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Impact Monitoring of Social Finance” (November), World Bank, Washington, DC.
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Acknowledgements
This report was prepared by a World Bank team consisting of Soraya Azhar (co-
task team leader), Abayomi A. Alawode (co-task team leader), Aamir A. Rehman,
Mohamed Eskandar Rasid, and Jerome Lavigne-Delville. Valuable inputs were
provided by Rekha Reddy, Tatiana Didier, Salman Alibhai, Mohamed Rozani bin
Mohamed Osman, and peer reviewers Kamal Siblini and Bryan Gurhy. The team
worked under the overall guidance of Cecile Thioro Niang and Yasuhiko Matsuda.
The report benefited from a close partnership and extensive discussion with the
staff of Bank Negara Malaysia, particularly Nor Rafidz Nazri, Hamim Syahrum Ahmad
Mokhtar, Mohd Shah Shukree Salim, Noor Syarikin Abdul Malek, Nurhani Hazamah
Anuar, and Puteri Iffah Zulaikha Tarmizan of the Financial Inclusion Department,
and Nurul Izza Idris, Lim Qian Pink, and Faqrul Fithri Mohd Nasrudin of the Islamic
Finance Department. The team is also grateful for the useful data, and input of
Mohd Zikri Mohd Shairy of Bank Islam Malaysia Berhad, Azahary Kamarulzaman
of Bank Kerjasama Rakyat Malaysia Berhad (Bank Rakyat), Ambika Sangaran of
Mereka, and Yuet Kim Lim of PichaEats.
Production of this report was managed by Eunice Ng and her team at Good
News Resources Sdn. Bhd., based on commissioned artwork by Munsya Rahman.
Azlina Ahmad edited this report. Joshua Foong and Dina Murad led external
communications. Stella Ambrose and Minisha Mandeepal provided administrative
support at different stages of this report.
TRACKING PROGRESS:
Impact Monitoring of Social Finance | NOVEMBER 2023 5
Table of Contents
Acknowledgements ........................................................................................................................................ 5
List of Figures .............................................................................................................................................. 8
List of Tables ............................................................................................................................................... 8
Acronyms ....................................................................................................................................................... 9
Glossary of Terms ....................................................................................................................................... 11
Executive Summary ..................................................................................................................................... 12
CHAPTER 1:
Impact Monitoring, Evaluation, and Reporting: Definitions, Processes and Principles ............................. 20
1.1 Trends in Impact and Social Impact Investments................................................................................ 21
1.2 Social Finance in Malaysia................................................................................................................... 22
1.3 Definitions of Social Investment and Social Finance .......................................................................... 23
1.3.1 Social Finance Definition for Malaysian Banks........................................................................... 23
1.3.2 Social Investment Definition for Malaysian Capital Market Participants.................................... 24
1.4 Definitions of Impact Monitoring and Evaluation ............................................................................... 25
1.5 Value of Impact Monitoring and Evaluation ....................................................................................... 26
1.6 Process of Impact Monitoring, Evaluation, and Reporting ................................................................. 27
1.7 Models of Impact Monitoring of Social Finance................................................................................. 29
CHAPTER 2:
Global Applications of Impact Monitoring and Reporting ......................................................................... 30
2.1 Common Principles of Impact Monitoring and Reporting ................................................................. 31
2.1.1 Goal and Target Setting ............................................................................................................ 31
2.1.2 Impact Indicators, Monitoring, and Evaluation ......................................................................... 31
2.1.3 Indicator and Results Reporting ................................................................................................ 32
2.2 Impact Monitoring Practices in ESG Investing ................................................................................... 33
2.3 Impact Monitoring on ESG Investments by Financial Institutions and Financial Markets .................. 34
2.4 Impact Monitoring and Evaluation by International Financial Institutions ......................................... 38
2.5 Impact Monitoring in Philanthropic Organizations ............................................................................. 39
CHAPTER 3:
Case Studies of Impact Monitoring, Evaluation, and Reporting
by Global Social Finance Providers ............................................................................................................. 42
3.1 Common practices of impact monitoring, evaluation and reporting by
global social finance providers ........................................................................................................... 43
3.2 International Financial Institutions (IFIs).............................................................................................. 43
3.3 Conventional Social Finance Providers and Impact Investors............................................................. 49
3.4 Islamic Social Finance Providers.......................................................................................................... 53
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CHAPTER 4:
Impact Monitoring and Reporting of Social Finance in Malaysia............................................................... 58
4.1 Impact Monitoring and Reporting by Malaysian Social Enterprises.................................................... 59
4.2 Impact Monitoring and Reporting by Malaysian Financial Institutions (FIs)........................................ 60
4.3 Impact Monitoring and Reporting of iTEKAD Social Finance Program by Malaysian Banks.............. 61
4.4 BNM’s Guideline on Impact Measurement, Monitoring, and Reporting for
Development Financial Institutions (DFIs) .......................................................................................... 62
4.5 Case Studies on Impact Monitoring and Reporting by iTEKAD Participating Banks ........................ 63
4.6 Case Study on Impact Monitoring and Reporting by Malaysian Social Enterprises........................... 66
4.7 Comparing Impact Monitoring and Reporting Practices by Malaysian and
Global Social Finance Participants...................................................................................................... 69
4.7.1 Goal and Target Setting............................................................................................................. 69
4.7.2 Impact Indicators, Monitoring, and Evaluation.......................................................................... 70
4.7.3 Indicator and Impact Reporting................................................................................................. 71
CHAPTER 5:
Recommendations and Lessons for Malaysia ............................................................................................ 72
Appendix 1: List of iTEKAD Participating Banks and Program Features ................................................ 83
Appendix 2: Comparisons of Commonly Adopted Impact Monitoring Standards................................. 85
Appendix 3: Summary of Global Practices by Conventional Microfinance Institutions.......................... 87
Appendix 4: Summary of Global Practices by Charities .......................................................................... 88
Appendix 5: Summary of Global Practices by Conventional Impact Investors ...................................... 88
Appendix 6: Summary of Global Practices of Islamic Social Finance Providers...................................... 90
Appendix 7: List of Social Impact Indicators Monitored by Selected Malaysian Banks
and Social Enterprises........................................................................................................... 91
References.................................................................................................................................................... 93
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List of Figures
FIGURE 1.1 Forms of Finance and Funding of Surveyed Social Enterprises in 2017 23
FIGURE 1.2 Program Result Chain 25
FIGURE 1.3 Continuous Cycle of Measurement Objectives Program Result Chain 27
FIGURE 2.1 Principles for Responsible Banking 34
FIGURE 2.2 Equator Principles 35
FIGURE 2.3 IFRS S1 Disclosure of Sustainability-related Financial Information 35
FIGURE 2.4 HIPSO Indicators for Financial Intermediation 39
FIGURE 3.1 World Bank Corporate Result Indicators 44
FIGURE 3.2 IFC’s Anticipated Impact Measurement and Monitoring (AIMM) 46
FIGURE 3.3 AIMM Rating Score 47
FIGURE 4.1 Impact Monitoring by Surveyed Social Enterprises 59
FIGURE 4.2 BNM’s Illustration of the Logic Model in the PMF 63
FIGURE 4.3 BangKIT Microfinance Indicators Monitored by Bank Islam 65
FIGURE 4.4 Impact Indicators Reported by PichaEats 67
FIGURE 5.1 Roadmap for Social Finance in Malaysia 73
List of Tables
TABLE 1.1 Stages of Impact Monitoring, Evaluation, and Reporting 28
TABLE 2.1 Common Social Issues Reported by Banks and Financial Institutions 36
TABLE 2.2 Social Finance Offerings and Monitoring Methods 37
TABLE 4.1 Indicators Reported for Financing Aligned to Social Finance Objectives
by Selected Banks 60
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Acronyms
AIMM Anticipated Impact Measurement and Monitoring
ADB Asian Development Bank
ADER Annual Development Effectiveness Report, Islamic Development Bank
AICB Asian Institute of Chartered Bankers
ALNAP Active Learning Network for Accountability and Performance in Humanitarian
Action
APIF Awqaf Property Investment Fund
AUM Assets Under Management
BAZNAS Badan Zakat Nasional Indonesia
BNM Bank Negara Malaysia
BPS Central Bureau of Statistics, Indonesia
CAGR Compound Annual Growth Rate
DEG German Investment Corporation
DFI Development Financial Institutions
EP Equator Principles
ESG Environment, Social, Governance
EY Ernst & Young
FCAT FINCA Client Assessment Tool
FINCA Foundation for International Community Assistance
FMO Dutch Entrepreneurial Development Bank
FOW Future of Work
FSP Financial Service Provider
GAA General Authority of Awqaf
GIIN Global Impact Investing Network
GRI Global Reporting Initiatives
GSS Green, Social and Sustainability
HIPSO Harmonized Indicators for Private Sector Operations
IAIA International Association of Impact Assessment
ICD Islamic Corporation for the Development of the Private Sector
ICMA International Capital Market Association
ICRC International Committee of the Red Cross
IFC International Finance Corporation
IFI International Financial Institutions
IFRC International Federation of Red Cross and Red Crescent Societies, Kenya
IFRS International Financial Reporting Standards
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IRIS Impact Reporting and Investment Standards
IsDB Islamic Development Bank
ISSB International Sustainability Standards Board
KPI Key Performance Indicator
LSMS Living Standards Measurement Survey
M-CRIL Micro-Credit Ratings International Limited
MECD Ministry of Entrepreneur and Cooperatives Development
MFI Multilateral Financial Institutions
M&E Monitoring and Evaluation
NGO Non-Governmental Organization
OECD Organisation for Economic Co-operation and Development
PLI Poverty Line Index
PMF Performance Measurement Framework by BNM
PPI Poverty Probability Index or Progress Out of Poverty Index
PRI Principles for Responsible Investment
PwC PricewaterhouseCoopers
RCT Randomized Controlled Trial
RM Malaysian Ringgit
SASB Sustainability Accounting Standards Board
SC Securities Commission Malaysia
SDGs Sustainable Development Goals
SMART Specific, Measurable, Achievable, Relevant, and Time-Bound
SME Small Medium Enterprise
SPIRIT Social Performance Impact Reporting and Intelligence Tool
SL Sustainability-linked
SLB Sustainability-linked bonds
SLL Sustainability-linked loans
SPM Social Performance Management
SROI Social Return on Investment
UNDP United Nations Development Programme
UNEP United Nations Environment Programme
UNEP FI United Nations Environment Programme Finance Initiative
USSPM Universal Standards for Social Performance Management
UOP Use of Proceeds
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Glossary of Terms
Vocabulary of Impact Monitoring and Evaluation
Inputs: Resources at the disposal of the project, including staff and budget.
Impact indicator: Data on outputs and outcomes that can be used to conduct
impact evaluation.
Impact evaluation: An objective assessment of program effectiveness that uses
specialized methods such as randomized controlled trials to determine whether a
program meets its objectives, i.e. impact attributable to the program, to estimate its
net results or impact, and/or to identify whether the benefits the program generate
outweigh its costs.
Impact monitoring: A continuous process of collecting and analyzing information to
better understand how well a program is operating against expected outputs.
Monitoring and Evaluation (M&E): A process set up by impact-seeking organizations
to enhance program effectiveness, making projects accountable to the public, and
helping government better allocate budget resources.
Output: The tangible goods and services that the project activities produce; these
are directly under the control of the implementing agency.
Outcomes: Results likely to be achieved once the beneficiary population uses the
project outputs; these are usually achieved in the short to medium term and are
usually not directly under the control of the implementing agency.
Vocabulary of Islamic Finance
Asnaf: Zakat beneficiaries that include the hardcore poor and destitute, the poor,
and the oppressed Muslims
Maqasid: Intent, objective, and purpose of public good to create harmony for welfare
of the society.
Awqaf or Waqf: Assets that are donated, bequeathed, or purchased to be held in
perpetual trust for general or specific charitable causes that are socially beneficial.
Sadaqah: Recommended contributions.
Qard hassan: Benevolent loan free of any charge.
Zakat: An obligatory financial contribution disbursed to specified recipients that is
prescribed by the Shariah for those who possess a minimum amount of wealth that is
maintained in their possession for one lunar year.
