanctioned.
The institution uses a policy on acceptable pledges of collateral, including not accepting collateral that will deprive borrowers of their basic survival capacity.
Re-scheduling policies prevent automatic debt extensions and re-scheduling procedures follow written protocol.

Systems of compliance:

Collections staff receive training in acceptable debt collections practices and loan recovery procedures. In-house and 3rd party collections staff are expected to follow the same practices.
The institution monitors staff and any third party debt collectors to ensure compliance with acceptable practices
If you have other policies or practices designed to protect clients and ensure their fair treatment, please provide details here:

If score is 1or 2, please provide a short summary of the policy:

If score is 2, what is being done to ensure these measures are effective?

4.11 Does the MFI ensure staff ethical codes of conduct are consistently followed?

0 = No, no specific code of conduct; exists but not applied.
1 = Yes, the institution’s corporate culture and human resources systems value and reward high standards of ethical behavior and customer services.

If score is 1, please specify key aspects of the ethics policy (at least 4 options must be checked in the key procedures):

A written code of business ethics spells out organizational values and the standards of professional conduct expected of all staff.
The code of ethics has been reviewed and approved by the Board and is included in staff rule books or ad-ministrative policies.
Staff rules include specific provisions on what is considered acceptable and unacceptable behavior. Provisions describe reprimands and actions that can result in termination of employment.
HR procedures pay attention to ethics, such as assessing new employees for compatibility with organizational values.
Staff receives orientation and refresher courses on the practicalities of following codes of conduct.
Managers and supervisors review ethical behavior, professional conduct and the quality of interaction with clients as part of staff performance evaluations.
The organization has a robust internal audit and fraud control system that detects client mistreatment, such as soliciting kickbacks and favors, or using coercion.
Other (please specify)

If score is 1, please provide a short summary of the policy:

4.12 Does the MFI have a complaint procedure for clients that is explained to them?

0 = No complaint handling procedure; or exists but clients are not informed of their right to complain and know how to submit a complaint
'1 = A mechanism to handle customer complaints is in place, has dedicated staff resources, and is actively used.
(Suggestion boxes alone are generally not adequate.)'

If score is 1, please specify key aspects of the complaints handling and resolution policy (at least 2 options must be checked) :

A written policy requires client complaints to be taken seriously, fully investigated and resolved in a timely manner without bias.
Internal audit or other monitoring systems check that complaints are resolved satisfactorily.
Complaints information is used to improve products, sales techniques and other interactions with clients.
Other (please specify) :

If score is 1, please provide a short summary of the policy:

4.13 Does the MFI safeguard privacy of clients’ data?

0 = No, no formal protection mechanism
1 = Yes, customers know how their information will be used. Staff explanins how data will be used and seeks permission for use.

If score is 1, explain how the MFI safeguards privacy of clients’ data (at least 2 options must be checked):

A written privacy policy governs the gathering, processing, use and distribution of client information.
Systems, including secure IT systems, are in place and staff trained to protect the confidentially, security, accuracy and integrity of clients’ personal and financial information.
Written client consent is required for use of information in promotions, marketing material and other public information. Clients are asked to express their written agreement for sharing personal information with any external audience, including credit bureaus.
The organization offers information, orientation or educational sessions to clients on how to safeguard in-formation, access codes or PIN numbers.
Other (please specify):

Criteria 3 –Social responsibility to the community and environment

This criteria evaluates the MFI’s actions in terms of local economic, social and cultural development as well as environmental protection. Microfinance relies on local social networks to create solidarity groups, foster trust and gather client information. Preserving social cohesion is not only ethical, it is essential for sustainability. Nonetheless, there is debate regarding the extent to which MFIs should get involved in communities where they operate. What is the boundary between respecting local culture and encouraging values of transparency, democracy, equality? What is the MFI’s role in disseminating these values, or investing in public goods? This criteria recognizes institutions’ efforts to be proactive in their community. 4.14 Does the MFI have a policy defining social responsibilities to the community?

0 = No, do not have, or planned in the future
1 = Yes, Informal policy reflected in operations
2 = Yes, a formal, written policy

If score is 1or 2, please provide a short summary of the policy:

4.15 Is the MFI proactive in promoting local social and economic development?

0 = No, or on an irregular basis (less than 5% than portfolio)
1 = Yes, on a regular basis and in accordance with a planned strategy

If the score is 1, give details:

Formal collaboration with local development actors
Initiatives to promote the creation of local employment (does not include self-employment and income generating activities)
Funding of risky but innovative local activities
Members of top management come from zones the MFI services
MFI avoids credit for enterprises with negative social value
Promotes transparency and anti-corruption
Promotes decent working conditions for employees in business financed by the MFI
Supports local communities in the event of emergencies
Supports women’s leadership
Takes measures to eliminate forced labor
Takes measures to eliminate child labor
Finances activities employing minorities, disabled, indigent people, widows, etc.
Finances activities with high social value, such as health care or prevention services, culture, community infrastructure, etc.
Local language or dialect
Other (please specify):

If score is 1, please provide a short summary of the policy

4.16 Does the MFI have an environmental policy for clients/microenterprises it finances?

0 = No, do not have, or planned in the future
1 = Yes, Informal policy reflected in operations
2 = Yes, a formal, written policy and concrete actions implemented

If score is 1 or 2, specify environmental policies directed at enterprises the MFI finances:

The institution raises clients' awareness about environmental impacts
The institution train/educates client regarding environmental improvements
Specific clauses in the loan contract are included to mitigate specific environmental risks
The institution identifies enterprises with environmental risk
The institution offers lending lines linked to alternative energies
The institution offers lending lines linked to other environmentally-friendly products (Please specify):

If score is 2, please provide a short summary of the policy:

4.17 Does the MFI have an environmental policy for its own organization's practices that includes both headquarters and branches (energy, water, paper, waste)?