1. What are social performance and social performance management (SPM)?
2. Why is SPM important?
3. What are the advantages of SPM?
4. How do I get my organization started in SPM?
5. How much does it cost to adopt strong SPM practices?
6. What is the difference between social performance and impact?
7. What is the difference between managing your financial performance and your social performance?
8. What are the various SPM initiatives and how do they fit together?
9. What are the tools and resources for managing social performance?
10. What are the Universal Standards for SPM?
11. Why are funders interested in social performance data?
12. What is social return on investment (SROI)?

1. Social performance management (SPM) refers to the systems that organizations use to achieve their stated social goals and put customers at the center of strategy and operations. An institution’s social performance refers to its effectiveness in achieving its stated social goals and creating value for clients. If an institution has strong SPM practices, they are more likely to achieve strong social performance. Read more here.
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2. Why is SPM important?
SPM is important because it puts clients at the center of strategic and operational decisions, making it more likely that financial services will be safe and beneficial for clients. For many years, the industry has emphasized financial sustainability, but we have learned that strong financial performance alone does not necessarily translate into benefits for clients.
A social strategy is just as important as a financial strategy. Without both, FSPs and funders will make decisions based on financial goals. In such cases, clients may benefit from access to financial services but it is not a given. In fact, financial services can cause harm to clients.
Ours is an industry that seeks to provide access to responsible financial services in order to achieve social benefits. This purpose can only be achieved by industry stakeholders committed to formalizing the social objectives of financial services through strong SPM practices.
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3. What are the advantages of SPM?
Though SPM requires time and attention, a balanced management approach benefits both the institution and the client in the following ways:

  • Client-centric products and services. Through direct feedback with clients and the collection of social performance data, the FSP can understand how it is affecting clients and which products and services that clients value. With this information, the FSP can attract and retain clients with appropriate products and services.
  • Protection against mission drift. Integration of social goals into business plans and strategies helps ensure that as the FSP grows and changes, its social purpose is retained.
  • Reporting to investors/donors. Using client data, the FSP can demonstrate client-level outcomes to external stakeholders (such as investors and regulators), thus helping to attract and retain funding. 
  • Differentiation in competitive markets. Efforts to protect clients and provide excellent customer service can set the FI apart from other providers.
  • Staff satisfaction/retention. Efforts to treat staff responsibly may result in improved staff satisfaction and performance.
  • Ability to influence regulation. Positive social data and a strong reputation for social outcomes can help FSPs avoid potential regulatory restrictions, such as interest rate caps. FSPs with strong SPM practices can influence regulation of the social aspects of microfinance.

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4. How do I get my organization started in SPM?
This depends on which stakeholder group you represent. Please visit our “Getting Started” pages for: financial institutions [hyperlink to “Get Started- financial institutions], networks/associations [hyperlink to “Get Started- networks and associations], and funders [hyperlink to “Get Started- funders].
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5. How much does it cost to adopt strong SPM practices?
There is not only one type of SPM system, and therefore there is not only one cost. The most cost effective way to make changes is to design them so that they can be implemented using only existing staff and resources. Changes that involve raising awareness and buy-in, such as discussing SPM with Board members, management, and staff, may have no associated costs. Other changes, such as adjusting staff or client training procedures to incorporate SPM, can be relatively inexpensive. Collecting new social data and incorporating it into your management information system tends to be one of the more expensive changes. 

Though research is still very preliminary, it is also important to note that early anecdotal evidence is showing that the long term financial benefits of a social performance system will offset some, if not all, of the cost of implementing it (see “What are the advantages of SPM?” above).
The video case studies below showcase financial institutions that improved their financial performance by improving their social performance:

UGAFODE, Uganda describes how strengthening SPM created financial benefits including client retention, portfolio growth, staff retention.
Watch this video with French subtitles    with Spanish subtitles
FODEMI, Ecuador explains how using the Universal Standards allows them to become competitive in the marketplace by keeping up with trends in the industry and improving relationships with investors, lenders, and regulatory entities. Please note this video is available only in Spanish.
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6. What is the difference between social performance and impact?
The concepts of "social performance assessment" and "impact assessment" are often confused and used interchangeably, but there is a distinction. Impact refers to an outcome (change) that can be directly attributed to an intervention. Impact evaluations attempt to demonstrate the outcomes of microfinance, while SPM focuses on the management practices that lead an institution toward positive social results for their clients, whether these can be “proven” or not.