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Executive
Summary
Overview
In recent years, the concept of social finance has gained prominence in Malaysia’s policy and financial
circles, particularly with respect to providing support to the underprivileged. Bank Negara Malaysia (BNM)
has defined social finance as all financial services that mobilize philanthropic capital using instruments such
as donations, endowments (including cash waqf ), or alms (zakat) to deliver tangible social outcomes.1 The
interest in social finance became even more acute in the wake of the COVID-19 pandemic, which impacted
millions of vulnerable people. Indeed, BNM has included social finance in its Financial Sector Blueprint
2022-2026, and its long-term vision is for social finance to become an integral component of the overall
financial system particularly the Islamic finance system.2
This report provides an overview of global good practices and provide specific recommendations for
Malaysia to develop the necessary architecture for disclosure of social finance and impact monitoring
by banks, insurance companies and other financial institutions (FIs). 3 This report also examines key issues
and opportunities related to impact monitoring and reporting of social finance in Malaysia, and aims to
provide guidance to Malaysian FIs through self-benchmarking vis-à-vis global good practices to improve the
outcomes from their social finance projects.
The report is structured as follows: Chapter 1 presents an overview of global and local trends in impact and
social impact investing, definitions of social finance, and the concepts of impact monitoring and evaluation.
Chapter 2 explores the common principles of impact monitoring, evaluation and disclosure established
by international standard-setting bodies and applications by Environment, Social, Governance (ESG) and
impact investors. Chapter 3 presents case studies on impact monitoring, evaluation and reporting by global
social finance entities and impact investors. Chapter 4 examines the current practices and challenges of
impact monitoring and reporting in Malaysia. Finally, Chapter 5 offers recommendations to policymakers to
enhance the Malaysian social finance and impact monitoring framework and tools.
1 This definition can be broadened to include all financial flows that directly or indirectly create a social impact. It differs from impact investing
as social finance in Malaysia does not focus on environmental impact. In addition, impact investing does not typically include donor and
philanthropic funding. See Bank Negara Malaysia. (2021, March 31). Annual Report 2020. p. 38.
2 Bank Negara Malaysia. (2022, March 30). Annual Report 2021. p. 33, 43, 47, 50.
3 This report is the outcome of a technical assistance request by BNM.
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Executive Summary
Trends in Social Finance and Impact Investing
Social finance can play a catalytic role in channeling resources to address social challenges, thus
complementing government funding and programs. The social finance ecosystem includes funding from
donors (typically in the form of grants), impact investments, venture philanthropy, and strategic philanthropy
for social enterprises and underserved communities. Social finance providers aim at achieving social and
environmental impact with some providers expecting financial returns from their investments.
The global social finance and impact investing marketspace is large and rapidly growing. The Global
Impact Investing Network (GIIN) estimates that the assets under management (AUM) of global impact
investing was almost US$1.2 trillion as of December 2021.4
The Malaysian social finance ecosystem is still at an early stage of development, despite significant
investment opportunities. Malaysian FIs have expanded social finance offerings to, and adopted, a blended
social finance (i.e. blend of donations, social impact investment, zakat, cash waqf and microfinance facilities)
approach over the last decade.5 One notable example is the iTEKAD social finance program offered by 12 FIs
(see Appendix 1) which grew significantly to RM9.8 million in 2022 from RM0.8 million in 2021 and benefited
more than 3,000 microentrepreneurs in May 2023.6 In August 2023, Prime Minister and Minister of Finance,
Dato’ Seri Anwar Ibrahim announced an increase of the Ministry of Finance’s iTEKAD fund allocation from
RM4 million to RM10 million in 2023 and RM25 million in 2024 to help scale up the iTEKAD social finance to
support the government’s MADANI policy to eliminate hardcore poverty and reduce the income gap.7,8
The findings and recommendations of this study are aligned with those of the Malaysia’s Ministry
of Entrepreneur and Cooperatives Development (MECD) Social Entrepreneurship Blueprint 2030.
Recommendations of this study supports some of the key objectives of the blueprint, such as mainstream
and elevate impact reporting practices by social enterprises to increase visibility and access to funds.
Concept of Impact Monitoring and Evaluation
Impact monitoring and evaluation are important tools for social enterprises, beneficiaries, investors,
and authorities to plan, monitor, prioritize, and make decisions on the use of limited resources to ensure
scalability and sustainability of the social program. The World Bank defines impact monitoring as a
continuous process that tracks inputs, activities, outputs, and occasionally, outcomes to inform program
implementation and day-to-day management and decision.9 Impact evaluation is defined as periodic,
objective assessments of a planned, ongoing, or completed projects or policies focused on specific
questions related to design, implementation, and results.10 Impact evaluation typically focuses on whether
there are material changes to the beneficiaries. Guided by the theory of change, impact evaluation includes
collection of data on outputs and outcomes based on inputs and activities within the program.11
4 Hand, D. Ringel, B. Danel, A. (2022) Sizing the Impact Investing Market: 2022. The Global Impact Investing Network (GIIN).
5 Bank Negara Malaysia. (2022, January 24). Financial Sector Blueprint 2022-2026.
6 Bank Negara Malaysia. (n.d.). Social Finance. Accessed on October 19, 2023 https://www.bnm.gov.my/social-finance
7 Malay Mail. (August 22, 2023). Govt to boost iTekad grant allocation by RM6m to assist micro entrepreneurs, says PM Anwar. https://www.
malaymail.com/news/malaysia/2023/08/22/govt-to-boost-itekad-grant-allocation-by-rm6m-to-assist-micro-entrepreneurs-says-pm-anwar/86531
8 Ministry of Finance. (2023). Belanjawan 2024 Malaysia Madani. https://belanjawan.mof.gov.my/en/
9 Gertler et al. (2016). Impact Evaluation in Practice. Second Edition. The World Bank. p. 7.
10 Ibid.
11 Theory of change describes the causal logic of how and why a particular program, program modality, or design innovation will reach its intended
outcomes. See Gertler et al. (2016). Impact Evaluation in Practice. Second Edition. The World Bank.
TRACKING PROGRESS:
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Executive Summary
Several international organizations and impact investing organizations have developed impact
monitoring framework and disclosure standards to guide and standardize impact monitoring, evaluation,
and reporting. Examples of these standards are Principles for Responsible Banking by the United Nations
Environment Programme Finance Initiative (UNEP FI), Universal Standards for Social and Environmental
Performance Management (USSPM), the Equator Principles, the Sustainability Accounting Standards Board
(SASB) Standards, GIIN’s Impact Measurement and Management System (IRIS+), Global Reporting Initiative
(GRI) Standards. In addition, impact evaluation frameworks have been developed and more commonly
implemented by international financial institutions (IFIs) such as the World Bank, International Finance
Corporation (IFC), and Asian Development Bank (ADB) to promote accountability and ensure evidence-
based policy making.
Common principles of international standards on impact monitoring, evaluation, and reporting established
by the above organizations are:
• Establishment of targets on outcomes of programs.
• Frequent monitoring of outputs and outcomes of programs based on selected metrics or indicators.
• Impact evaluation conducted to evaluate the direct impact of policy or program through comparisons
with counterfactual outcomes.
• Publication of annual reports on the activities and impact of the programs to facilitate decision-
making and benchmarking by investors and other stakeholders.
• Impact monitoring and evaluation should be independently validated to prevent “impact washing.”
• Impact reports act as an important tool for learning and feedback. Programs can be enhanced to
ensure better value for money and better impact to target beneficiaries, or paused or even cancelled
if targets are not achieved.
Global Practices of Impact Monitoring, Evaluation,
and Reporting
Globally, impact monitoring, evaluation, and reporting are widely practiced among several categories of
institutions—more so than is currently prevalent in Malaysia. This report reviews the practices of impact
monitoring, evaluation, and reporting by three types of institutions. First, the report analyzed the impact
monitoring and evaluation methodologies of international financial institutions specifically the World Bank,
the IFC, ADB, Islamic Development Bank, and Islamic Corporation for the Development of the Private Sector.
Second, this report examines the practices by a number of impact investors and microfinance institutions—
specifically, BlueOrchard Finance Ltd, Leapfrog Investment, the International Red Cross and Red Crescent
Movement, VisionFund, FINCA International, Grameen Bank, Opportunity International, Triodos Investment
Management, and Nuveen. Third, this report also reviews the practices of Islamic social finance providers
specifically Akhuwat Islamic Microfinance, the General Authority Awqaf, and Badan Zakat Nasional.
Among the institutions, common themes emerged in their impact monitoring of impact investments and
social finance. The analyzed institutions tend to combine established international standards on impact
monitoring, such as USSPM, IRIS+, and GRI, with customized tools. However, the practices of each institution
differ in terms of their scope, implementation methods, and resource requirements, based on their specific
needs, program objective, and client-segment.
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Executive Summary
Practice of Impact Monitoring, Evaluation, and
Reporting in Malaysia
The practice of impact monitoring and evaluation of social finance in Malaysia lags behind global
practices. Among FIs, iTEKAD participating banks monitor the outcome indicators but there is limited
disclosure of results. No impact evaluation has been conducted by authorities, FIs and social enterprises to
assess the effectiveness of social finance programs. The monitoring and reporting of outcome indicators
by iTEKAD participating banks are guided by BNM’s reporting requirement which focuses on business
growth, employment, financial resilience, and digital upskilling.12 Impact evaluations are not conducted by
iTEKAD participating banks as they are a costly exercise, particularly for social finance programs that focus
on financial inclusion and capacity building rather than financial returns.
Similarly, patterns on impact monitoring emerge for social enterprises. A survey conducted by the British
Council in 2017 found that more than 60% of surveyed social enterprises in Malaysia monitored their social
impact based on metrics set by funders and support organizations.13 However, there was limited capacity
to conduct impact monitoring and there was lack of standardized approach among funders and support
organizations.14 Sample analysis of two social enterprises found that impact monitoring was conducted but
most social enterprises only reported it to the funders as a condition for support.
Recommendations to improve impact monitoring,
evaluation, and reporting of social finance in Malaysia
The table below summarizes the key recommendations for policymakers in Malaysia, specifically BNM,
MECD, Zakat authorities, and state governments, as well as financial institutions that emerge from the
assessment in this report. In pursuing the practical application of these elements, policymakers must be
careful to balance the costs and benefits.
12 BNM. (2023). Annual Report 2022. p. 39
13 The British Council. (2018). The State of Social Enterprise in Malaysia 2018. p. 68.
14 Ibid.
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Executive Summary
Summary of Recommendations for Stakeholders in Malaysia
Recommendations Description Stakeholders to Implement Timeframe
Clarify the principles Social finance can be further Financial regulators and Short term
of social finance in clarified and adopt the Maqasid MECD
Malaysia. principles, which refers to the
intent, objective, and purpose of
public good to create harmony
for the welfare of the society.15
The principles should include
the prevention of harm and
exploitation of any individual and
the society, as well as transparency
in revenue sources.
Identify the impact Identify specific impact domains Financial regulators and Short term
domains for social on what social finance aims to MECD
finance in Malaysia. address to ensure that resources
and efforts can be prioritized
effectively. Impact domains can
be established based on most
pressing issues or regulators’
priorities such as building the
capacity of micro-entrepreneurs
and digitizing micro and SMEs
operations.
Consult stakeholders Obtain buy-in and feedback on Financial regulators, MECD, Short term
and beneficiaries on the initiatives from social finance financial institutions,
the development participants (FIs, funders, and social finance providers/
of a social finance beneficiaries) which are key to investors, beneficiaries,
framework and the successful implementation of Zakat authorities, and state
proposed impact strategies to mainstream social governments.
reporting guidelines. finance and social finance impact
monitoring and reporting in
Malaysia.
15 Institute of Islamic Banking and Insurance. (n.d.). Maqasid Al-Shariah. Accessed on June 17, 2023 https://www.islamic-banking.com/moral-oath/
maqasid-al-shariah
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Executive Summary
Recommendations Description Stakeholders to Implement Timeframe
Improve structural Regulatory Environment — Financial regulators and Short term
support for social Create a regulatory environment MECD.
finance. that is conducive for social
finance to foster continuation,
scaling up, and enhancements
to the impact monitoring
and reporting practices. This
includes requirements for annual
publication of social impact reports
by social finance providers and
recipients.
