Performance Management Blog

Posts Tagged ‘Social Performance’

Measuring performance in non-profit organisations

Thursday, September 2nd, 2010

A recent www.smartKPIs.com blog post, ‘Social and Financial Performance of Microfinance Institutions’, outlined that Microfinance Institutions (MFIs) are strongly associated with a social mission, therefore MFIs performance focuses both on social impact and financial outcomes (smartKPIs.com, 2010).

In turn, Non-profit organisations manage and measure performance using various KPIs in order to cover social impact performance, financial and grant performance, as well as effectiveness and other operational aspects. However, in comparison to MFIs, non-profit organisations use specific KPIs for their domain and less customer oriented indicators.

A newly published KPI in practice, The Global Fund to Fight AIDS, Tuberculosis and Malaria, presents a customized approach regarding performance management, by developing its own performance framework with annual KPIs for review.

Their performance framework is shaped as a pyramid, building from an assessment of the core functions of the Global Fund Secretariat at the base, through evaluation of grant performance and the effectiveness of Global Fund financing, to measuring the impact achieved on the three epidemics: AIDS, Tuberculosis and Malaria (The Global Fund, 2010).

Framework Overview

Source: The Global Fund (2010)

The performance framework implementation presents the following benefits:

differentiating the organizational performance of the Global Fund and the performance of the Secretariat’s internal operations
facilitating the assignment of responsibilities to different teams
offering a stable and comprehensive measurement framework over time
grouping KPIs into different areas of performance
aligning the reporting frequencies with the data availability and reporting systems (The Global Fund, 2010).

For additional information with regards to The Global Fund KPI in practice and for further examples of non-profit performance reports explore the Non-Profit / Non-governmental KPIs in practice section of smartkpis.com (smartKPIs.com 2010).

References:

The Global Fund 2010, Key Performance Indicators, available at: http://www.theglobalfund.org/en/performance/kpi/ (accessed 1 September 2010)

smartKPIs.com 2010, Social and Financial Performance of Microfinance Institutions, available at: http://www.smartkpis.com/blog/2010/06/02/social-and-financial-performance-of-microfinance-institutions/ (accessed 1 September 2010)

smartKPIs.com 2010, Non-Profit / Non-governmental KPIs in practice, available at: http://www.smartkpis.com/kpi_examples_in_practice/industries/non-profit-non-governmental/ (accessed 1 September 2010)

Tags: Microfinance Institutions, Non-Profit, Social Performance, The Global Fund
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Social and Financial Performance of Microfinance Institutions

Wednesday, June 2nd, 2010

Microfinance institutions (MFIs) are mainly private-held companies, whose owners tend to have long-term interests (Ingo, W., Krauss, N. 2008). Most MFIs are strongly related with a social mission. For example, the most common “raison d’être” for MFIs is to broaden access to financial services, reduce poverty, empower women, build community solidarity, or promote economic development and regeneration.

MFIs social performance refers to the extent of their success in meeting these goals, representing more the impact rather than an outcome (IFAD 2006).

Impact pathways (IFAD 2006)

As social organizations, MFIs apply commercial principles for achieving social impact. MFIs performance focuses both on social impact and financial outcomes. The social impact is achieved through the way financial services improve the lives of poor and excluded clients, by widening the range of opportunities for communities.

Financial outcomes are achieved through strategic management and focus on assuring organizational performance. The KPIs used to measure performance of microfinance institutions are usually structured in core areas, (Rosenberg 2006) such as:

Outreach—what number of clients are being served?
Client poverty level—how poor are the clients?
Financial sustainability—how profitable is the MFI, in order to maintain and expand its services, without having continued injections of subsidized donor funds?
Collection performance—is the MFI collecting its loans as planned and expected?
Efficiency—is the MFI controlling its administrative costs at an optimal level?

A standard international KPI monitored in MFIs is Portfolio at Risk (PAR). It measures the loan portfolio with at least one day missed payment to total loan outstanding at a given time. It refers to the outstanding balance of all the loans that have an amount overdue.

For further examples of MFIs performance indicators, explore the Banking, Mortgages and Credit KPIs examples and the section of smartkpis.com (smartKPIs.com 2010).

References:

IFAD 2006: Assessing and managing social performance in microfinance, Rome

Ingo, W., Krauss, N. 2008: Can Microfinance Reduce Portfolio Volatility?, Working Paper Series, USA: New York University

Rosenberg, R. 2006: Review of UNDP Microfinance Portfolio, The Consultative Group to Assist the Poor (CGAP), Washington D.C.

smartKPIs.com 2010, Banking, Mortgages and Credit KPIs examples, viewed 27 May 2010, <http://www.smartkpis.com/kpi/industries/financial-institutions/banking-mortgages-and-credit/>.

Tags: Financial Performance, Microfinance, Microfinance Institutions, PAR, Portfolio at Risk, Social Performance
Posted in Library of KPI examples, Performance Management, smartKPIs.com | No Comments »