Amelia GREENBERG started the session by introducing the panellists. The session would mainly summarise results from three new publications on outcomes management. It resulted from requests within the Outcomes Working Group for a harmonized list of recommended outcome indicators and guidelines customised for investors and financial service providers (FSPs). The titles of the publications are: Making the Case for Outcomes Management to Financial Service Providers, Guidelines on Outcomes Management for Financial Service Providers, both written by Frances Sinha, and Guidelines on Outcomes Management for Investors, written by Lucia Spaggiari in collaboration with the e-MFP Social Performance Outcomes Action Group. The Outcomes Working Group has identified recommended indicators in four outcomes areas so far: 1.) Business and entrepreneurship; 2.) Economic poverty, assets and housing; 3.) Resilience and vulnerability; 4.) Health. To be selected for the recommended list, indicators had to meet five criteria: relevant, usable, clear, feasible, and comparable. Greenberg stressed that outcomes management is a multi-step organisational system for the collection, analysis and use of outcomes data. Simply collecting data is not enough! She emphasised the difference between outcomes and impact. Outcomes imply a plausible association, impact implies attribution. Outcome management can improve accountability, increase understanding of whether the systems and strategies that are in place are working, and lead to improvements of what is not working.
Frances SINHA started her presentation with a quote by a social investor that nice stories of change are interesting and good for marketing but not enough for outcomes management. There is a need for more robust ways of providing evidence of client outcomes, and one that avoids a bias to only the success stories. She presented the principles that underline the approach of the Guidelines on Outcomes Management for Financial Service Providers; these are to be: lean, credible, affordable, transparent, and open to learning, including acknowledging and learning from less positive outcome findings. She presented the framework of TEN steps for outcomes management, emphasising that the process requires engagement at different levels of an institution, from the board to field staff. This helps to build buy-in, ensures that the approach will be practical, reflecting field realities, so that the data is focussed and likely to contribute to decision making. Social investors can and do increasingly play a supportive technical role. Her presentation gave some examples of the content of the guidelines – relating to selecting the method for data collection, and key tips on analysing data and reporting.
Lucia SPAGGIARI summarised some of the main points of Guidelines on Outcomes Management for Investors. She remarked that asset owners, asset managers, and FSPs should contribute resources so that the outcomes management agenda can advance. These are Spaggiari’s tips for investors on outcome management: cover smart, there is no need to cover all investees when we can use representative samples. Consolidate the portfolio analysis if possible, keep the analysis at the case study level if not. Do it well enough, do not aim at perfection, but there needs to be data quality control and validation to obtain usable results. Report transparently and converge to emerging industry standards when possible. Use data for decision making. Unexpected or disappointing outcomes can help you improve your strategy. Improve outcomes by encouraging improvements in investees and re-set expectation so that the promise aligns to what the fund can deliver. Integrate outcomes management within risk management to improve investee’s commitment and the use of data in decision-making. Hold yourself accountable to asset owners for outcomes to keep competitive and resilient.
The audience questioned the panel as to whether credit officers should be involved in data collection. There have been cases where credit officers were forging data. According to Sinha, field officers should collect data as part of routine operations. However, FSPs should train officers in data collection beforehand and raise awareness that good quality data is important and that field officers will not get in trouble if what they have collected does not show positive outcomes. She added that FSPs should always do quality checks. The use of tablets can facilitate the process and increase cost-effectiveness, while also reducing the burden of data collection. Another question was why financial inclusion is not part of the initial four indicators. Spaggiari explained that financial inclusion is not strictly an outcome; it is an output. Financial inclusion data describe client profiles at a certain point in time. Financial access, however, does not necessarily translate to benefits for clients.
Rodrigo PELAEZ introduced Fundación Microfinanzas BBVA (BBVAMF), a financial holding that is managing six MFIs in Latin America. Their aim is to address the financial needs of low-income micro-entrepreneurs through responsible productive finance. According to Peláez, outcomes management allows them to connect with the realities of their clients, allowing them to check if they are working in line with their mission. BBVAMF is managing a detailed client database with historical data, which is updated on a quarterly basis. The findings are presented in a yearly report that includes socioeconomic information. BBVAMF classifies their clients into segments of economic vulnerability based on client monthly per capita net income (generated by their microenterprises) and comparing it with local poverty lines. According to the 2015 social performance report, the number of 2011 clients living in poverty and extreme poverty has decreased from 55% to 27% in 2015. According to their findings, BBVAMF is observing positive impact. He added that he would summarise the results of their report in the next session, ‘Managing client outcomes, Part II’.
Laura GÄRTNER introduced Oikocredit, a worldwide cooperative and social investor. She noted that better data leads to better decisions. Oikocredit is working on client outcomes management on two levels, on a FSPs level by building FSPs’ capacity to measure and monitor client data, and by conducting research at Oikocredit to better understand the changes in clients’ lives. Oikocredit is using existing data from the FSPs, such as the Progress out of Poverty Index (PPI), socio-economic, employment and geographic data. They are providing participatory one week workshops to build FSPs’ capacity on data analysis. At the end of the workshop the FSP makes an action plan and dashboard based on the data analysis. Internally Oikocredit is doing econometric analysis in collaboration with the International Institute for Social Studies (ISS) at Erasmus University Rotterdam. She added that Oikocredit already published a research paper on ‘Effects of Microcredit on the Poverty of Borrowers using the Progress out of Poverty Index: Evidence from Asian MFIs’. The research showed that microfinance loans have a small positive and significant effect on poverty reduction among microcredit borrowers. In the follow up session, “Managing client outcomes Part II”, she would present the preliminary results of a second discussion paper which compares the changes in poverty levels between urban and rural borrowers.
Christophe BOCHATAY briefly introduced Triple Jump which manages and advises funds aiming to invest responsibly in developing countries. Triple Jumps focuses on microfinance, agriculture, housing, sustainable energy, and small medium enterprises (SMEs). Triple Jump manages the Dutch Good Growth Fund (DGGF) whose outcome objectives are focused on SME revenue growth and job creation. According to Bochatay, Triple Jump has built an active approach to outcome management by setting outcome targets at fund level, integrating outcomes assessment into investment selection, collecting outcome results from investees, and monitoring and reporting outcomes at the fund level. He added that he would explain this approach at the following session, ‘Managing client outcomes, Part II’.