Dimension 6: Balance Financial
and Social Performance
The Universal Standards Implementation Series
Today’s speakers:
Wesley Jordan, CFO, VisionFund Cambodia
Yamini Annadanam, Independent Consultant
July 23, 2015
Agenda
• Review of Dimension 6 of the Universal
Standards for SPM
• Presentation by Wesley Jordan, VisionFund
Cambodia
• Discussion with Participants
• Wrap-up
There are 19
standards,
organized
into six
dimensions.
Today we
will discuss
dimension 6.
Dimension 6 of the Universal Standards
• Title: Balance Financial and Social Performance
• Rationale: An institution’s financial decisions
and results should reflect their social goals
• Four standards:
▫
▫
▫
▫
6a- Growth
6b- Returns & financing structure
6c- Pricing
6d- Executive compensation
Dimension 6: 4 Standards
• 6a- The institution sets and monitors growth rates that
promote both financial sustainability and client wellbeing
• 6b- Equity investors, lenders, board and management
are aligned on the institution’s double bottom line and
implement an appropriate financial structure in its mix
of sources, terms, and desired returns
• 6c- Pursuit of profits does not undermine the long-term
sustainability of the institution or client well-being
• 6d- The institution offers compensation to senior
managers that is appropriate to a double bottom line
institution
6a- The institution sets and monitors growth rates
that promote both financial sustainability and client
well-being.
Essential Practices
• Set a policy on sustainable target growth rates, for all
branches/regions and all product types, considering the
institution's growth capacity and the markets being targeted
• Analyze growth rates and market saturation to assess whether
growth policies ensure both financial sustainability and client
well-being
• Monitor whether internal capacity is keeping pace with
institutional growth in number of clients and amount of loans
and deposits, and enhance that capacity as needed
6b- Equity investors, lenders, board and management are
aligned on the institution’s double bottom line and implement
an appropriate financial structure in its mix of sources, terms,
and desired returns.
Essential Practices
• Set clear policies on desired level of returns and on how those
returns will be used
• Engage with funders whose expectations for financial returns,
timeframe and exit strategies are aligned with your social goals
and stage of development
• When deciding on funding sources, understand what cost would
be passed on to the client
• Protect client savings and cash collateral
• Maintain a transparent financial structure
6c- Pursuit of profits does not undermine the longterm sustainability of the institution or client wellbeing.
Essential Practices
• Set market-based, non-discriminatory pricing
• Ensure efficiency ratios are aligned with peers
• Do not charge excessive fees
• Monitor whether pricing levels are consistent with your policies
on returns
• Establish a field-officer-to-client ratio that promotes high
service quality for clients
6d- The institution offers compensation to senior
managers that is appropriate to a double bottom
line institution.
Essential Practices
• Ensure that compensation of the CEO/Managing Director and
other senior employees is in line with your social goals
• If senior management compensation is in part incentive-based,
include the social performance evaluation
• Upon request, transparently disclose compensation to
regulators, auditors, raters, donors, lenders, and investors
• Calculate the difference between the average compensation of
top level executives and field employees, and analyze whether
this spread is consistent with the your mission
Reminder! Use the SPI4 Tool to Assess
Your SPM Practices
• SPI4 is the common data
collection and assessment tool
for the Universal Standards
Dimensions
Standards
• Evaluates implementation
based on indicators
Essential
Practices
Indicators
SPI4 Indicators Corresponding to
Essential Practice 6A….
Agenda
• Review of Dimension 6 of the Universal
Standards for SPM
• Presentation by Wesley Jordan, VisionFund
Cambodia
• Discussion with Participants
• Wrap-up
Meet your Speakers!
Name: Wesley Jordan
Title: Chief Financial Officer
Organization: VisionFund Cambodia
Email: wesley_jordan@wvi.org
Name: Yamini Annadanam
Title: Independent Consultant
Email:
yamini.avk@gmail.com
Introduction to VisionFund Cambodia
“Our vision for every child, life in all
its fullness; our prayer for every heart,
the will to
make it so.”
• We improve lives of children
• We empower poor women
• We unlock the potential for community
• Started as an MED program by World Vision in 2000,
the transformation into VisionFund Cambodia took
place in 2003. Within two years, the entity achieved
sustainability.
