Measurement of social impact: The Microfinance Case

Work session organized by the Spanish Forum for Socially Responsible Investment (Spainsif) and Madrid’s Afi School of Finance (AFI). March 29, 2017.

Spain is showing a growing interest in the impact investment sector, and in the measurement of the sector’s social impact. In the case of the microfinance sector, it is already further along in this direction with the development and adoption of international standards for the measurement of social performance, such as those promoted by the Social Performance Task Force. However, practices, as part of due diligence or reporting, vary when designing social impact measurement strategies.

On 29 March 2017, Inclusion [Social Ratings] participated in a workshop held in Madrid and organized by Spainsif and Afi, on “Measuring Social Impact in the Microfinance Sector”. The workshop gathered players working in the sector to a session where participants were able to learn about the experiences of different Spanish impact investors such as Gawa Capital, BBVA Foundation, CODESPA and COFIDES.

The workshop covered the different types of measurement approaches undertaken by various organisations and highlighted how typically many focus on measuring outcomes rather than their actual impact. One of the reasons behind this is the fact that impact measurement (when an organization shows that without their intervention, the same results could not have been achieved) is more costly, time consuming, and in many situations is unclear whether true impact is conclusively measured. In this context, it may make more sense to focus on the measurement of social performance rather than on social impact, in order to verify how well an organization has identified and implements its social strategy and internal processes, so that there is a higher likelihood of actually leading to the accomplishment of its social mission.