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
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

BYU - 3/04

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?
BYU - 3/04

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

BYU - 3/04

First Findings
1. NOT necessarily socially scientific validity
E.g. NCAA College Basketball rankings

2. Client motivated activities & program

3. Manager-centric tools & solutions

Reduce cost
Increase accessibility
Apply information in decision-making
Enable local, self-reliant organizations
Encourage BYU Interns

BYU - 3/04

Continuum of Return
Expectations
Donation
s

Morino
Institute,
Blended Value Proposition
BYU
- 3/04

Investme
nt

Value of Social Return

Broadly

What is its function?

Enhance impact measurements

Marketing / PR
Tie to Socially Responsible Investment (SRI)
Mobilize new investment/sources of cash into microfinance

Specifically

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)

BYU - 3/04

Impact Framework
United Ways 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
BYU - 3/04

Source: Soc. Ent. Assoc MicrofinanceandtheDoubleBottomLine, Ford Foundation

Impact

Double Bottom Line Measurement

Goals

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) R&D to develop better & social science valid standards
2) Use existing available data for best use

BYU - 3/04

Double Bottom Line Measurement

Goals

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) R&D to develop better & social science valid standards
2) Use existing available data for best use

BYU - 3/04

Measurement - Discount Model

Alternativ
e
Investmen
t:
Financial
Return

BYU - 3/04

5%

Financial
Return

10%

Bank
Total Return:

5%

Social
Return

MFI
10%

10%

Measurement - Value Added Model

Social Return
- Education

3%

Social Return
-Microcredit
Financial
Return

Total Return:

BYU - 3/04

3%

3%

5%

5%

5%

Bank

MFI
5%

8%

MFIMicrocredit
with
11%
Education

Application for
Practitioners
Learn from others: dont reinvent the wheel
Impact Assessment, Other industries

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 institutions competitive advantage

Remember DBL is a tool (and only one tool)

BYU - 3/04

Next Steps
Responsibility of the entire industry / movement:
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, dont wait for perfection
Disseminate widely; transparently

Measure Donors & Investors activities, too

Continue this process upstream

Facilitate increased investment

Use DBL for marketing & PR

BYU - 3/04

Q&A
Thank you!
Drew Tulchin
Social Enterprise Associates
www.SocialEnterprise.NET
drew@SocialEnterprise.NET

BYU - 3/04