Microfinance &
the Double Bottom Line:
(Measuring Social Value for Microfinance &
Microcredit with Education Programs)
Drew Tulchin
Social Enterprise Associates
BYU
Provo, Utah
March, 2004
BYU - 3/04
Review of Paper
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The Problem
Research Conducted
Definitions
Frameworks & Logic Models
Measure for Microcredit with Education
Application for Practitioners
Next Steps
Q&A
Too much information, too little time
BYU - 3/04
Acknowledgements
This Research Owes Gratitude to:
• Ford Foundation
• BYU, Grameen Foundation USA, MicroCapital
Institute, Mix Market & Prisma Microfinance
• The many individuals who have provided
feedback & support:
Dr. Monique Cohen, Erica Mills, David Myhre, Wendy
Prosser, Andrew Ralph, David J. Satterthwaite, Anton
Simanowitz, Didier Thys, Dr. Joseph Tulchin, Dr.
Koenraad Verhagen, Dr. Gary Woller & Many Others
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Introduction
Who are you? How familiar are you with
microfinance, ‘SRI’ & the Double Bottom Line?
Who am I?
Drew Tulchin,
Social Enterprise
Associates
A network of professionals
making communities better by
applying business skills &
sustainable practices.
BYU - 3/04
The Problem
• 3 billion people in poverty (live < $2 / day)
• Demand exceeds supply (< 10% demand met)
– Microcredit Summit 67 mil. clients
– Potential aggregate portfolio value $5-7 bil.
• Few MFIs financially self-sufficient (1-10%)
• Not enough donor funds ($.5 to 1 bil. / year)
How can MFIs serve self-reliant entrepreneurs to
achieve ‘massification’ as sustainable making an impact
on poverty alleviation?
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Research Conducted
• Outgrowth of other work, ‘subsidized research’
• Interviews: more than 30 investors, 30 practitioners
& 20 DBL / SR specialists – still ongoing
• MFI literature Review & Catalogue
• Investigation of SR, DBL & related literature
outside of MFI industry
• Applied action research. Share findings w/
others, get new ideas, revise, disseminate…
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First Findings
1. NOT necessarily socially scientific validity
E.g. NCAA College Basketball rankings
2. Client motivated activities & program
3. Manager-centric tools & solutions
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Reduce cost
Increase accessibility
Apply information in decision-making
Enable local, self-reliant organizations
Encourage BYU Interns
Continuum of Return Expectations
Donations
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Morino
Institute, Blended Value Proposition
Investment
Value of Social Return
Broadly
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What is its function?
Enhance impact measurements
Marketing / PR
Tie to Socially Responsible Investment (SRI)
Mobilize new investment/sources of cash into microfinance
Specifically
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Who is social return for?
Use by managers in decision-making
Segment interested investors.
Craft tailored messages to SRI, use social return for some
Consider social benefits from financial inputs (investment)
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Impact Framework
United Way’s Logic Model
Org.’s
Mission
Activities
Outputs
Outcomes
Effect, impact & measurement
related back to MISSION
BYU
- 3/04
Source:
United Way & Kellogg Foundation
Community
Goal
Double Bottom Line Framework
Track Social & Economic Value Creation
Input
(Investment)
Activities
Outputs
Outcomes
Effect, impact & measurement related
back to INPUT as a return ratio
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Source:
Soc. Ent. Assoc Microfinance and the Double Bottom Line, Ford Foundation
Impact
Double Bottom Line Measurement Goals
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Develop an industry metric & apply it uniformly
Establish comparables (apples to apples)
Aggregate Data (industry totals, vs. other sectors)
INTERNAL audience:
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Easy to use, add value to operations
EXTERNAL audience:
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Easy to understand, add meaning to investment
decision &/or evaluation
SROI operating on two fronts:
1)
2)
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R&D to develop better & social science valid standards
Use existing available data for best use
Double Bottom Line Measurement Goals
•
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•
•
Develop an industry metric & apply it uniformly
Establish comparables (apples to apples)
Aggregate Data (industry totals, vs. other sectors)
INTERNAL audience:
–
•
Easy to use, add value to operations
EXTERNAL audience:
–
Easy to understand, add meaning to investment
decision &/or evaluation
SROI operating on two fronts:
1)
2)
BYU - 3/04
R&D to develop better & social science valid standards
Use existing available data for best use
Measurement - Discount Model
Alternative
Investment:
Financial
Return
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5%
Financial
Return
10%
Bank
Total Return:
5%
Social
Return
10%
MFI
10%
Measurement - Value Added Model
Social Return Education
3%
Social Return Microcredit
Financial
Return
Total Return:
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3%
3%
5%
5%
5%
Bank
MFI
5%
8%
MFI-Microcredit
with Education
11%
Application for Practitioners
• Learn from others: don’t reinvent the wheel
– Impact Assessment, Other industries
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Avoid decision paralysis, take a first step
Use information MFI already captures
Examine collected data
Consider all client ‘touch’ opportunities
– Talk to your client, Listen to what they say & Respond
• Emphasize institution’s competitive advantage
• Remember DBL is a tool (and only one tool)
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Next Steps
Responsibility of the entire industry / movement:
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Increase MFI DBL Dialogue
Bring in other allies (i.e. BYU & community)
Motivate more activity (like Call for Papers)
Measure what you can, build a tool
– Version 1.0 ok, don’t wait for perfection
– Disseminate widely; transparently
• Measure Donors’ & Investors’ activities, too
– Continue this process ‘upstream’
• Facilitate increased investment
– Use DBL for marketing & PR
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Q&A
Thank you!
Drew Tulchin
Social Enterprise Associates
www.SocialEnterprise.NET
drew@SocialEnterprise.NET
BYU - 3/04