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The Social Return on Investment (SROI) of four microfinance projects

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  • Grazioli, Riccardo
  • Pizzo, Giampietro
  • Poletti, Lucia
  • Tagliavini, Giulio
  • Timpano, Francesco

Abstract

The paper develops an SROI (Social Return on Investment) analysis of four microfinance institutions (MFIs) located in Spain, Italy and Bosnia-Herzegovina. This work is part of the MeMI Project ("Measuring Microfinance Impact in the EU. Policy recommendations for Financial and Social Inclusion") funded by the EIBURS. It is an attemptto translate microcredit outcome indicators into a social return, quantified in monetary terms. After preliminary focus group analyses and staff interviews, data on outcomes of selected microcredit lines have been collected through a questionnaire administered to the borrowers. By comparing the monetary value of these outcomes (translated into an estimated impact) with the amount of related investment, we find that SROI is greater than 2 for all the credit lines analysed, meaning that every euro invested in microcredit generates at least 2 euros of social return. We also find SROI ranging between 2.33 and 6.97, mirroring the differences between MFIs in terms of target, operating model and country-level financial environment. Although the analysis is conducted on a limited number of cases and SROI calculation can be sharpened, it shows how different factors and outcomes drive the social return generated by microcredit.

Suggested Citation

  • Grazioli, Riccardo & Pizzo, Giampietro & Poletti, Lucia & Tagliavini, Giulio & Timpano, Francesco, 2020. "The Social Return on Investment (SROI) of four microfinance projects," EIF Working Paper Series 2020/65, European Investment Fund (EIF).
    • Handle: RePEc:zbw:eifwps:202065
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    References listed on IDEAS

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    1. Satya R. Chakravarty & Conchita D’Ambrosio, 2019. "The Measurement of Social Exclusion," Themes in Economics, in: Satya R. Chakravarty (ed.), Poverty, Social Exclusion and Stochastic Dominance, pages 167-189, Springer.
    2. Atkinson, Tony & Cantillon, Bea & Marlier, Eric & Nolan, Brian, 2002. "Social Indicators: The EU and Social Inclusion," OUP Catalogue, Oxford University Press, number 9780199253494.
    3. Domenica Federico & Maria Adele Milioli & Antonella Notte & Lucia Poletti, 2020. "Financial and Social Inclusion and Financial Sector Development: An Outline in the EU28," American Journal of Economics and Business Administration, Science Publications, vol. 12(1), pages 14-35, January.
    4. Tony Atkinson & Bea Cantillon & Eric Marlier & Brian Nolan, 2002. "Indicators for Social Inclusion," Politica economica, Società editrice il Mulino, issue 1, pages 7-28.
    5. Gloukoviezoff, Georges, 2016. "Evaluating the impact of European microfinance. The foundations," EIF Working Paper Series 2016/33, European Investment Fund (EIF).
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    1. Giulio Tagliavini & Lucia Poletti, 2020. "Microcredito e pandemia Covid-19: la necessit? di un percorso per la valutazione di impatto," QUADERNI DI ECONOMIA DEL LAVORO, FrancoAngeli Editore, vol. 2020(111), pages 237-262.
    2. Andrea Calzolari & Domenica Federico & Antonella Notte & Lucia Poletti & Giulio Tagliavini, 2023. "Microcredit Services to Reduce Vulnerabilities in Italy: An Exploratory Study Using Focus Groups," American Journal of Economics and Business Administration, Science Publications, vol. 15(1), pages 1-12, March.

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