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Enterprise Development Impact Assessment Information Service (EDIAIS)

NEW DIRECTIONS IN IMPACT ASSESSMENT FOR DEVELOPMENT: METHODS AND PRACTICE

James Copestake, University of Bath, UK

Simple standards or burgeoning benchmarks? Institutionalising social performance monitoring, assessment and auditing of microfinance.

Link to full paper

ABSTRACT

The aim of this paper is to consider what sort of standards or benchmarks (if any) could help to improve the social performance of microfinance organisations (MFOs). It accepts that benchmarks can help to bring about greater consistency in use of language, definition of indicators, allocation of resources and the quality and efficiency of services. But it also warns that benchmarks can result in misguided and excessive uniformity, as well as excessive compliance costs. The paper argues in favour of establishing a single universal standard for social performance, but one that is very simple and flexible. In brief it would stipulate that all MFOs should develop a clear policy that addresses the following questions. (1) What are your social performance goals, and what indicators do you use to monitor progress towards them? (2) How do you monitor the status of clients? (3) How do you assess the value added or impact of the services that you provide on samples of clients, including those who leave? (4) How do you audit and seek to improve the quality of systems for monitoring client status and impact? Section 1 reviews the potential promises and pitfalls of benchmarking. The next four sections then review each of the above questions in turn, and suggest simple standards in each case. Section 6 summarises the main arguments.

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