The Grameen Foundation in collaboration with Oikocredit have developed a set of guidelines to help ensure a social impact of investments in microfinance worldwide. 

A statement  from Grameen Foundation stated that in 2006, over 663 million dollar had been invested into microfinance by US-based investors, much of which came from socially motivated investors looking for a “social return” as well as a financial return.                                 Measuring the size of the social return, however, has always proved more difficult than measuring its monetary counterpart, the foundation said.

The one page document containing the microfinance investment guidelines raises questions based on two basic issues: (1) Are microfinance institutions reaching poor clients; (2) Are microfinance institutions helping clients move out of poverty among other questions.

Almost all of the questions that constitute the guidelines point towards the need to assess the poverty level of MFI clients.  To address these questions, the document offers the Progress out of Poverty Index (PPI) as a poverty measurement tool.

The PPI is a MFI social performance tool developed by the Grameen Foundation, the Consultative Group to Assist the Poor (CGAP), and the Ford Foundation.  It is designed to measure the poverty level of individuals and groups through ten poverty indicators.  The indicators vary depending on the income level and characteristics of the country, but common indicators include, whether the family owns a gas stove, what the house’s outer walls are made of, what kind of toilet facility the family has, or whether the family owns a television.

A surveyor visits clients’ homes and assigns points for each indicator.  The scores are then used to derive the clients’ PPI score.  MFIs can use the PPI scores to estimate whether clients fall below the national poverty line, the USD 1 per day and/or USD 2 per day international benchmarks. 

By conducting regular surveys, changes in the poverty levels can be tracked over time.  The Grameen Foundation claims “with 90-percent confidence, estimates of groups’ overall poverty rates are accurate to within +/-2 percentage points.”

Oikocredit is a Netherlands-based international non-profit financier of MFIs, with a loan portfolio of over 300 million dollar. Oikocredit adopted the PPI in 2007, and has implemented it among investees in the Philippines and Peru.

The Grameen Foundation is a Washington DC-based non-profit organization that supports a global network of  55 MFIs with funding, technical assistance, training and new technology.

As of March 31, 2008, Grameen Foundation had 25 million dollar in total assets.  It is funded primarily by donors.  Between April 2007 and April 2008 the foundation received $16 million in grants and $3.4 million in in-kind contributions.