Nested Initiatives to Promote Evidence-based Practice in Microfinance

I return briefly to Theme One, especially posts #2 and #3, in which I discussed the origins and purposes of the Smart Campaign, the Social Performance Task Force (SPTF) and the Seal of Excellence for Poverty Outreach and Transformation in Microfinance.  Thanks in part to the Microfinance CEO Working Group, and because of their kindred spirits and broadly overlapping constituencies, these three initiatives to promote good practice in microfinance have recently declared their resolve to work hand in hand to create a synergy of guidance and incentives for the microfinance industry.

Freedom from Hunger has long been engaged in all three initiatives.  They affirm our long commitment to evidence-based practice: being clear about objectives and collecting and using evidence to make sure we are on track or get back on track toward those objectives.  So we welcome the letter jointly issued by the three initiatives.  The Center for Financial Inclusion (which provides the administrative home for the Smart Campaign) posted the following summary on their excellent blog, with a link to the letter itself.  I urge you to read the letter.

>Posted by the Center for Financial Inclusion staff, June 26

Over the past few years, as many organizations in the microfinance industry have increased their focus on responsible and client-centered microfinance, a number of initiatives have developed to enhance the performance of MFIs along various social criteria. The Smart Campaign, Social Performance Task Force (SPTF), and Seal of Excellence in Poverty Outreach and Transformation have released a joint letter to explain how the activities and focus of each initiative differ from each other, and how they interconnect. 

At the most fundamental level, all the initiatives “Start with Smart”: both SPTF and the Seal treat the Client Protection Principles of the Smart Campaign as the foundation of their work. The SPTF’s Universal Standards for Social Performance Management (USSPM)incorporate detailed client protection indicators developed by the Smart Campaign. The Seal of Excellence builds on both the Client Protection Principles and the USSPM as gating criteria. It will then go on to identify organizations that both meet client protection and social performance management standards and also make a demonstrable effort to reach very poor people and help them move out of poverty. 

While each initiative operates independently, the three organizations are taking steps to coordinate their work. Each initiative is working with microfinance rating agencies to implement assessment and certification mechanisms specific to their mission. What is likely to emerge over time is an array of modules that would allow MFIs to choose the topics on which to be rated. 

Read the letter here.