Institutional Structure — Financial regulators and Short term
Develop a social finance MECD.
governance framework for the
financial industry to define the
roles and responsibilities of
various stakeholders engaged
in the process of social impact
monitoring and evaluation.
Human Capital Development — Financial regulators, MECD, Short and
Cultivate technical capability to and financial institutions. medium
conduct impact monitoring and term
evaluation through comprehensive
and esteemed training programs
that offer certification in impact
monitoring and evaluation.
Technological Infrastructure — Financial regulators, MECD, Long term
Establish a centralized database Zakat authorities, and state
for FIs and implementation governments.
partners to report the social
finance impact indicators
and outcomes to regulators.
Reporting to this database can
generate comprehensive data
and information that can be
consolidated to aid regulators to
effectively monitor the trajectory
of social finance within the country
and evaluate its overall impact.
TRACKING PROGRESS:
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Executive Summary
Recommendations Description Stakeholders to Implement Timeframe
Provide guidance for Develop a guideline for impact Financial regulators and Short term
the financial industry monitoring of social finance MECD.
on impact monitoring to facilitate more effective
and reporting of target setting, data collection,
social finance and monitoring, and impact monitoring
assess the impact methodology amongst FIs.
of social finance
programs.
To ensure consistent and Financial regulators and Short term
transparent reporting of social MECD.
impact, develop a standardized
impact reporting framework for
the industry.
Encourage independent Financial institutions and Medium
validation of impact reports financial service providers. term
to ensure an unbiased view of
the social finance program and
prevent impact washing.
Establish a rating system Financial regulators and Long term
to assess and compare the MECD.
performance of social finance
programs based on their social
impact outcomes.
Customize Conduct institution-centered, Financial regulators and Medium
social finance recipient-centered and funding Islamic FIs. term
framework and source gap analysis on application
impact monitoring, of conventional social impact
evaluation, and monitoring frameworks by Islamic
reporting guidelines FIs offering social finance to ensure
for Islamic financial that the unique attributes of
institutions (Islamic Islamic FIs and Shariah standards
FIs). are addressed. The analysis can
facilitate identification of KPIs,
impact indicators and outcomes
relevant to Islamic social finance.
18 Impact Monitoring of Social Finance | NOVEMBER 2023
TRACKING PROGRESS:
CHAPTER 1
Impact Monitoring,
Evaluation, and Reporting:
Definitions, Processes
and Principles
20 Impact Monitoring of Social Finance | NOVEMBER 2023
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CHAPTER 1: Impact Monitoring, Evaluation, and Reporting: Definitions, Processes and Principles
1.1 Trends in Impact and Social Impact
Investments
Impact investment is a rapidly growing phenomenon worldwide, driven by the need to address pressing
global challenges such as environmental degradation, inequality, and urbanization. While initially intended
as a means to complement the efforts of government or authority to meet societal demands, the complexity
of these challenges requires a coordinated and structured framework to make a positive contribution to
social and environmental impact. Impact investors make investment decisions based on their expectations
of the social and environmental impact, on top of financial returns. Thus, the growth of impact investing has
augmented the need to develop mechanisms to establish evidence on the contribution of their investments
to social and environmental impacts. A key driver of impact investment is the ESG segment where market
participants are willing to pay a premium on positive social change by requiring both financial returns and
moral values in their investment decisions.
The ESG segment is large and growing rapidly. The consulting firm PwC conducted a survey of 250
institutional investors and wealth managers that together account for approximately 50% of global AUM
in 2022.16 The ensuing study estimates that, in the base case, the share of global AUM (debt and equity)
managed according to ESG principles will expand from 14.4% in 2021 to 21.5% in 2026, at which time ESG-
managed assets would amount to almost US$34 trillion, having grown at a five-year Compound Annual
Growth Rate (CAGR) of 12.9%.17 The study has a low-case forecast of over US$24 trillion, still over one-sixth
of global AUM, and a best-case forecast of almost US$48 trillion, representing nearly 30% of global AUM.
Under any scenario, these are significant sums and market shares.18
ESG investors that positively screen for social impact are deemed “impact investors.” The impact
investment industry, though nascent in comparison to the broader ESG sector and in less widespread use
than the negative screening approach, is growing rapidly. One estimate for the amount of assets managed
under positive screening guidelines was US$1.8 trillion in 2018.19 Another estimate of the “impact investing”
market size was produced by the Global Impact Investing Network (GIIN), a nonprofit organization based in
New York that aims to increase the prevalence of impact investing which estimates that global impact investing
AUM was almost US$1.2 trillion as of December 2021.20 This figure was dominated by Europe, with over half of
impact AUM, and the U.S. and Canada, with 37%.21 For an organization to be considered to practice impact
investing for purposes of the GIIN’s estimate it must “attest to clear intent to create positive environmental or
social impact, actively measure the impact results of their investments, and seek a financial return.”22
A broad range of investors practice impact investing, but average allocations remain small. The range
of impact investors included in the GIIN analysis includes fund managers, foundations, development finance
institutions, diversified financial institutions (including banks), family offices, pension and retirement funds, and
other market participants. In its examination of 1,289 organizations practicing impact investing, the GIIN found
the average investment portfolio to have impact AUM of US$485 million, while the median figure was US$62.5
million.23 The GIIN concluded that 34 outlier organizations had a significant amount of impact AUM, averaging
over US$10 billion each, which skewed the average upward, and that most of the organizations studied had
16 PwC. (2022). Asset and Wealth Management Revolution 2022. Exponential Expectations for ESG.
17 Ibid.
18 Ibid.
19 Principles for Responsible Investing. (May 29, 2020). Introductory Guides to Responsible Investment.
20 Hand, D., Ringel, B., Danel, A. (2022) Sizing the Impact Investing Market: 2022. The Global Impact Investing Network (GIIN). New York.
21 Ibid.
22 Ibid.
23 Ibid.
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CHAPTER 1: Impact Monitoring, Evaluation, and Reporting: Definitions, Processes and Principles
a small allocation to impact investing strategies.24 This data suggests that the impact investing industry has
considerable scope for growth within existing organizations that have small allocations to impact strategies, in
addition to potential adoption of impact investing by organizations that do not currently practice it.
1.2 Social Finance in Malaysia
Social Finance is a growing activity in Malaysia. BNM reports that several financial institutions have
expanded social finance offerings and adopted a blended social finance approach (i.e. blend of donations,
social impact investment, zakat, cash waqf and microfinance facilities) over the last decade. 25 In the
Financial Sector Blueprint 2022-2026, BNM envisions elevating social finance as part of the Islamic finance
ecosystem. One notable example is the iTEKAD social finance program offered by 12 FIs (see Appendix
1). In 2022, social finance mobilized through iTEKAD grew significantly to RM9.8 million from RM0.8 million
in 2021 which benefited more than 3,000 microentrepreneurs in May 2023.26 In August 2023, the Prime
Minister and Minister of Finance, Dato’ Seri Anwar Ibrahim increased the Ministry of Finance’s iTEKAD fund
allocation from RM4 million to RM10 million in 2023 and RM25 million in 2024 to help scale up the iTEKAD
social finance to support the government’s MADANI policy to eliminate hardcore poverty and reduce the
income gap.27, 28
The SC has also developed taxonomy and guidelines on social investing to support the advancement of
social finance under the Islamic finance agenda. In terms of social finance opportunities, an SDG report on
Malaysia by Standard Chartered highlighted investment opportunities of US$3.9 billion to provide greater
access to clean water and sanitation, US$14.7 billion to maintain digital access, and US$73.7 billion to
significantly improve transport infrastructure by 2030.29
The need for social finance in Malaysia has expanded with the establishment of the Malaysia Social
Entrepreneurship Blueprint 2030 developed by MECD. The ministry has defined social enterprise as “a
registered entity under a written law in Malaysia, purpose-driven and has a financially viable business model
that addresses social and/or environmental challenges, aiming to achieve positive impacts to its beneficiaries
and the economy.”30 Under MECD’s Social Enterprise Accreditation program, there are 414 registered social
enterprises and 48 accredited social enterprises as of December 2021 but the actual number could be
higher. 31
In 2018, the British Council estimated that there were 20,749 firms that could qualify as social enterprises
in Malaysia comprising micro and SMEs (0.8%), cooperatives (79%), and NGOs (3.47%). 32 These social
enterprises were mainly funded through personal funds, donations, and grants.33 Less than 10% of surveyed
social enterprises received funding through bank financing.34 Figure 1.1 below illustrates the sources of
funding received by social enterprises in 2017. However, there is a growing trend of social financing by
24 Ibid.
25 Bank Negara Malaysia. (2022, January 24). Financial Sector Blueprint 2022-2026.
26 Bank Negara Malaysia. (n.d.). Social Finance. Accessed on October 19, 2023 https://www.bnm.gov.my/social-finance
27 Malay Mail. (August 22, 2023). Govt to boost iTekad grant allocation by RM6m to assist micro entrepreneurs, says PM Anwar. https://www.malaymail.
com/news/malaysia/2023/08/22/govt-to-boost-itekad-grant-allocation-by-rm6m-to-assist-micro-entrepreneurs-says-pm-anwar/86531
28 Ministry of Finance. (2023). Belanjawan 2024 Malaysia Madani. https://belanjawan.mof.gov.my/en/
29 Standard Chartered. (2020, January 16). Opportunity 2030: The Standard Chartered SDG Investment Map.
30 Ministry of Entrepreneur and Cooperatives Development. (2022, April 23). Malaysia Social Entrepreneurship Blueprint 2030.
31 Ibid.
32 The British Council. (2018). The State of Social Enterprise in Malaysia 2018.
33 Ibid.
34 Ibid.
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banks such as the iTEKAD program, Bank Islam’s BangKIT microfinance, and Bank Rakyat’s Entrepreneurship
Leadership Series. Some insurance companies have established impact investment funds for social
enterprises such as Allianz Group’s Investment Ready Program and Etiqa Insurance’s Accelerator Program.
MECD has identified strategies to improve access to financial support for social enterprises including private
financing such as microfinancing schemes, alternative financing, and impact investments.35 This reinforces
the need to expand social finance by financial institutions in Malaysia.
FIGURE 1.1
Forms of Finance and Funding of Surveyed Social Enterprises in 2017
Bootstrapping (pitching in)
Donation
Grants from foundations
Grants from government
None
39% 32% In-kind resources
26% 25% 21% 19%
Equity or equity-like investment
Concessional loans (loans with below-market
interest rates, including from friends and family)
Commercial loan (market interest rate loans)
Overdraft
Mortgage 0% 1% 3% 5% 9%
Source: British Council. (2018). The State of Social Enterprises in Malaysia 2018.
1.3 Definitions of Social Investment and
Social Finance
“Impact investing” is defined as a broad range of investments that deliver social, environmental, and financial
returns.36 Impact investing, which includes social impact investments and social finance is intended to offer
social organizations access to suitable financing to deliver positive impact to the society and the environment.
1.3.1 Social Finance Definition for Malaysian Banks
In Malaysia, financial institutions are guided by BNM’s definition of social finance. BNM has defined social
finance as all financial services that mobilize philanthropic capital using instruments such as donations,
endowments (including cash waqf ), or alms (zakat) to deliver tangible social outcomes.37 It differs from
35 Ministry of Entrepreneur and Cooperatives Development. (2022, April 23). Malaysia Social Entrepreneurship Blueprint 2030
36 Murray, S. and Arrillaga-Andreessen, L. (2017, February 16). The Rockefeller Foundation: Innovations in Social Finance. Stanford Graduate School of
Business.
37 Bank Negara Malaysia. (2021, March 31). Annual Report 2020. p. 38
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CHAPTER 1: Impact Monitoring, Evaluation, and Reporting: Definitions, Processes and Principles
impact investing as social finance in Malaysia focuses on social impact, not including environmental impact.
In addition, impact investing does not typically include donor and philanthropic funding. Thus, this report
will focus on social impact monitoring and reporting. BNM’s iTEKAD social finance pilot program consists
of the following elements:
i. Flexible instruments that offer repayment terms with minimal or no financing cost. There may even
be no repayment obligations if it is funded by donations or zakat. Source of funds may be a blend
of philanthropic capital (for example donations, endowment, alms, CSR funds, government grants),
social impact investments, and financing facilities such as the iTEKAD program;
ii. Funding is supplemented with structured programs by implementation partners to upskill
beneficiaries in financial management, business acumen, digital capabilities, and other key areas;
and
iii. Integrates a “pay-it-forward” mechanism where past beneficiaries provide mentoring support for
current beneficiaries.
