1. What is social performance management (SPM)?
2. Why is SPM important?
3. What are the advantages of SPM?
4. What are the Universal Standards for SPM?
5. How much does it cost to adopt strong SPM practices?
6. Why are funders interested in social performance data?

1. What is social performance management (SPM)?
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. A provider's social performance refers to its effectiveness in achieving its stated social goals and creating value for clients. If a provider has strong SPM practices, it is 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.

For actors seeking to achieve social benefits for clients, a social strategy is just as important as a financial strategy. Without a social strategy, financial services may not benefit clients, and in some cases, may hurt clients.
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3. What are the advantages of SPM?
Though SPM requires time and attention, a balanced management approach benefits both the provider and the client in the following ways:

• Client-centric products and services. Through direct feedback with clients and the collection of social performance data, an FSP can understand how it is affecting clients and which products and services that clients value. This allows the FSP can attract and retain clients with appropriate products and services.
• Protection against harmful practices. With strong consumer protection practices in place, an FSP can ensure that clients are not harmed through over-indebtedness, discriminatory lending, abusive collections, and other dangerous practices.
• Reporting to investors/donors. Using client data, the FSP can demonstrate client-level outcomes to external stakeholders, thus helping to attract and retain funding.
• Staff satisfaction/retention. Responsible treatment of employees results in improved staff satisfaction and performance.
• Ability to influence regulation. FSPs with strong SPM practices can influence regulation of the social aspects of microfinance.

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4. 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 bring together strong practices implemented successfully throughout the industry in one comprehensive 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 providers, and support them to improve practice.

Visit the SPTF’s Universal Standards page for more information.
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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.
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6. Why are funders interested in social performance data?
Donors and investors know 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 a provider 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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