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Solidarity finance

Themes : Finance and money at the service of society

Microfinance links up savers who want to invest in activities with strong social benefits and project initiators who do not have enough access to conventional funding. Its main function is to help the poor and excluded, and is now widely recognized as a lever for development that contributes to the fight against poverty. The fact that it has a dual purpose means that it should be able to balance both social and financial performance. The institutionalization of MicroFinance Institutions (MFIs) and strong pressure exerted on funders to focus on short-term profitability have often led the sector to give financial results priority over the creation of social ties and social capital among the destitute.

Because solidarity finance centres on human beings and their social ties, it serves as a tool for human and social development. It seeks to reach the poor and excluded, promote the creation of “decent” jobs by supporting small-scale businesses, adapt services to customers, increase the benefits for them and their families and guarantee MFIs’ responsibility towards their employees, customers, the community and the environment. It is a particularly efficient form of finance, since it takes into account existing social situations and strengthens their stability, and is less vulnerable to change and crises, a not inconsiderable advantage in these troubled times.

But how can MFIs’ social impact, which has long been taken for granted, be measured?

In response to recent criticism of the way MFIs operate and their impact in southern countries, a whole battery of tools for assessing social performance has been set up. For instance, the Social Performance Indicators (SPI) are used to measure the balance between MFIs’ social mission and the means they use to achieve it.

For further details, see the very comprehensive feature “Impact and social performance” put together by Cerise for the Microfinance Gateway: (www.lamicrofinance.org/resource_centers/impactperf/)

10 publications

One proposal

25 case studies

11 analyses

7 public contributions

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