Since 2020, several Islamic financial institutions have been participating in BNM’s iTEKAD social finance pilot
program. The iTEKAD is a social finance pilot program providing beneficiaries with capital funds through
microfinance, social impact investment, donations, zakat or waqf, and structured training to upskill their
financial and business acumen.38 A list of participating banks, funding features, value-added propositions,
and target beneficiaries is outlined in Appendix 1.
Prior to the launch of iTEKAD, a small number of banks such as Bank Islam and Bank Rakyat have developed
their own social finance programs, which are now part of the iTEKAD program. Other banks use the term social
finance in their Sustainability Reports for Corporate Socially Responsible (CSR) activities such as donations to
non-government organizations (NGOs) to improve the well-being of low-income and underprivileged groups
in education, health, food, or sanitation.
1.3.2 Social Investment Definition for Malaysian Capital Market Participants
The Malaysian capital market is mainly guided by Securities Commission (SC)’s definition of social investments
in its Sustainable and Responsible Investment (SRI) taxonomy.39 Social investment is defined as an economic
activity that meets the following criteria:
i. Substantially contribute to at least one of the social objectives, i.e. enhanced conduct towards
workers, enhanced conduct towards consumers and end-users, and/or enhanced conduct towards
affected communities and wider society; and
ii. Does not cause significant harm to any of the other social objectives.
The SC also outlines more detailed criteria and procedures for the classification of socially responsible
economic activities to promote growth and greater transparency on social investments by Malaysian capital
market participants. The adoption of the guideline is voluntary and aims to improve the standardization and
comparability of sustainable investment assets in the Malaysian capital market.
38 Bank Negara Malaysia. Social Finance. Accessed June 2, 2023. https://www.bnm.gov.my/social-finance
39 Securities Commission. (2022, December 12). Principles-Based Sustainable and Responsible Investment Taxonomy for the Malaysian Capital Market.
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1.4 Definitions of Impact Monitoring and
Evaluation
The World Bank provides definitions of “monitoring” and “impact evaluation” which are helpful to contrast
and understand the concepts involved. The World Bank defines monitoring is a continuous process of
collecting and analyzing information to better understand how well a program is operating against expected
outputs.40 Impact evaluation is an objective assessment of program effectiveness that uses specialized
methods to determine whether a program meets its objectives, to estimate its net results or impact, and/
or to identify whether the benefits the program generates outweigh its costs.41 Monitoring and Evaluation
(M&E) is defined as a process set up by impact-seeking organizations to “enhance program effectiveness,
making projects accountable to the public, and helping government better allocate budget resources.”42
The theory of change and results framework help to identify the causal links of the program through a
results chain consisting of inputs, activities, outputs, outcomes, and impact (final outcomes) (see Figure
1.2). Inputs, outputs, and expected outcomes are expressed and reported using specific indicators so that
progress and results can be tracked.
FIGURE 1.2
Program Result Chain
Implementation Results
Inputs Activities Outputs Outcomes Impacts (Final
outcomes)
• Financial, • Actions • Products • Use of • The nal
human, taken or resulting outputs by objective of
and other work from targeted the
resources performed converting population. program.
mobilized to convert inputs into
• Long-term
to inputs into tangible
goals
support speci c outputs.
activities. outputs.
Source: Gertler et al. (2016). Impact Evaluation in Practice. Second Edition. World Bank, and author’s illustration.
A well-recognized definition also comes from the International Association of Impact Assessment (IAIA)43
which defines impact assessment or evaluation as “the process of identifying the future consequences
of a current or proposed action” and defines impact as “the difference between what would happen
with the action and what would happen without it.”44 The IAIA notes that impact monitoring has roots
in environmental legislation, where the impact of a proposed policy or project on such factors as air and
water quality would be examined. In more contemporary usage, the “environment” relevant to impact
monitoring more broadly includes the cultural and socioeconomic components of human societies residing
40 Gertler et al. (2016). Impact Evaluation in Practice. Second Edition. World Bank. 7.
41 Ibid.
42 Ibid.
43 The IAIA is a global, multidisciplinary network of 1100 members from 110 nations dedicated to identifying, developing, and disseminating best
practices in the field of impact monitoring, with a goal of improving global sustainability.
44 IAIA. (n.d.) What Is Impact Assessment?. https://www.iaia.org/uploads/pdf/What_is_IA_web.pdf.
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CHAPTER 1: Impact Monitoring, Evaluation, and Reporting: Definitions, Processes and Principles
in the natural environment. Since impact monitoring can consider a broad range of consequences and
outcomes on the social, economic, and physical environment, the term “total environment” has been used
to capture the breadth of impacts that can be measured when conceiving, undertaking, or assessing a
proposed course of action and its alternatives.45
This definition means that we can identify the use of monitoring and evaluation in a wide variety of
settings, especially in segments that are directly relevant to social finance, such as ESG (environment,
social, and governance) investment, development finance, and philanthropic grantmaking. Other segments,
such as government policy making, urban and rural planning, real estate development and construction,
and private investments can also incorporate this concept into their activities. In addition, impact monitoring
and evaluation is a field of study in many colleges and universities, several academic journals are devoted
to the topic, and there exist professional accreditation bodies such as Institute of Development Studies, the
Evaluators Institute at Claremont Graduate University, and European Evaluation Society for competency in
impact evaluation methods.
1.5 Value of Impact Monitoring and
Evaluation
Impact monitoring and evaluation are important tools in social finance (and impact investment more
broadly) for reporting, ensuring accountability, and approving financing. Impact monitoring and evaluation
also provide useful learning and feedback loops to ensure value for money of programs, and ensuring right
beneficiaries are targeted. Impact monitoring and evaluation are not only used to secure additional funding
but also to make appropriate and timely changes or cancellation of programs. It is part of an overall system
to provide evidence for decision making. Impact evaluations can also be of great value to the government
in deciding where to invest, what policy changes to undertake, and where to partner with others.
Impact monitoring and evaluation are also important tools that can be used to assess the success of
a pilot that can be replicated or scaled up in the future, though it can’t always be generalized for other
programs. This is especially true for social impact financing where many new approaches and programs are
being tested for the first time, or investors are possibly approaching beneficiaries for the first time, among
other reasons. Before the impact of a program is evaluated, assessment on evaluability needs to be done to
ensure no excess of impact evaluations, and ensure that they are more valuable when evaluations take place.
It is important to note that although impact evaluation is not always necessary as it is resource intensive,
program results can be obtained through regular monitoring of indicators and targets to gauge the direction
of the program. Impact evaluations can be conducted for similar programs to show the different pathways
to achieve the same impact.
45 Ibid.
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1.6 Process of Impact Monitoring,
Evaluation, and Reporting
A 2015 study46 of practices and methodologies used by established impact investors to measure the social
impact of investments found four key assessment objectives:
1. Estimating impact : Conducting due diligence pre-investment.
2. Planning impact : Deriving metrics and data collection methods to monitor impact.
3. Monitoring impact : Measuring and analyzing impact to ensure mission alignment and performance.
4. Evaluating impact : Understanding post-investment social impact of an intervention or investment.
These objectives feed into one another, as described in Figure 1.3 below:
FIGURE 1.3
Continuous Cycle of Measurement Objectives Program Result Chain
1 Estimating Impact
for due diligence
4 Evaluating Impact 2 Planning Impact
to prove social value through strategy
3 Monitoring Impact
to improve program
Source: So, I., Staskevicius, A. (2015). Measuring the “impact” in impact investing. Harvard Business School.
Impact monitoring, evaluation, and reporting takes place in four core stages: i) the identification of the
impacts that are sought or that will be measured; ii) the selection of metrics to gauge impact; iii) the
application of these metrics in monitoring and reporting; and iv) a feedback loop whereby monitoring of
results affect future actions. Table 1.1 below presents these stages.
46 So, I., Staskevicius, A. (2015). Measuring the “impact” in impact investing. Harvard Business School.
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CHAPTER 1: Impact Monitoring, Evaluation, and Reporting: Definitions, Processes and Principles
TABLE 1.1
Stages of Impact Monitoring, Evaluation, and Reporting
Stage Key Questions Illustrative Examples
Impact What positive change do we We seek to enhance the livelihood of agricultural
identification intend to enable? business owners in three specific villages.
What population do we intend
to serve?
Metrics selection How will we measure the We will measure the number of business owners
outcomes? supported and the change in their monthly
income over the three years from the inception
Over what period of time will of the project.
measurement occur?
Monitoring and How will relevant data be Through bank and local farmer’s market data
reporting collected? and interviews with recipients, we found that
the project supported 400 business owners and
What results were achieved? increased their monthly income by an average of
US$60.
Feedback loop How will the impact inform The impact achieved gives us confidence to scale
future action? the project to ten more villages over the next
two years. We also found aspects of the existing
program that could be improved.
Source: World Bank analysis based on impact monitoring and evaluation frameworks across sectors.
Effective impact evaluation minimizes, if not completely removes, adverse impacts of interventions.
Impact evaluation should also be used to assess risks associated with certain programs, how they were
mitigated, and what harm could come through in certain programs. Results should be assessed beyond
indicators monitored. Feedback loops should also provide avenue for grievance mechanisms where
those who are unfairly affected by a program can submit complaints. This could be a good balancing
aspect to impact evaluations that are focused on reporting and would only focus on positive results defined
by a couple of indicators.
The impact monitoring, evaluation, and reporting process is often guided by globally established
principles and frameworks (see Appendix 1). The role of these principles and frameworks is to conceptually
articulate the desired outcomes. This is an essential first step before identifying specific metrics. In addition,
the public nature of such global frameworks facilitates their adoption by a variety of impact investors, which
in turn allows for meaningful comparisons between various investors of the impacts achieved.
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1.7 Models of Impact Monitoring of Social
Finance
If we look specifically at impact monitoring in the realm of social finance, two main models are typically
applied:
1. Direct models: These include frameworks which enable a comprehensive measure of results at
entity or project level. This model is highly customized and involve direct assessment of results
and a more deterministic approach to impact, including having a unique sustainable development
agenda and strategic allocation of funds to impact areas. This model is very resource intensive to
develop and implement, and therefore, is more appropriate for financial institutions dedicated to
social finance (impact investors, multilateral DFIs, foundations).
2. Indirect models: These are typically used at the market level for impact monitoring and include
standards for social finance products, taxonomies and ESG reporting frameworks. These are “off-
the-shelf” solutions that can be used without a dedicated internal impact management capability
since they are based on pre-established impact monitoring frameworks (standards, taxonomies,
reporting guidance). This approach is less deterministic in terms of development objectives (may not
be allowed) and allocated funds, instead relying on standards development goals (e.g., SDGs, Paris
Agreement).
Regardless of the approach, all frameworks for impact monitoring have the following common elements:
1. Impact thesis (theory of change) and strategic priorities (ex-ante);
2. Setting goals, targets, and KPIs to track progress;
3. Monitoring and measuring progress; and
4. Reporting and verification (ex-post).
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CHAPTER 2: Global Applications of Impact Monitoring and Reporting
CHAPTER 2
Global Applications
of Impact Monitoring
and Reporting
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CHAPTER 2: Global Applications of Impact Monitoring and Reporting
This chapter explores the common principles of international standards on impact monitoring and reporting,
and practices by investors, which includes ESG investors, FIs, IFIs and philanthropic organizations (see
Appendix 2 on comparisons of commonly adopted impact standards).
2.1 Common Principles of Impact
Monitoring and Reporting
The global growth of impact and ESG investing has prompted development of common standards on
impact monitoring and evaluation to facilitate comparison of impact achievements by stakeholders
including investors, program managers, and authorities. International standards that are widely adopted
by impact and ESG investors are the Universal Standards for Social and Environmental Performance
Management (USSPM), UNEP FI’s Principles for Responsible Banking, the Equator Principles, Global
Impact Investing Network (GIIN)’s Impact Measurement and Management System (IRIS+), the Sustainability
Accounting Standards Board (SASB) Standards, and Global Reporting Initiative (GRI) Standards. The following
are the common principles for impact monitoring and reporting.
