Grameen Foundation Announces New Social Investing Guidelines for Microfinance

Feb 2009
Washington, United States, February, 23 2009 - Grameen Foundation today released the first ever guidelines designed to help institutional and individual investors rigorously evaluate the social returns on their microfinance investments.

As of 2006, socially-focused investors in the U.S. had channeled more than $663 million into microfinance. Most of these investors choose microfinance because they expect financial as well as social returns related to reducing poverty. Until recently, however, there were few tools to help them track how well their investments were achieving their goal of improving the lives of microfinance clients and how those “returns” compared to industry-wide performance benchmarks.

The new guidelines are available at Additional information on social investing in microfinance is also available on Grameen Foundation's Progress out of Poverty website at

“As more investors looking for social impact turn to microfinance, they need to ask the right questions about how well the microfinance institutions are meeting their social mission, which has traditionally been more difficult to measure and benchmark than their financial performance,” said Alex Counts, president and CEO of Grameen Foundation. “Using this new microfinance investing checklist, investors can better ensure that their investments are reaching the poorest people and helping them to escape poverty.”

The guideline criteria were developed based on Grameen Foundation’s ongoing work with Oikocredit, a leading social investor in microfinance, other fund managers, and microfinance institutions. For the past two years, Grameen Foundation has been working with microfinance fund managers to better educate them on the value of balancing both the social and financial performance of institutions. To help microfinance institutions collect and analyze this social data, the foundation, together with the Consultative Group to Assist the Poor (CGAP) and the Ford Foundation, commissioned the development of the Progress out of Poverty Index (PPI™) which allows MFIs to better understand their clients’ needs, evaluate the effectiveness of programs and products, benchmark their performance against other microfinance institutions, and track how quickly clients leave poverty.

Oikocredit was seeking a process to assess how its investment network was promoting social goals. “Investors choose Oikocredit expecting an investment with a strong social effect and a modest financial return,” said Ging Ledesma, Manager, Monitoring and Administration Unit of Oikocredit’s Department of Credit Operations. “They want to know if we are fulfilling our social goals of reaching the poor and helping to bring about positive change in their lives and we need to be able to demonstrate that.”

With a portfolio of more than $300 million from institutional and individual investors, Oikocredit is among the top five social investors in microfinance and a leader among those focused on the social outcomes of the work of microfinance institutions. In 2007, it became the first social investor to adopt the PPI for evaluating the social returns on its microfinance investments. Oikocredit’s investees are now implementing the PPI in the Philippines and Peru and will begin implementations in Ecuador and Cambodia this year.

Grameen Foundation and Oikocredit’s work with the PPI will benefit the entire microfinance investment industry as social investors and other funders will be able to obtain data from MFIs in either portfolio on clients’ outreach and progress in the near future. As the partnership deepens, best practices and case studies highlighting how social and financial performance is balanced will be shared.

Each PPI is country-specific and is based on that country’s best nationally representative household survey on income and expenditure. Fifteen have already been developed and there will be more than 30 PPIs at the end of 2009. Additional information is available at


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