Can’t buy me love?

Love, to most of us, is one of those things that just has no easy measure, similar to art or to happiness. Nevertheless, we insist on sizing and benchmarking it and we spend our lives trying to measure what we all really feel for one another. We might even use material things or actions – like diamonds and presents – to measure how much we love or are loved by some individual or group of people.

The standard measure for love?

Well when I first met with the Planet Rating team last week, my impression was that they were trying to achieve something as difficult as measuring love: Planet Rating was assessing Financiera El Comercio’s Social Performance.

Allow me to take a step back: Planet Rating is a French Social Impact rating agency, specialized in assessing Micro Finance Institutions (MFIs) and currently evaluating Financiera El Comercio. MFI rating agencies work similarly to ordinary rating agencies (the notorious Standard&Poors, Moodys, etc) and typically come up with a final grade based upon both quantitative (financial statements) and qualitative analysis (position in industry, management expertise, etc). No need to get into technicalities and scare away profane readers, precious and loyal so far!

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Smart Campaign -> Well-aligned with the Social Impact rating

Notwithstanding the above, the Planet Rating folks were here in Asunción just to evaluate  El Comercio’s Social Performance. And this is where it gets tricky, because Planet Rating is trying to measure “the systems and procedures implemented by MFIs to reach their social objectives” (in other words: are they contributing towards a better world?), using questions such as “is El Comercio reaching the poor or excluded?”, “is it protecting its clients?”, “is it treating its employees fairly and equally?”, and finally “is El Comercio contributing towards social change?”.  Some of these questions remind me of the “who do you love more, your daddy or your mummy?” questions that my parents would use to tease my brother and me with when we were kids. They are hard to answer, and they are even harder to measure and compare!

In any case, I am aware of the need to standardize and regulate the ever-growing industry of microfinance, and now that I have met the analysts and seen their rigorous and methodical work, I buy the idea.  The positive side effects of such ratings are clear:

a)   MFIs would be able to tap into investors that do not have time nor resources to evaluate social impact themselves as the MFI       landscape gets more crowded and complex and,

b)   Improvement of the industry by sharing best practices.

I think it is worth mentioning that Financiera El Comercio came out very well in 2011 with a solid 4- rating, which positions it among the top rated MFIs and proves its commitment to social goals – hooray!

This post is just an introduction for the discussion that follows. Readers, please share your thoughts and comment below: Can we measure love and/or social impact? What is the right way to do it?

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7 Responses to “Can’t buy me love?

  • jeffmowatt
    5 years ago

    Juan, In his work advocating a people-centered approach to economics my deceased colleague made this assertion in his core argument for his 1996 white paper.

    “Economics, and indeed human civilization, can only be measured and calibrated in terms of human beings. Everything in economics has to be adjusted for people, first, and abandoning the illusory numerical analyses that inevitably put numbers ahead of people, capitalism ahead of democracy, and degradation ahead of compassion.”

    His death, associated with his efforts to place institutionalised children in loving family homes, gave reason for me to reflect on the influences of his work, putting love and compassion into business.

    One of these was Erich Fromm

    “Love of the helpless, the poor and the stranger, are the beginning of brotherly love. To love ones flesh and blood is no achievement. The animal loves its young and cares for them. Only in the love of those who do not serve a purpose, does love begin to unfold. Compassion implies the element of knowledge and identification. “

    http://economics4humanity.wordpress.com/2012/07/17/love-in-business/

  • Andrés Ayala Rodriguez
    5 years ago

    whenever you want, I invite you to visit our customers, you’ll see the impact and take your own conclusions, it’s an experience that you have to do before you go from Py.

  • Sergio (yeyo)
    5 years ago

    Great way to put it Juan. As your note implies, the first step to make of impact investment a scalable industry (MFI’s inclusive) that achieves its full potential (truly unprecedented) in changing how social progress occurs and how we view adding value and, more importantly, adding meaning, is measuring impact and standardizing such measurement in an efficient and simple way. The gold standard, from my perspective? Well… gold! Impact monetization is the frontier of impact measurement standardization, since there is no information system as efficient and simplified or benchmark as comparable and objective as coin. If impact can be measured properly, it must be possible to be monetized and the only way to do it fully is by creating a stand-alone market for pure impact -not for the vehicles that create impact (e.g. the SME’s that reduce poverty, pollution or whatever specific impact they attribute themselves), but for the impact itself. Am I arguing for the commoditization of social impact? That’s exactly what I’m pointing at… There’s no reason to trade-off impact and profit and the widespread belief that such a trade-off is inescapable is fundamentally erroneous. Perhaps your work can further that end and will help prove that love and markets do have a space to share. I certainly hope it will!

    • Juan Rubio
      5 years ago

      Just trying to create some room for debate here, Yeyo! My post was kind of “Introduction to Impact Evaluation 1.0” and your reply was an advanced degree class, but here goes my answer: amen, hermano. My question would be: How do we monetize impact? The question is not just rhetorical, and I feel that potentially there are plenty of ways to do it, but i just dont know what way is best. For instance, in the case of MFIs impact investment is usually less profitable than regular investment, but it can attract new investors and lenders that are seeking precisely a double bottom line on their returns. But i believe your idea goes far beyond this positive side effect, and looks to set impact as an end on its own, and not just as a mean to get cheaper financing. Once again, I have to say that I love the idea. We all definitely have to work on that.

  • You can’t measure love in any way, and since love is part of social impact, you can’t measure social impact 100% accurately. But anyway you can measure it with relative high precision. You have to focus in the numbers, the rest happens by itself.
    Cheers

    • Juan Rubio
      5 years ago

      Definitely it´s all about numbers here… quantifying social impact is key! Rod, what do you think of the below comment by Yeyo? Pretty monetary approach, and probably hard to accomplish, but worthwhile considering!

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