2.1.1 Goal and Target Setting
The USSPM and GIIN’s IRIS+ outlined several common principles of social finance program goal and target
setting, as follows:
i. The goals and target should consider the positive and negative effects of social finance on the
community while balancing investors’ expectations for risk, return, liquidity, and impact. An example
of a strategic goal developed by GIIN is improving financial health for financial inclusion programs.47
ii. Strategies to achieve social goals and mitigate negative effects on the community should be
established. Strategies will identify inputs and activities such as resources to be invested, development
of appropriate product or financing solutions, and capacity building.
iii. Targets on outputs and outcomes should be measurable and linked to evidence that lead to the
achievement of goals. To guide members in the selection of targets, GIIN has developed targets
that are linked to evidence of successful achievement of goals (see Appendix 2 for samples of IRIS+
metrics relevant to SDGs).
iv. Goals and targets should be time-bound to ensure the achievement of goals that are aligned with
stakeholders’ expectations.
2.1.2 Impact Indicators, Monitoring, and Evaluation
Impact indicators are important data to demonstrate program results to influence project planning,
management, and reporting. Impact evaluation provides more concrete evidence of the targeted changes
attributable to the social finance program. There are several guidelines and references on indicators,
monitoring and evaluation methodologies such as GIIN’s IRIS+, the World Bank’s Impact Evaluation
methodology,48 the International Finance Corporation (IFC)’s Anticipated Impact Measurement and
47 Nova et al. (October, 2020). Understanding Impact Performance: Financial Inclusion Investments. GIIN.
48 Gertler et al. (2016). Impact evaluation in practice. Second Edition. The World Bank.
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CHAPTER 2: Global Applications of Impact Monitoring and Reporting
Monitoring (AIMM) Framework,49 the World Bank Result’s Framework50 and OECD’s Principles of Impact
Evaluation. Based on these methodologies, we find that the common principles for monitoring of indicators
and impact evaluation are as follows:
i. The indicators should follow the Specific, Measurable, Achievable, Relevant, and Time-Bound
(SMART) principle and be minimal to avoid burdensome data collection and monitoring. The World
Bank’s Results Framework requires stakeholders to select indicators that are necessary to measure
the progress of the program without creating additional burdens on respondents or staff.51 GIIN also
recommends that the indicators selected to be backed by evidence and based on best practices of
the industry.52
ii. Impact evaluation should consider the counterfactual of what the outcomes would have been
without the social finance program within a realistic timeline. This can be measured by comparing the
outcomes of social finance beneficiaries versus non-beneficiaries with similar characteristics. There
are many databases of metrics developed to support impact reporting such as GIIN’s IRIS+, SPI4, B
Analytics, and UN SDGs.
iii. Impact evaluation is verified by independent reviewers to ensure an unbiased view and prevent
impact washing.
2.1.3 Indicator and Results Reporting
The reporting of impact indicators and results are important to ensure transparency and accountability on
resources utilized, activities, and achievement of the desired outcomes. Most importantly, impact report
provides a learning and feedback loop to ensure that programs are enhanced to improve its value for money
and increase positive impact to target beneficiaries, or paused or cancelled if the desired outcomes are
not achieved. A robust report can also help to secure additional funding from investors as it allows them
to conduct risk-reward decisions. Common practices on reporting of indicators and impact adopted by
national and international organizations as well as global FIs include the following:
i. Publication of annual impact reports that are separate from sustainability or ESG reports. The
separation of social finance impact reports from sustainability or ESG reports provides clearer and
broader information on the activities and indicators related to the social finance programs.
ii. Regular reporting to the management, and the Board. This is important to ensure prudent use of
funding, risk management, and strategic decision on social finance programs.
iii. Report is validated by qualified social impact auditors. This process is particularly important for
social finance with financial returns to ensure an unbiased view of the social finance program and
prevents impact washing.
49 IFC. Anticipated Impact Measurement and Monitoring (AIMM). Accessed June 12, 2023 https://www.ifc.org/en/our-impact/measuring-and-
monitoring
50 Independent Evaluation Group. (2012). Designing a Results Framework for Achieving Results: A How-To Guide. The World Bank.
51 Independent Evaluation Group. (2012). Designing a Results Framework for Achieving Results: A How-To Guide. The World Bank. 38.
52 GIIN. An Introduction to Impact Measurement and Management. Accessed June 12, 2023 https://iris.thegiin.org/introduction/#b2
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2.2 Impact Monitoring Practices in ESG
Investing
The term ESG includes a spectrum of approaches which range from exclusionary screens (negative
screens) to actively applying ESG concepts to achieve desired impact. Screening can consist of negative
screening, norms-based screening, and positive screening. Negative screening is perhaps the most prevalent
practice in ESG investing (81% of FIs in frontier countries)53 and refers to “excluding certain sectors, issuers, or
securities for poor ESG performance” or based on criteria such as avoiding certain activities or geographies.
Norms-based screening involves examining potential investments against internationally recognized
business practice standards, such as those embodied in UN treaties, OECD guidelines, or international
agreements on particular topics (for example, climate change or labor standards). Finally, positive screening
in some ways seeks to achieve the opposite of negative screening: include those sectors or issuers that
score the best on ESG metrics.
ESG investors that positively screen for social impact are deemed “impact investors.” Impact investors
usually conduct impact monitoring, guided by international impact measurement framework such as the
GIIN IRIS+. The impact investment industry, though nascent in comparison to the broader ESG sector and
in less widespread use than the negative screening approach, is growing rapidly. The GIIN estimates that
global impact investing AUM was almost US$1.2 trillion as of December 2021.54 This figure was dominated
by Europe, with over half of impact AUM, and the U.S. and Canada, with 37%.55 For an organization to be
considered to practice impact investing for purposes of the GIIN’s estimate it must “attest to clear intent to
create positive environmental or social impact, actively measure the impact of their investments, and seek
a financial return.”56
Impact monitoring, evaluation, and reporting have some, though limited, relevance for ESG investments
that solely apply negative screening. Because negative screening reflects the intent of investors to avoid
causing harm, ESG investments based solely on negative screens have less need to measure their impact,
as they make no representations about positive impact and only make representations about avoiding
investments that ex-ante fail at certain criteria. However, ESG investments that solely apply negative
screens may still engage in impact monitoring. Islamic investment funds, for example, often undertake a
“purification” process by which they measure the impermissible portion of the revenue, income, dividends,
or gains (depending on the methodology) attributable to their stakes in investee companies in order to
offset such portion with charitable giving.57 This can be deemed a form of impact monitoring.
53 World Bank and Institute of Finance and Sustainability. (2022, November). Unleashing Sustainable Finance in Southeast Asia. https://www.
worldbank.org/en/country/malaysia/publication/SFSEAreport
54 Hand, D., Ringel, B., Danel, A. (2022) Sizing the Impact Investing Market: 2022. The Global Impact Investing Network (GIIN).
55 Ibid.
56 Hand, D., Ringel, B., Danel, A. (2022) Sizing the Impact Investing Market: 2022. The Global Impact Investing Network (GIIN). New York.
57 Franklin Templeton Investments. (2018, January-March). Implementing Purification in Shariah-Compliant Equity Funds. Shariah Quarterly.
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CHAPTER 2: Global Applications of Impact Monitoring and Reporting
2.3 Impact Monitoring on ESG
Investments by Financial Institutions
and Financial Markets
Frameworks for ESG management and reporting by financial institutions reflect the unique nature of
these organizations and the powerful role they play as financial intermediaries in promoting social finance
and generating social impact. This includes:
1. Monitoring and mitigating negative social impact of financial products and services.
2. Expanding access to essential financial products and services to underserved segments of the
population.
3. Raising and allocating capital for activities and investments deemed socially beneficial.
Frameworks for ESG management by financial institutions reflect an entity-level approach to impact
monitoring, focusing on the same core elements of traditional social impact monitoring frameworks (M&E,
impact investments), including setting goals and expectations, defining strategies, selecting metrics and
targets, and monitoring and reporting impact. For example, the UNEP Finance Initiative’s Principles for
Responsible Banking is a unique framework for ensuring that signatory banks’ strategy and practices align
with the vision society has set out for its future in the Sustainable Development Goals and the Paris Climate
Agreement (see Figure 2.1).
FIGURE 2.1
Principles for Responsible Banking
PRINCIPLE 1: PRINCIPLE 2: PRINCIPLE 3:
ALIGNMENT IMPACT & CLIENTS &
TARGET SETTING CUSTOMERS
We will align our business strategy to We will continuously increase our We will work responsibly with our
be consistent with and contribute to positive impacts while reducing the clients and our customers to
individuals’ needs and society’s goals, negative impacts on, and managing encourage sustainable practices and
as expressed in the Sustainable the risks to, people and environment enable economic activities that create
Development Goals, the Paris Climate resulting from our activities, products shared prosperity for current and
Agreement and relevant national and and services. To this end, we will set future generations.
regional frameworks. and publish targets where we can have
the most significant impacts.
PRINCIPLE 4: PRINCIPLE 5: PRINCIPLE 6:
STAKEHOLDERS GOVERNANCE TRANSPARENCY &
& CULTURE ACCOUNTABILITY
We will proactively and responsibly We will implement our commitment We will periodically review our individual
consult, engage and partner with to these Principles through effective and collective implementation of these
relevant stakeholders to achieve governance and a culture of Principles and be transparent about and
society’s goals. responsible banking. accountable for our positive and
negative impacts and our contribution
to society’s goals.
Source: UNEP-FI. (n.d.) About the Principles. The 6 Principles for Responsible Banking. Accessed on June 18, 2023 https://www.unepfi.org/banking/more-
about-the-principles/
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In addition, many financial institutions also use the Equator Principles (EP) as a risk management framework
to identify, assess, and manage environmental and social risks when financing projects (see Figure 2.2).
The goal is to minimize the adverse impacts that large infrastructure and industrial projects can have on
people and on the environment.
FIGURE 2.2
Equator Principles
OVERVIEW OF THE 10 EQUATOR PRINCIPLES
Principle 1 Principle 2 Principle 3 Principle 4 Principle 5
Review & Environmental & Social Applicable E&S E&S Management Stakeholder
Categorisation (E&S) Assessment Standards System & EP Action Plan Engagement
Principle 6 Principle 7 Principle 8 Principle 9 Principle 10
Grievance Mechanism Independent Review Covenants Independent Monitoring Reporting &
& Reporting Transparency
Source: Equator Principles. (n.d.) About the Equator Principles. Overview of the 10 Equator Principles. Accessed on June 18, 2023 at https://equator-
principles.com/about-the-equator-principles/
In terms of ESG reporting by FIs, the relevant frameworks are based on a traditional approach to impact
monitoring and reporting, adapted to the assessment of results at the entity-level, focusing on strategy,
risk management, governance, and metrics and targets. They also provide guidance on social issues that
are likely to be material for FIs, and therefore that should be included in sustainability reporting. In March
2022, the International Sustainability Standards Board (ISSB) published Exposure Draft IFRS S1 General
Requirements for Disclosure of Sustainability-related Financial Information, proposing overall requirements
for an entity to disclose sustainability-related financial information about its sustainability-related risks and
opportunities (see Figure 2.3).
FIGURE 2.3
IFRS S1 Disclosure of Sustainability-related Financial Information
Governance Strategy
• A company's governance processes, controls and • A company's strategy for addressing significant
procedures used to monitor and manage signi cant sustainability-related risks and opportunities;
sustainability- related risks and opportunities. • Whether these risks and opportunities are incorporated into
its strategic planning, including financial planning;
• Whether these risks and opportunities are core to the
company's strategy.
Risk management Metrics and targets
• The process by which a company identi es, assesses and • How a company measures, monitors and manages
manages current and anticipated sustainability-related risks significant sustainability-related risks and opportunities and
and opportunities; assesses its performance, including progress towards the
targets it has set.
• Whether that process is integrated into its overall risk
management processes.
Source: Miotech.
