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Balance Financial and Social Performance

Learn about Dimension 6 of the Universal Standards for SPM and how it relates to an institution's financial decisions and their social goals. Wesley Jordan, CFO of VisionFund Cambodia, will present on this topic.

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Balance Financial and Social Performance

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  1. Dimension 6: Balance Financial and Social Performance The Universal Standards Implementation Series Today’s speakers: Wesley Jordan, CFO, VisionFund Cambodia Yamini Annadanam, Independent Consultant July 23, 2015

  2. Agenda • Review of Dimension 6 of the Universal Standards for SPM • Presentation by Wesley Jordan, VisionFund Cambodia • Discussion with Participants • Wrap-up

  3. There are 19 standards, organized into six dimensions. Today we will discuss dimension 6.

  4. Dimension 6 of the Universal Standards • Title: Balance Financial and Social Performance • Rationale: An institution’s financial decisions and results should reflect their social goals • Four standards: • 6a- Growth • 6b- Returns & financing structure • 6c- Pricing • 6d- Executive compensation

  5. Dimension 6: 4 Standards • 6a- The institution sets and monitors growth rates that promote both financial sustainability and client well-being • 6b- Equity investors, lenders, board and management are aligned on the institution’s double bottom line and implement an appropriate financial structure in its mix of sources, terms, and desired returns • 6c- Pursuit of profits does not undermine the long-term sustainability of the institution or client well-being • 6d- The institution offers compensation to senior managers that is appropriate to a double bottom line institution

  6. 6a- The institution sets and monitors growth rates that promote both financial sustainability and client well-being.

  7. 6b- Equity investors, lenders, board and management are aligned on the institution’s double bottom line and implement an appropriate financial structure in its mix of sources, terms, and desired returns.

  8. 6c- Pursuit of profits does not undermine the long-term sustainability of the institution or client well-being.

  9. 6d- The institution offers compensation to senior managers that is appropriate to a double bottom line institution.

  10. Reminder! Use the SPI4 Tool to Assess Your SPM Practices Dimensions • SPI4 is the common data collection and assessment tool for the Universal Standards • Evaluates implementation based on indicators Standards Essential Practices Indicators

  11. SPI4 Indicators Corresponding to Essential Practice 6A….

  12. Agenda • Review of Dimension 6 of the Universal Standards for SPM • Presentation by Wesley Jordan, VisionFund Cambodia • Discussion with Participants • Wrap-up

  13. Meet your Speakers! Name: Wesley Jordan Title: Chief Financial Officer Organization: VisionFund Cambodia Email: wesley_jordan@wvi.org Name: Yamini Annadanam Title: Independent Consultant Email: yamini.avk@gmail.com

  14. Introduction to VisionFund Cambodia “Our vision for everychild, life in all its fullness; our prayer for every heart, the will to make it so.” OUR VISION • Started as an MED program by World Vision in 2000, the transformation into VisionFund Cambodia took place in 2003. Within two years, the entity achieved sustainability. • Currently, VisionFund Cambodia works in 25 provinces and reaches to 280,000 clients with loans & savings. OUR MISSION • We improve lives of children • We empower poor women • We unlock the potential for community

  15. CLIENTS & PORTFOLIO AS OF JUN-15

  16. CLIENT GROWTH 2002-15

  17. IMPACT OF VFC GROWTH • # of clients (being empowered): 237,891 • Women % clients: 94%(more likely to benefit the family) • Estimated no. of children benefited: 776,683 • Cover 100% in all 55 WV’s ADPs in 9 Provinces (i.e. 85% of villages): • Hence those who have progressed under WV’s ADP program will have access to financing to help liberate themselves from the poverty cycle • Average loan size per client: ~$443 (40% of Cambodian GDP/capita) reaffirms our mission to benefit the poorer segment

  18. What mechanisms have you put in place for meeting the standards of the dimension “balancing social and financial performance”? • Social Performance committee at both Board and Management level • Margin guidelines across products • Specialization of field-based roles • Systems provide real-time reporting, down to loan officer level via mobile devices

  19. VisionFund Cambodia has grown in the past 10 years. How did you manage and monitor the growth without compromising on client well-being? • Key performance indicators reflect social performance across MFI • Full reinvestment in portfolio • Moderate growth targets • Continued diversifying products to enhance social performance targets – loans, savings, insurance

  20. How did you ensure that profitability is intact while balancing long term sustainability and client well-being? • Ongoing process review in order to improve & reduce costs • Pricing should not mask inefficiencies • Over-indebtedness risks for both MFI and client

  21. Board members and management play a significant role in monitoring financial performance. What role did they play at VisionFund to balance social and financial performance? • Maintain Social Performance as priority at a strategic level • Set guidelines on profitability & pricing • Ensure integration with activities of World Vision and other NGO partners

  22. How do these practices benefit clients and staff? Clients: • Improved sanitation (62%) • Additional clothing, shoes for children (59%) • Child health costs covered (57%) Staff: • Concern for whole client & household, not just business • Reward & Recognition of branches with SP emphasis

  23. What is your advise for other practitioners? • Secure strategic support from Board • Processes – use technology and continuous improvement to reduce costs • Reconsider pricing levels & profitability targets

  24. Agenda • Review of Dimension 6 of the Universal Standards for SPM • Presentation by Wesley Jordan, VisionFund Cambodia • Discussion with Participants • Wrap-up

  25. Agenda • Review of Dimension 6 of the Universal Standards for SPM • Presentation by Wesley Jordan, VisionFund Cambodia • Discussion with Participants • Wrap-up

  26. Take Action: Use the Implementation Guide! • Download the guide here: http://sptf.info/spmstandards/universal-standards

  27. Take Action: Consult the Resource Center! • Visit the resource center here: http://sptf.info/resources/resource-center

  28. Where to find more information: • The Universal Standards of SPM Manual: http://sptf.info/spmstandards/universal-standards • The SPI4 social audit tool: http://cerise-spi4.squarespace.com • The presentation and recording from today’s session: http://www.sptf.info/online­trainings/universal­standards­ implementation • The SPTF Resource Center: http://www.sptf.info/resources/resource­center • The SPM Implementation Guide: http://sptf.info/spmstandards/universal-standards

  29. Thank you for your participation!

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