Another important distinction is that impact assessment is much more complicated and costly than the less rigorous client monitoring used in SPM. Most institutions choose to client data that aids in management decision making—such as client satisfaction and changes in outcomes indicators over time, rather than commissioning a full impact study.
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7. What is the difference between managing your financial performance and your social performance?
Financial performance management (FPM) focuses on the sustainability of the financial institution. To understand its financial performance, the institution monitors data such as its revenue, costs, and profit level. Social performance management (SPM) focuses on client well-being. To understand its social performance, the institutions monitors data such as client satisfaction and changes in clients' lives (e.g., increased balance in clients' savings accounts).

Client-centered management practices do not diminish financial performance but support it. Common financial problems (e.g., client exit, high PAR, and employee turnover) can be addressed with SPM interventions such as understanding the needs of different client segments, designing products and services that meet specific needs, and creating human resources policies that protect employees. A double bottom line institution can and should use data on both financial and social performance to guide its decisions about prices, products, service delivery systems, and strategies, as success for social institutions requires sustainability and the creation of benefits for clients.
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8. What are the various SPM initiatives and how do they fit together?
This page describes the various SPM initiatives and how they fit together.
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9. What are the tools and resources for managing social performance?
The SPM Resource Center contains dozens of the industry’s top resources to help practitioners implement SPM.
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10. What are the Universal Standards for SPM?
There is no single formula for successful SPM. However, the industry has recognized a set of core management practices that constitute “strong” SPM. These practices form the SPTF Universal Standards for Social Performance Management (“the Universal Standards”). [hyperlink to Learn subpage]
The Universal Standards bring together strong practices implemented successfully throughout the industry in one comprehensive manual [hyperlink to the Universal Standards manual] in order to clarify and standardize SPM. Developed through broad consultation, the Universal Standards both reflect current practice and push practitioners toward better performance.
FSPs can use the Universal Standards to understand all aspects of SPM, evaluate their own practices against global practices, and improve their management systems over time. Similarly, other stakeholders—investors, donors, networks, technical assistance (TA) providers, consultants, and regulators—can use the Universal Standards to understand SPM, assess the performance of FIs, and support them to improve practice.
The Universal Standards are organized into six dimensions and each dimension contains multiple standards. A standard is a simple statement of what the institution should do to manage social performance. For each of these standards, there are several “Essential Practices,” which detail how to achieve the standard.
Visit the SPTF’s Universal Standards [hyperlink to “Learn about SPM and the Universal Standards” page] page for more information.
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11. Why are funders interested in social performance data?
Donors and investors are well aware that investment in microfinance does not automatically produce positive social returns. Savvy funders look for FSPs that are both financially sound and successful in achieving their social goals. In the early years of microfinance, anecdotal stories of client transformation were often accepted as evidence of social returns, but investors and donors today are generally too sophisticated in their due diligence to base investment decisions on anything less than comprehensive, high quality social data and analysis.

Additionally, experience in a variety of sectors suggests that social performance and financial performance can be mutually reinforcing. Thus, investors whose primary focus is the financial health of an institution may still be interested in social performance data, particularly in areas such as client retention, avoidance of client over-indebtedness, and reduction of reputation and credit risk.
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12. What is Social Return on Investment (SROI)?
SROI is a financial concept that incorporates principles from return on investment and cost-benefit analysis to derive an estimate of net social benefit. Typically, the net social benefit would be expressed as either the dollar value of social benefits minus social costs, or the ratio of social benefits to social costs. The microfinance industry has not yet reached consensus on how to calculate SROI, but some organizations have developed and pilot tested their own methodologies.
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