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The SASB Standards — under the responsibility of ISSB — enable organizations to provide industry-based
sustainability disclosures about risks and opportunities that affect enterprise value. They identify a subset
of environmental, social, and governance issues most relevant to financial performance and enterprise value
for 77 industries. The financial sector within the SASB includes 7 areas: wealth management, commercial
banks, retail banks, insurance, investment banks, mortgage banks and the securities market. Below is an
example of the SASB Standards for Commercial Banks. Many of the issues that are recommended for
disclosure by banks and financial institutions focus on social impact through employees, access to finance,
and impact management in financial intermediation. Table 2.1 below provides a description of material
social impact of banks and financial institutions, based on the SASB standards.
TABLE 2.1
Common Social Issues Reported by Banks and Financial Institutions
Topics KPIs
• Efforts to maximize the health, safety, and economic well-being of employees, to
ensure equal treatment and avoid gender, ethnic, or other discrimination.
Employees
• Focus on diversity in the workforce and professional integrity to ensure ethical
compliance.
• Efforts to ensure ethical conduct, including legal compliance, paying a fair share of
taxes, transparency in political contributions.
• Efforts to avoid corruption and bribery, especially for operations in countries with high
Ethics
corruption.
• Focus on fraud, anti-competitive practices, money-laundering, prohibited activities,
confidential information, insider dealing, and market manipulation.
• Efforts towards financial inclusion of underbanked population and small businesses.
Financial
Inclusion • This includes lower-income individuals, youth, women and women-led businesses,
small farmers and landholders, and SMEs.
Responsible • Efforts to maximize the social utility of products and services and reduce social and
Lending and environmental impacts on consumers during the use-phase.
Financial
• Focus should be on responsible lending and data privacy and security.
Products
• How ESG factors are integrated into the lending and investment process.
• Risk to the loan portfolio presented by climate change, natural resource constraints,
Management of
human rights concerns, or other broad sustainability trends.
ESG in Lending
and Investment • Significant concentrations of credit exposure to ESG risks and credit exposure by
Activities industry.
• Approach to managing risks of human rights violation in investments and lending
portfolio.
Source: Study team
In practical terms, banks and other FIs provide social finance in a wide range of ways and develop
corresponding monitoring methods and frameworks. Table 2.2 below presents a summary of the typology
of social finance channels and the relevant methods and frameworks.
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TABLE 2.2
Social Finance Offerings and Monitoring Methods
Benchmark /
Items Description Monitoring Method
framework
Bank portfolio Monitor and mitigate • % of portfolio monitored. ESG Reporting
management negative social impact • Amount of capital exposed to
of financial products and socially damaging activities.
services.
Expand access Provide access to • Number of financial services ESG Reporting
of traditional essential financial provided.
finance products and services to
underserved population.
Sustainable Raise capital for activities • Amount of capital linked to Sustainability Bond
Finance and investments deemed sustainability goal. Guidelines
environmentally and • Amount of capital allocated to
socially beneficial. social areas.
• Commitment to social targets
and allocation of capital.
Use-of- Provide capital for • Amount of capital deployed Green, Social and
proceeds borrower’s activities and ear-marked for qualified Sustainability (GSS)
lending investments deemed activities (UOP). Bonds Standards,
socially beneficial. • Breakdown by issue areas. Social Loan
Principles
Sustainability- Provide capital tied to • Amount of capital deployed SDGs / SLL
linked lending borrower performance on to incentivize social goals. Standards
social metrics (SL Loans • Aggregate loan portfolio
tied to social targets of performance on social
borrower). metrics.
Impact Provide capital for • Full scale M&E with DFI, Investing
investing programs dedicated to outcome/impact.
solving social issues, at
commercial or subsidized
rates.
In addition, the use of new instruments such as sustainability-linked bonds and loans has allowed
structures that make the monitoring of impact more transparent and accountable, with interest rates
tied to ambitious targets in key sustainability areas for the issuer. These sustainable finance instruments
approach impact monitoring and reporting as follows:
1. Ex-ante. Selection of impactful areas of investments (UOP), or material issues to be addressed and
ambitious targets (SLB/SLL) pre-issuance.
2. Monitoring. Process for project evaluation and selection (UOP), or investments made to support
performance on the target.
3. Reporting. Annual reporting of use of proceeds (UOP), or performance on KPIs (SLB/SLL). For capital
market transactions, UOP and SLB structures also require independent and external verification.
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CHAPTER 2: Global Applications of Impact Monitoring and Reporting
2.4 Impact Monitoring and Evaluation by
International Financial Institutions
Impact monitoring and evaluation is a key part of the process of International Financial Institutions (IFIs),
which inherently seeks to achieve positive impact and advance policy goals. IFIs consist of multilateral
financial institutions, such as the World Bank, the International Finance Corporation, the Asian Development
Bank, and the Islamic Development Bank, or bilateral IFIs, the largest of which are Dutch Entrepreneurial
Development Bank (FMO) of the Netherlands, and German Investment Corporation (DEG), a subsidiary of
KFW in Germany.58
IFIs are, by mandate, committed to positive impact. Thus, impact monitoring and evaluation are important
tools to provide learning and feedback loop to ensure that the programs are enhanced to improve value
for money and increase positive impact to target beneficiaries. The results of the impact monitoring
could also help program managers decide to pause or cancel the program if the desired outcomes are
not achieved. Impact monitoring and evaluation are thus integrated into numerous steps of the financing
process, including project identification, the monitoring of outcomes, and reporting to various stakeholders.
For example, there is some indication that IFIs are putting increasing emphasis on goals 5 (gender equality),
8 (decent work and economic growth), and 13 (climate action) of the SDGs.59 In addition, IFIs employ a
variety of impact monitoring and management methods, providing a variety of examples to learn from.60
At the same time, IFIs have some characteristics of private investors, especially commercial banks, taking
financial returns and risks into account when evaluating potential funding projects.61 Consequently, the
experience of IFIs with impact monitoring and evaluation can be relevant to private sector investors seeking
to incorporate social impact criteria into their investment approaches, as well as to those that have already
done so and are seeking to refine their processes.62
IFIs offer a number of impact monitoring and reporting practices that are not always found in private
sector impact investing. These practices include: (a) annual impact reporting for the organization as a
whole in addition to reporting on individual funds and projects; (b) the creation and support of departments
committed specifically to monitoring and effectiveness; and (c) the engagement of beneficiaries and
stakeholders in impact monitoring and evaluation, including through surveys and stakeholder consultation.
In October 2015, IFIs joined forces to harmonize development impact metrics, through the Harmonized
Indicators for Private Sector Operations (HIPSO). HIPSO is a set of common indicators developed by
a group of IFIs to bring consistency in reporting impact of the private sector and to facilitate learning
from each other. Indicators organized around important sectors for economic and social impact, reflect
the impact priorities of IFIs. Figure 2.4 below illustrates the HIPSO indicators for financial intermediation. In
2021, HIPSO and IRIS+ established a Joint Impact Indicator in topics common across investments, including
gender, jobs, and climate. It aims to reduce reporting burden on investees and provide comparable impact
data to facilitate decision-making. 63
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FIGURE 2.4
HIPSO Indicators for Financial Intermediation
FINANCIAL INTERMEDIATION
FI-01 — Number of Loans Outstanding
FI-02 — Value of Loans Outstanding
FI-03 — Number of Active Borrowers/Clients
FI-04 — Average Tenor of Loans Outstanding
FI-05 — Number of Deposit Transaction Accounts
FI-06 — Number of Merchant Acceptance Points (POS)
FI-07 — Access to Digital Payment Services
FI-08 — Value of Non-Cash Transactions
FI-09 — Number of Active Female and Women-Owned/Led Enterprise Clients served through a
Financial Institution
FI-10 — Number of Loans Outstanding to Female and Women-Owned/Led Enterprise Clients served
through a nancial institution
FI-11 — Value of Loans Outstanding to Female and Women-Owned/Led Enterprise Clients served
through a nancial institution
FI-12 — Number of deposit transaction accounts to Female and Women Owned/Led Enterprise Clients
served through a nancial institution
FI-13 — Access to digital payment services to Female and Women-Owned/Led Enterprise Clients
served through a nancial institution
Source: Harmonized Indicators for Private Sector Operation (HIPSO). Financial Intermediation. Accessed on June 12, 2023 https://indicators.ifipartnership.
org/financial-intermediation/
2.5 Impact Monitoring in Philanthropic
Organizations
Philanthropic grantmaking, for the purposes of this report, includes grantmaking undertaken by foundations
and other private sector organizations. It is estimated that, in the United States alone, over US$140 billion
per year is granted by foundations, corporations, and donor-advised funds. These large sums have led some
makers of grants to request recipients to measure the outcomes of the grants.64
Grantees (the recipients of grants) are required to engage in impact reporting at multiple stages of the
process. During the proposal stage, they are required to identify key metrics and measures of success that
they plan to achieve. For example, a school applying for an educational grant from a foundation will be
required to propose how many students will benefit and how much their learning will improve (and how this
will be measured). After the grant is given and the project is completed (and sometimes during an ongoing
project), the school will be required to report on the actual impact achieved and how it varied from the
goals. If grantees do not provide information on the impact achieved, foundations may at times withhold
part of the grant. For example, some foundations specify in their grant approval communications that they
64 Schreiber, J. and Jackson-Ward, E. (2022, July 7). How Philanthropists Can Diversify Their Grantmaking Portfolios. Harvard Business Review.
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will withhold a portion (often 5 to 10%) of the grant and make its disbursement contingent on certain impact
reporting requirements.65
The philanthropic grantmaking sector offers impact monitoring and reporting practices that may
contrast with the practices prevalent in private-sector impact investing and IFIs. The differences
between the two sets of approaches include:
a. The grantmaking approach invites grant applicants to propose the impact metrics and outcomes
of projects as part of the proposal process. This is a stark contrast from other “top-down” approaches
that first identify the metrics and then look for projects to support them. The grantmaking approach
may in some ways be more inclusive and “bottom-up” and may also produce fresh ideas on potential
impact.
b. The grantmaking approach uses data from impact monitoring to inform future strategy. While
such feedback loops are also found in private-sector impact investing, and in IFIs, the philanthropic
grantmaking sector is noteworthy in this area.
c. Philanthropic institutions often convene grant recipients to collaborate and share best practices.
Such convening may be relevant in social finance contexts where knowledge sharing and fostering
community are important.
65 Ibid. at 43, 59.
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CHAPTER 3
Case Studies of Impact
Monitoring, Evaluation,
and Reporting by Global
Social Finance Providers
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This chapter presents case studies on impact monitoring, evaluation and reporting by selected global social
finance providers and impact investors including IFIs, conventional and Islamic FIs, and authorities. The
objective of the case studies is to identify common practices and compare the practices against international
standards on impact monitoring and reporting. For IFIs, we examine the practices of the World Bank, IFC,
Asian Development Bank, Islamic Development Bank, and Islamic Corporation for the Development of the
Private Sector. For conventional social finance providers, we examine the practices of BlueOrchard Finance
Ltd., LeapFrog Investment, the International Red Cross and Red Crescent Movement, VisionFund, FINCA
International, Grameen Bank, Opportunity International, Triodos Investment Management, and Nuveen.
For Islamic social finance providers and authorities, we examine Akhuwat Islamic Microfinance, the General
Authority of Awqaf, and Badan Zakat Nasional.
3.1 Common practices of impact
monitoring, evaluation and reporting
by global social finance providers
Based our case studies, we found that international standards on impact monitoring is mainly adopted by
conventional impact investors. For example, the GIIN’s IRIS+ is adopted by Leapfrog Investment, Triodos
Investment Management, and Nuveen. The USSPM is adopted in the customized impact monitoring tools
of BlueOrchard and FINCA International. The International Red Cross and Red Crescent Movement adopts
the Global Reporting Initiative (GRI). The Poverty Probability Index (PPI) is measured by VisionFund and
Grameen Bank. Additionally, several impact investors have developed their own impact monitoring tools
based on the international standards on impact monitoring such as BlueOrchard’s B.Impact framework,
FINCA International’s FINCA Client Assessment Tool, and Triodos Investment Management’s Sustainability
Management System. Islamic FIs and Islamic social finance providers and authorities tend to establish their
own impact monitoring methodologies. Impact evaluation is mainly conducted by IFIs and conventional
impact investors. Generally, results are disclosed and published by global social finance and impact investors.
