In the mid-2000s, I worked as a senior grantmaker at a New York-based foundation. In addition to annual or bi-annual due diligence trips we made to visit our overseas partners, the only performance-based evaluation we required of the grantees was to submit a semi-annual and annual report, detailing how they spent the grant we gave them. These reports tended to vary greatly in quality and usefulness.
It occurred to me that we ought to have something more tangible to show ourselves, our donors and our partners in the field, in order to highlight the progress from the investment.
Today I see an interesting cross-fertilization taking place: donors asking for better measures on how their money is spent, and as private sector entities populate a traditionally not-for-profit zone, investors trying to quantify the amount of social benefit gained for their double- or triple-bottom line.
Two groups that have taken steps towards this and presented new assessment tools this year are: Grameen Foundation and USAID. Grameen, in partnership with CGAP (Consultative Group to Assist the Poor), has begun creating country-specific indices to measure client poverty levels.
Grameen’s Progress out of Poverty index (PPI) uses ten indicators, assigning point values in order to determine a poverty rating. Grameen intentionally devised a transparent, easy-to-use tool so that local staff would feel confident using it. Additionally, the tools are being rolled out with culturally-specific, observable metrics for each country. For example, Grameen’s tool for India asks whether a family owns a pressure cooker and how many electric fans, whereas their Mexico tool inquires about ownership of a coffee pot and a stereo system.
Nigel Biggar, Director of Social Performance Management Center of Grameen Foundation, says, “The end goal of the PPI is to enable MFIs to serve their clients better. The tool is designed to help MFIs achieve their social objectives through poverty measurement, understand poverty movement and ultimately, use that information to respond more effectively to client needs through improved product design and delivery.”
USAID, with the IRIS Center at the University of Maryland, has created the Poverty Assessment Tool, to ensure USAID grantees comply with the 2003 amendment to the US Microenterprise for Self-Reliance Act, stating that 50% of USAID funding for microenterprise reach the very poor (as defined by those living on less than US$1/day PPP). To this end, the USAID tool is designed for reporting purposes. In order to prevent data-tampering, the survey calculations take place off-site, in contrast with the transparent Grameen PPI, which MFI staff can compute while still in the field.
More information about social performance mapping, as well as a comparison of the new PAT and PPI tools can be found on the SEEP (Small Enterprise Education and Promotion) Network site, in their recent publication of Social Performance Map, Chapter 10: Poverty Assessment Tools.
The trend inspiring development of poverty assessment tools is positive. However, it is important to keep in mind: one, that both the Grameen and USAID tools present a snapshot in time, ie: the current status quo of the clients; therefore the tool would have to be repeated annually or at the end of each loan cycle in order to begin to see a change over time.
Two, private sector investors entering this market, as well as NGOs and MFIs, may be interested in social performance indicators in addition to poverty, such as: health, women’s empowerment, overall social welfare, MFI governance, effect on the environment, etc., which this tool does not measure. There are indications on the Microfinance Gateway website, via a pilot study released in July 2008 that a comprehensive tool to address measuring these values is forthcoming: (See Here)
That said, creation of a reliable, transparent and user-friendly poverty assessment instrument is a fundamental tool for the global microfinance toolbox, and another step in defining and quantifying social performance.
Elle has been working in international development since serving as a Peace Corps Volunteer in Thailand in the early 1990s. She is now a freelance consultant based in Brooklyn, leading trips for the National Outdoor Leadership School and singing with a rock ‘n roll cover band when she’s home.