Microfinance Initiatives: MicroRate

(offers "thin" rating)

MicroRate offers investors and interested parties a way of evaluat-ing a MFIs social performance through an independent assessment of an organization's social performance and social risk. The objective is to allow social investors an easy way to compare different types of MFIs from different regions on an objective scale in the two general areas that matter most to investors in addition to financial sustainability.

The first part of MicroRate's social rating - social performance - measures the effective translation of an institution's social mission into practice. The second part of the social rating - social risk - mea-sures the risk that the MFI deviates from its social mission and fails to produce forward looking outcomes.

MicroRate uses this analysis to assign a social rating score and a social risk score to the MFI. The social rating score ranges from "excellent" (Very good likelihood of social impact with outstanding service outreach and depth. MFIs whose operations are exceptionally well-aligned with their social mission) to "poor" (Weak likelihood of social impact with limited service outreach and depth. MFIs whose operations are poorly aligned with their social mission). The social risk score value can be high, medium, or low, representing the prob-ability of deviation from the social mission.

MicroRate has performed 3 Social Ratings in Latin America in 2007 and has plans to unroll the methodology throughout Africa in 2008.

More details available from Sebastian von Stauffenberg at sebastian@microrate.com.