(See Appendix 3 to 6 for summaries of impact monitoring practices by these institutions).
3.2 International Financial Institutions
(IFIs)
1. The World Bank66
All lending operations supported by the World Bank are required to have results frameworks and monitoring
systems. Results frameworks are based upon a theory of change and include indicators at outcome and
intermediate results (output) levels with baselines and targets agreed with clients. The results framework is
drafted at the beginning of the project cycle. A results framework that is properly developed and of good
66 The World Bank. Measuring and Reporting Results in the World Bank. Factsheets.
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quality will help clients to manage the project effectively and efficiently, and demonstrate achievements
clearly. Measuring and monitoring the results of projects is crucial for accountability, transparency, and
continuous learning for timely corrections to achieve the development goals.
Corporate Results Indicators (CRIs) on sustainable development, human development, and economic,
finance, and institutions across sectors are reported to support the collection of reliable, consistent data
for corporate reporting (see Figure 3.1). Task teams are required to use CRIs in their project monitoring and
results frameworks when the indicators are relevant to expected outcomes and outputs. CRIs enable results
to be aggregated across regions and practices at the corporate level and are a sub-set of Tier 2 (Client
Results) indicators of the Corporate Scorecards and IDA Results Management System.
FIGURE 3.1
World Bank Corporate Result Indicators
Corporate Results Indicators
Sustainable Development
Agriculture, Fishing, and Forestry Water, Sanitation, and Waste Management
• Farmers reached with agricultural assets or services • People provided with access to improved water sources
• Farmers adopting improved agricultural technology • People provided with access to improved sanitation services
• Area provided with new/improved irrigation or drainage services
• Land area under sustainable landscape management practices
• Forest area brought under management plans Transportation
• Fisheries management plans implemented • Roads constructed or rehabilitated
Energy and Extractives
• Generation capacity of energy constructed or rehabilitated Multisector/Urban
• Projected energy or fuel savings • People provided with improved urban living conditions
• People provided with new or improved electricity service • Cities with improved livability, sustainability, and/or management
Information and Communication Technologies Multisector/Climate
• People provided with access to the Internet • Net greenhouse gas emissions
Human Development Economic, Finance, and Institutions
Health Industry, Trade, and Services
• People who have received essential health, nutrition, • Implemented reforms supporting private sector development
and population (HNP) services • Firms benefiting from private sector initiatives
Social Protection Financial
• Beneficiaries of labor market programs • Beneficiaries reached with financial services
• Beneficiaries of social safety net programs
Education
• Teachers recruited or trained
• Students benefiting from direct interventions to enhance learning
Multisector/Jobs
• Beneficiaries of job-focused interventions
Source: The World Bank. Measuring and Reporting Results in the World Bank. Factsheets.
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Progress on results achieved through projects are reported regularly. During implementation, staff report
on the results framework indicators through the project monitoring and reporting tool, the Implementation
Status and Results Report. At completion, staff present a complete and systematic account of the performance
and results of the project with an Implementation Completion and Results Report (ICR). The ICR assesses
the extent to which the project achieved its objectives and documents the linkage of the project’s inputs
and outputs to the desired outcomes. World Bank’s Independent Evaluation Group (IEG) will then review
the ICR and validate the ratings of the project outcome. ICRs are available externally and are 100 percent
validated by IEG.
2. International Finance Corporation (IFC)67
The IFC developed an ex-ante impact monitoring tool in 2017 — the Anticipated Impact Measurement
and Monitoring (AIMM) system to better define, measure, and monitor the development impact of each
project. The measurement framework assesses both (i) the development gap that an investment is designed
to fill, and (ii) the intensity of impact. It builds upon DOTS, IFC’s previous impact measurement system.
The AIMM system incorporates several innovative approaches to assess development impact along two
dimensions – project and market outcomes (see Figure 3.2). For the project outcome dimension, AIMM
assesses effects on the stakeholder, economy, environment, and society. For market outcome dimension,
AIMM assesses the degree to which an intervention improves the structure and functioning of markets by
promoting one or more of the following objectives: (i) competitiveness, (ii) resilience, (iii) integration, (iv)
inclusiveness, and (v) sustainability. AIMM assesses project intensity/efficiency sector-specific development
gap assessments and project design features, drawing on a reservoir of 200 gap indicators and 600 intensity
indicators across 30 sector frameworks developed to date. Sector frameworks help assess desired effects
by assigning ratings in four areas:
• Gap: How big is the problem IFC is seeking to address?
• Intensity: How much does the project contribute to the solution?
• Impact potential: Based on the problem and contribution, what is the potential to deliver desired
effects?
• Likelihood: What is the likelihood that the project will deliver the desired effects?
For each of these definitions, normalization (as possible) and benchmarks have been created, using available
data, evidence, and technical expertise within IFC, the World Bank, and other recognized external sources,
including partner development finance institutions.
67 International Finance Corporation. (n.d.) Anticipated Impact Measurement and Monitoring (AIMM). Accessed August 14, 2023. https://www.ifc.org/
en/our-impact/measuring-and-monitoring
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FIGURE 3.2
IFC’s Anticipated Impact Measurement and Monitoring (AIMM)
Assessing Project Outcome Assessing Market Outcome
Significantly Highly
above significant
average
Projects in Projects in
countries with underdeveloped
wide gaps and markets with
high project significant
Above intensity have the movement have
Significant
Project intensity
average highest impact the highest
potential impact potential
Movement
Average Meaningful
Below
average Marginal
Small Medium Large Very large Highly Moderately Under- Highly
developed developed developed under-
Size of development challenge gap developed
Market stage
Source: IFC. (n.d.) How IFC Measures the Development Impact of Its Interventions. https://www.ifc.org/content/dam/ifc/doc/2022/202012-ifc-aimm-
brochure.pdf
Since January 2018, IFC has rated all new investment projects, providing a numeric score for each
investment that represents ex-ante the project’s expected quantum of development impact (see Figure
3.3). IFC has assessed over 1,400 investment projects (committed and uncommitted) for their expected
development impact and assigned ex-ante. The AIMM system is now fully integrated into IFC’s operations,
allowing development impact considerations to be weighed against a range of strategic objectives, including
volume, financial return, risk, and thematic priorities.
The monitoring of outcomes is an essential component of the AIMM system as it links ex-ante assessments
with the learning and accountability function embedded in IFC’s existing results measurement system.
Each development outcome claim in IFC projects is explicitly tied to one or more monitoring indicators and
regularly tracked during portfolio supervision. By tracking these indicators, the AIMM system links project
ratings with real-time results measurement findings.
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FIGURE 3.3
AIMM Rating Score
Project impact Project likelihood
potential
AIMM score
Market impact Market likelihood
potential
Ex-ante AIMM rating scale
Low Satisfactory Good Excellent
(10–22) (23–42) (43–67) (68–100)
Source: IFC. (n.d.) How IFC Measures the Development Impact of Its Interventions. https://www.ifc.org/content/dam/ifc/doc/2022/202012-ifc-aimm-
brochure.pdf
3. Asian Development Bank
The Asian Development Bank (ADB) publishes an Annual Development Effectiveness Review assessing its
overall impact and identifying areas for further improvement. The ADB currently evaluates its performance
in four broad categories: (1) development progress in Asia and the Pacific, (2) results from ADB’s completed
operations, (3) ADB’s operational management, and (4) ADB’s organizational effectiveness. The ADB
measures its progress in these four areas through 60 “results framework indicators,” which in many cases are
tied to the SDGs; with an additional 156 “tracking indicators” to provide further information.68 In addition to
rating how performance compares to target, the ADB’s report indicates whether performance has improved,
deteriorated, or remained constant over the previous year (for example, on a given metric performance
could be below target but improving). The ADB also publishes complementary reports on its operational
performance and on the performance of its portfolio of active projects.69
68 Asian Development Bank. Results Framework Indicators. https://www.adb.org/multimedia/defr2021/src/pages/grid-table.html.
69 Asian Development Bank. (2022, May). 2021 Development Effectiveness Review.
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The ADB also engages independent consultants to undertake impact monitoring and evaluation of
ADB projects. As of this writing, the ADB had 923 reports assessing completed projects in its archive,
going back to 2007.70 An example of such an impact evaluation is of the Technical Education Project the
ADB conducted in Malaysia in the early 2000s to improve the quality of the country’s secondary technical
schools, such as through revising the curriculum, training teachers, and renovating educational facilities. The
ensuing impact evaluation report, published after the completion of the project, examined the project’s
costs and design, the impact of the project on the quality and capacity of the technical education system,
issues that arose during the implementation of the project, the performance of various parties involved
in the project (such as agencies under the Malaysian government and the ADB), the sustainability of the
project, and lessons learned.71
4. Islamic Development Bank
The Islamic Development Bank (IsDB) similarly issues an Annual Development Effectiveness Report
(ADER). The approach of the IsDB’s report mirrors that of the ADB’s report in some respects, as the
IsDB examines development progress in its member countries, the developmental results of its project
operations, and its own organizational performance. For example, the IsDB’s current goals are to advance
sustainable infrastructure and human capital in IsDB member countries, and the ADER organizes its
discussion of the development effectiveness of the IsDB’s projects around these two overarching goals. The
ADER also weaves the SDGs into its monitoring of projects, pointing out which SDGs are being advanced in
IsDB member countries and the current status of progress toward various SDGs. The ADER examines both
results expected from development projects that have been approved, and results actually achieved from
development projects that have been completed, in each case using numerical indicators. The IsDB also
tracks its “portfolio aging trends” with indicators such as the percentage of projects that are signed within
six months of being approved, and the average number of years from a project’s approval to its completion.
Finally, the IsDB’s annual report reviews lessons learned from its Project Completion Reports, which are akin
to the independent impact evaluation conducted by the ADB discussed above.72
5. Islamic Corporation for the Development of the Private Sector
The Islamic Corporation for the Development of the Private Sector (ICD), a member of the IsDB Group,
also publishes an Annual Development Effectiveness Report specific to its private sector financing.
The ICD’s report is based on a survey of the enterprises in which the ICD has invested. It communicates
impact through metrics such as the number of clients gaining access to Islamic finance (and the female
number thereof), the number of people opening new Islamic finance accounts, the number of small and
medium-sized enterprises supported through ICD financing projects, the dollar amount of export sales
or government revenues generated, and the amount of energy produced. The ICD has a Development
Effectiveness Department whose duty is to spread best practices and improve systems and processes so
that the ICD can better assess and report on the impact of its development projects.73
70 Asian Development Bank. Validations of Project Completion Reports.
71 Asian Development Bank. (2009, May 31). Malaysia: Technical Education Project.
72 Islamic Development Bank. Development Effectiveness Report 2021.
73 Islamic Corporation for the Development of the Private Sector. (2022, May). Annual Development Effectiveness Report 2021.
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3.3 Conventional Social Finance Providers
and Impact Investors
1. BlueOrchard Finance Ltd.
BlueOrchard, which is a globally-operating impact investment management company and a part of the
Schroders Group, is committed to generating sustainable and enduring positive impacts for communities
and the environment while providing profitable returns for investors. In 2001, BlueOrchard was established
as the world’s first manager of microfinance debt investments, and it currently manages the world’s largest
microfinance fund, the BlueOrchard Microfinance Fund. By 2021, BlueOrchard had supported 28,881,062
micro, small, and medium-sized enterprises and lent micro-loans averaging US$ 2,019.74
To systematically assess and improve the impact of its investments, BlueOrchard has developed its own
B.Impact framework. This framework includes expanding the Social Performance Impact Reporting and
Intelligence (SPIRIT) tool, which was developed in-house and has been in use for a long time, into dedicated
SPIRIT ESG and SPIRIT Impact scorecards. SPIRIT encompasses various dimensions, including strategic
intent, maintaining a balance between financial and impact returns, evaluating the investee’s contribution
towards achieving impact objectives, a systematic evaluation of impact objectives, monitoring impact risks
and performance, managing potential negative effects, ex-post impact monitoring, disclosing impact results
publicly, and validating relevant impact in-line with ESG policies.75 These scorecards are essential components
of BlueOrchard’s systematic approach to evaluating and improving the impact of its investments.
