Financial sustainability is a crucial indicator of the success of our microfinance program. After all, a program that can cover its costs can also grow, serving more and more clients. But for us, like most other microfinance institutions and funders, it is also important to reach poor and very poor people; to provide quality services and most importantly, to improve the lives of our clients.
We strongly believe that access to financial services can help clients improve their lives. Though financial sustainability is essential for us to expand our services, it does not automatically ensure that client-level benefits are realized.
Our institutional and individual donors invest money in our projects, especially microfinance, with the belief that microfinance helps poor people. To be accountable to these funders, we record and report on how our stated goals are being achieved. In doing so, TDF uses the universal form of Social Performance Indicators (SPI 4.0), using six benchmarks to measure its social performance. As a self-evaluation tool, this framework helps us identify our own strengths and weaknesses and find innovative ways to improve social performance. Because it exhaustively analyses the six key dimensions of social performance, the SPI 4.0 is precise in highlighting areas for improvement.
We start with an analysis of the declared social objectives of our organisation, and our foundation’s social mission is then clearly defined. Our activities are directly linked to the achievement of the foundation’s social goals. In addition, we also have appropriate systems in place to meet these objectives. However, we lack a system to routinely track the poverty index. The impact on clients is typically measured once every two years through an in-depth study of the clients’ income improvement, employment, education (of their children), quality of life and empowerment; effected through a program of random interviews.
Category 3 (design products that meet clients’ needs) scores 82 out of 100 points (82%), suggesting that we still have room for improvement. We are currently limited by the fact that we plan to give smaller loans to a larger number of clients, while clients are always in need of larger loans. Also, while our loan products are designed only for weekly repayments and income generating activities, there are clients who want loans for monthly/ annual repayments with more varied purposes. TDF has increased loan sizes to a maximum of VND50 million, while still adhering to the principle of offering at least 50% of small loans (less than VND15 million) to newly-recruited and very poor clients.
With other indicators scoring over 94%, we believe that our foundation is moving in the right direction in terms of commitment to our social goals, treating clients and employees responsibly and especially balancing social and financial performance.