• Currently, VisionFund Cambodia works in 25 provinces
and reaches to 280,000 clients with loans & savings.
CLIENTS & PORTFOLIO AS OF JUN-15
METHODOLOGY
# CLIENT
%
$ PORTFOLIO
%
COMMUNITY (CB)
190,220
80.0%
40,775,872
38.72%
SOLIDARIY (SG)
2,415
1.0%
858,875
0.82%
INDIVIDUAL (IL)
45,256
19.0%
63,683,271
60.47%
TOTAL
237,891
100%
105,318,018
100%
15 | VISIONFUND CAMBODIA| INVESTING IN A BETTER LIFE FOR CHILDREN
CLIENT GROWTH 2002-15
16 | VISIONFUND CAMBODIA| INVESTING IN A BETTER LIFE FOR CHILDREN
IMPACT OF VFC GROWTH
# of clients (being empowered):
Women % clients:
family)
237,891
94% (more likely to benefit the
Estimated no. of children benefited:
776,683
100%
Cover
in all 55 WV’s ADPs in 9 Provinces
(i.e. 85% of villages):
Hence those who have progressed under WV’s ADP
program will have access to financing to help liberate
themselves from the poverty cycle
~$443
Average loan size per client:
(40% of
Cambodian GDP/capita) reaffirms our mission to
benefit the poorer segment
17 | VISIONFUND CAMBODIA| INVESTING IN A BETTER LIFE FOR CHILDREN
What mechanisms have you put in
place for meeting the standards of the
dimension “balancing social and
financial performance”?
• Social Performance committee at both Board
and Management level
• Margin guidelines across products
• Specialization of field-based roles
• Systems provide real-time reporting, down to
loan officer level via mobile devices
VisionFund Cambodia has grown in the
past 10 years. How did you manage
and monitor the growth without
compromising on client well-being?
• Key performance indicators reflect social
performance across MFI
• Full reinvestment in portfolio
• Moderate growth targets
• Continued diversifying products to enhance
social performance targets – loans, savings,
insurance
How did you ensure that profitability
is intact while balancing long term
sustainability and client well-being?
• Ongoing process review in order to improve &
reduce costs
• Pricing should not mask inefficiencies
• Over-indebtedness risks for both MFI and client
Board members and management play
a significant role in monitoring
financial performance. What role did
they play at VisionFund to balance
social and financial performance?
• Maintain Social Performance as priority at a
strategic level
• Set guidelines on profitability & pricing
• Ensure integration with activities of World Vision
and other NGO partners
How do these practices benefit clients
and staff?
Clients:
• Improved sanitation (62%)
• Additional clothing, shoes for children (59%)
• Child health costs covered (57%)
Staff:
• Concern for whole client & household, not just
business
• Reward & Recognition of branches with SP
emphasis
What is your advise for other
practitioners?
• Secure strategic support from Board
• Processes – use technology and continuous
improvement to reduce costs
• Reconsider pricing levels & profitability targets
Agenda
• Review of Dimension 6 of the Universal
Standards for SPM
• Presentation by Wesley Jordan, VisionFund
Cambodia
• Discussion with Participants
• Wrap-up
Agenda
• Review of Dimension 6 of the Universal
Standards for SPM
• Presentation by Wesley Jordan, VisionFund
Cambodia
• Discussion with Participants
• Wrap-up
Take Action: Use the Implementation
Guide!
• Download the guide here:
http://sptf.info/spmstandards/universalstandards
Take Action: Consult the Resource
Center!
• Visit the resource center here:
http://sptf.info/resources/resource-center
Where to find more information:
• The Universal Standards of SPM Manual:
http://sptf.info/spmstandards/universal-standards
• The SPI4 social audit tool:
http://cerise-spi4.squarespace.com
• The presentation and recording from today’s session:
http://www.sptf.info/onlinetrainings/universalstandards
implementation
• The SPTF Resource Center:
http://www.sptf.info/resources/resourcecenter
• The SPM Implementation Guide:
http://sptf.info/spmstandards/universal-standards
Thank you for your participation!