Social and financial performances of the microfinance institutions

The methods used for impact assessment have adopted many techniques to face the problems of the evaluation, such as establishing a counterfactual or control group against which the impact is evaluate, or attribute the impact to microfinance or determinate the statistical significance of the change.
Several of the basic information needed to assess the economic and social impact of microfinance is part of the management information system of the MFI. For example, information about the income of the clients may be useful for an assessment of poverty alleviation or for stabilize criteria for commercial decision – making relating to loan sizes. Thus in many cases institutions have already available some important information within their organization. Although MFIs are not identical, their common needs about market and client information have push them to developing standard assessment tools that can be adapted and edited to specific conditions. Mainly these instruments consist of questionnaires and assessment methodologies and they have been developed to meet the needs of MFIs and to provide a basic justification of microfinance programs. In 1995 USAID launched the first set of assessment tools under the project “Assessing Impact of Microenterprise Services (AIMS)”.

Even if this report has 15 years, it is still one of the most prominent world references about microfinance impact assessment. It suggested some qualitative and quantitative tools: impact survey, client exit survey, analysis of the use of loans, services and savings over time, client satisfaction survey and client empowerment analysis. Obviously, the impact survey represents the core of the impact evaluation. Two focus groups elicit qualitative feedback from users of microfinance service about their satisfaction and other issues related to the client empowerment.
In order to avoid the possibility that the loans provided are not used for productive goals, AIMS focused on the client and his business in the context of the household and proposed the concept of “Household Economic Portfolio model”. It proposes a mid-range methodology, less expensive than the scientific ones. Another methodology used is that proposed by Planet Finance and called IKM (Impact, Knowledge, Market). Also in this case, the approach used is a combination of quantitative and qualitative methods. Surveys focused on client impacts, household incomes and features, client satisfaction, analysis of existing and potential market demand and monitoring of drop – outs. Qualitative instruments are based on focus groups and participatory rapid appraisal. This method differs from the support at the planning and design phase to identify the key issues evaluation.

In the case of microfinance institution with social mission there are more issues, related to the social context, such as governance of the MFI itself, its mission statement and implementation capacity, and the evaluation of indirect social impact. Social Performance Assessments (SPA) tools are based on easy and low cost indicators that can be adapted to the necessities of the institutions. Many SPA tools have been created in the last years.