The SPIRIT tool was originally launched in 2009 to evaluate the social performance management policies and
processes of financial institutions, such as microfinance institutions, that were funded by BlueOrchard. The
tool was aligned with the six dimensions of the Universal Standards for Social Performance Management,
which represented the best practices for microfinance at that time. BlueOrchard incorporated an additional
dimension focusing on the environmental aspects under the collective umbrella of ESG performance to
better reflect its offerings in social, environmental, and governance domains through SPIRIT ESG. The SPIRIT
ESG Scorecard evaluates the ESG risks associated with potential portfolio companies and generates a rating
that plays a critical role in the monitoring and management of investments.
2. LeapFrog Investments
In 2017, LeapFrog Investments achieved a noteworthy milestone by becoming the world’s first impact
investor to conduct an independent evaluation of its impact based on the Operating Principles for Impact
Management.76 LeapFrog Investments is an impact investing company that provides funds ranging from
US$10 million to US$50 million to support the growth of financial services and healthcare companies that are
driven by a strong sense of purpose and are based in emerging markets located in Asia and Africa.77 LeapFrog
Investments uses IRIS+ as a tool and research source to guide its investments from fund inception to exit.
During the fund inception stage, the firm employs IRIS+ in two primary ways: first, to confirm the alignment
between LeapFrog’s objectives and the SDGs, and second, to leverage the evidence base and Core Metrics
sets to reduce the amount of time and effort required for research.78
74 BlueOrchard. (2021). Disclosure Statement: Operating Principles for Impact Management.
75 Ibid.
76 Mirchandani, B. (2019, December 9). Finally a Way to Assure Sustainability and Impact! Vornado, Etsy, and LeapFrog Lead the Charge. Forbes.
77 GIIN. (2020). IRIS+ USE CASE: LEAPFROG. https://s3.amazonaws.com/giin-web-assets/iris/assets/files/iris-use-cases/IRIS-LeapFrog_6-25-20.pdf.
78 Ibid.
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3. The International Red Cross and Red Crescent Movement
The International Red Cross and Red Crescent (ICRC) Movement is a global humanitarian network
supported by millions of volunteers. The Movement is unified by seven Fundamental Principles, including
impartiality and universality. The ICRC aims to protect the lives and dignity of victims of violence and provide
assistance, while the International Federation coordinates humanitarian activities among its members, and
National Societies offer various services like disaster relief.79
The ICRC conducts monitoring, review, and evaluation throughout the programme and project cycle using
the Results Monitoring Framework, and Activity and Resource Plan tools. 80 Review and evaluation are
conducted at specific points or at the end of the project by the Ecosec unit in the headquarters or the
Ecosec coordinator in the field.81 The results of the review by Ecosec are used to identify corrective actions
and sharing of lessons learnt.82 The Institutional Performance Management Unit performs evaluation using
qualitative and quantitative methods such as systematic or non-probability sampling methods. The result of
the evaluation is used to provide guidance throughout phases of execution to achieve better outcomes.83
4. VisionFund
VisionFund, which is the microfinance network of World Vision — a humanitarian organization that is
guided by Christian values — is committed to eradicating poverty and injustices. It is present in more than
20 countries, and extends a range of financial services like loans, savings, and insurance to its clients, with a
focus on women and rural farmers. As of 2022, VisionFund has disbursed 1.1 million loan agreements worth
US$706 million to 1 million clients worldwide.84
VisionFund uses the Progress out of Poverty Index (PPI) as an impact measurement framework to track
and improve its social performance and outcomes. 85 VisionFund’s use of PPI is aligned with its mission to
empower families to create income and jobs and unlock economic potential for their children. By using the
PPI, VisionFund can ensure that its services are relevant, effective, and impactful for its clients and their
communities.
The approach of VisionFund to assessing its social impact is exhaustive and meticulous, as it encompasses
both quantitative and qualitative factors in measuring the impact. Additionally, it is consistent with
the established norms and optimal practices for managing social performance, such as the USSPM.86 By
implementing this approach, VisionFund seeks to demonstrate its responsibility to its stakeholders, enhance
its products and services based on the demands and preferences of its clients, and articulate its social value
proposition to its contributors and investors.
5. FINCA International
The Foundation for International Community Assistance (FINCA International) is a non-profit organization
that aims to combat poverty through microfinance and social enterprise. With a presence in more than
40 countries, FINCA provides financial services such as loans, savings, and insurance to over six million
79 International Committee of the Red Cross. (n.d.) The Movement. Accessed on June 12, 2023 https://www.icrc.org/en/movement.
80 ICRC. (2009, August). Measuring Results.
81 Ibid.
82 Ibid.
83 ICRC. (2022, February). ICRC Evaluation Strategy 2022-2024. https://www.icrc.org/en/download/file/240718/icrc_evaluation_strategy_2022-2024.pdf
84 VisionFund. (2022). VisionFund. https://www.visionfund.org/.
85 VisionFund. (2023). Evaluating the Impact of Our Work.
86 VisionFund Myanmar. (2019). VFM Annual Report.
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clients with low incomes, focusing on women and rural entrepreneurs.87 FINCA extends its reach beyond
microfinance by supporting social enterprises that offer fundamental products and services in domains like
energy, water and sanitation, health, education, agriculture, and fintech.
FINCA International uses the FINCA Client Assessment Tool (FCAT), a household survey based on the
Living Standards Measurement Survey (LSMS), to measure the poverty level and living conditions of its
clients. The FCAT collects data on the family’s income, education, health, housing, and access to basic
services.88 The FCAT is adapted to each country’s context and consumption habits and cross-referenced
with the national poverty lines. The FCAT helps FINCA report on its social performance and mission
alignment and is in line with the USSPM. To ensure the quality and reliability of the FCAT data, FINCA also
uses ValiData, a proprietary research platform that uses op machine-learning functions to collect, analyze,
and validate survey data from its clients in real time. ValiData enables FINCA to produce high-quality data
sets that can generate meaningful insights for social impact monitoring.
6. Grameen Bank
Grameen Bank, established in 1983 by Muhammad Yunus, is a community development bank and
microfinance organization in Bangladesh. Its services comprise the provision of small loans to the poor
without collateral, particularly to women and rural entrepreneurs, to assist them in initiating or expanding
their businesses and enhancing their living standards. The organization is committed to fulfilling its mission of
creating a world free of poverty and social injustice. Grameen Bank has emerged as one of the most extensive
and successful microfinance institutions globally, benefiting more than 10 million borrowers in nearly all of
Bangladesh’s villages and serving approximately 45 million individuals, including family members.89
Grameen Bank uses a methodology similar to that of PPI to target, segment, track, and transform its
clients by measuring their poverty likelihood relative to the national or international poverty lines. Grameen
Foundation — a non-profit organization closely linked with Grameen Bank — also participates in the PPI
Alliance, a collective governance and funding structure that supports the development and innovation of
the PPI. By using the framework, Grameen Bank can demonstrate its social performance and impact on
reducing poverty and improving the well-being of its clients and their families.
7. Opportunity International
Opportunity International is a non-governmental organization that has a worldwide presence in more
than 20 countries in Africa, Asia, Latin America, and Eastern Europe. The organization offers financial
services, training, and assistance to individuals living in impoverished conditions, primarily women, farmers,
refugees, young people, and school proprietors. Its primary objective is to provide individuals with the
opportunities required to enhance their financial standing, build long-lasting livelihoods, and access quality
education for their children.
Opportunity International seeks to measure its social impact by using a combination of human-centered
research, client data capture, and comparative impact studies. These methods allow the organization to
understand the clients’ experience, report against project targets, and demonstrate the impact of services
on target clients.90 Opportunity International uses the PPI to collect data on the poverty levels of its clients
and track their progress over time. The PPI helps the organization to target its services to those who need
them most, and to measure its social impact on poverty reduction. Meanwhile, Opportunity International
87 FINCA International. (2023). About FINCA . https://finca.org/about-finca/.
88 FINCA International. (2023). Social Performance Management.
89 Grameen Bank. (2023). Grameen Bank. Grameenbank.org.
90 Opportunity International. (2023). Measurement Approach. https://opportunity.org/our-impact/measurement-approach.
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places a significant emphasis on Social Performance Management (SPM) and its approach towards SPM has
shown significant alignment with USSPM.91 In addition, the organization has conducted pilot tests of the
Social Return on Investment (SROI) approach in India and the Philippines.
8. Triodos Investment Management
Triodos Investment Management is an active global impact investor that focuses on sustainability.
Triodos Investment Management offers Article 9 funds and investment strategies across all asset classes
that aim to generate social and environmental impact alongside a healthy financial return. It focuses its
investment activities across several overarching themes: Impact Equities and Bonds, Financial Inclusion,
Sustainable Food and Agriculture, Energy and Climate.92 As of 2022, Triodos Investment Management had
EUR 5.5 billion assets under management and more than 750 direct investments across the globe.93 Its
mission is to leverage money as a catalyst for a society that is humane, environmentally sustainable, and
serves the common good.
Triodos Investment Management employs a multifaceted approach to assess and disclose the social
and environmental impact of its investments using Impact Reporting and Investment Standards (IRIS)
metrics to monitor the performance of its portfolios focused on inclusive finance and trade finance in
emerging markets. Additionally, Triodos Investment Management employs its Sustainability Management
System to evaluate how its invested financial institutions and trade organizations align their operations with
their social mission and objectives.94 Notably, the organization recognizes the importance of engaging in
dialogue with its investees, as data alone cannot convey the complete impact story.
9. Nuveen
Nuveen is an investment management firm that offers investment products across different asset
classes, including equities, fixed income, private capital, real estate, and alternatives. As of the end of
2022, the firm had a significant asset under management value of over US$1.1 trillion, and serves individual
and institutional investors in over 20 countries globally.95
Nuveen employs IRIS+ as a standardized tool for impact monitoring and management to evaluate the
social and environmental effects of its affordable housing investments.96 IRIS+ provides Nuveen with
a structured approach to align its impact objectives with common strategic goals, validate its theory of
change with evidence, select, and report on key indicators, and compare and analyze data across its
portfolio. In addition to facilitating Nuveen’s impact monitoring process, IRIS+ allows the firm to contribute
to the advancement of impact investing by utilizing common frameworks and standards such as the Core
Characteristics of Impact Investing. Nuveen also promotes industry knowledge sharing by disseminating its
findings and data with other industry players.
Through its use of IRIS+, Nuveen can effectively define, measure, and manage its impact in a clear,
consistent, and comparable manner. It also enables Nuveen to communicate the social and environmental
benefits of its investments to stakeholders while illustrating how it contributes to positive outcomes for
low-income families in the United States.97 By integrating IRIS+ into its investment management approach,
Nuveen aspires to not only achieve financial success but also create long-lasting impact in society.
91 Opportunity International. (2023). Our Response. https://spm.opportunity.org/our-response.
92 Triodos Investment Management. (2023). About Us. https://www.triodos-im.com/about-us.
93 Triodos Investment Management. (2023). 2022 in Numbers. https://www.triodos-im.com/impact-report/2022.
94 The GIIN. (2016). Triodos Investment Management. https://iris.thegiin.org/impact-report/triodos-investment-management/.
95 Nuveen. (2023). Nuveen by the Numbers. https://www.nuveen.com/en-us/about-us/about-nuveen/nuveen-by-the-numbers.
96 The GIIN. (2020). IRIS+ Use Case: Nuveen. https://iris.thegiin.org/document/iris-use-case-nuveen/
97 Ibid.
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3.4 Islamic Social Finance Providers
The issue of poverty and livelihoods in the Muslim world remains a crucial concern, prompting a primary
focus on making a social impact through Islamic social finance. This emphasis is particularly pressing
given the prevalence of conflicts resulting from geopolitical and political instability in many Muslim-majority
countries, as well as the early stages of economic development and low quality of living in some areas. These
circumstances have contributed to limited access to fundamental resources such as education, healthcare,
and the opportunity to earn a decent wage for a large segment of society. There has also been a growing
movement towards integrating environmental considerations.
In comparison to conventional models of social finance that rely primarily on impact investing and voluntary
contributions, Islamic social finance relies on obligatory religious contributions through zakat as well as
voluntary donations through waqf and sadaqah to generate funds. This complementary approach has
been in existence for many centuries, with a historical emphasis on compliance. However, the application
of these concepts appears to be limited and implemented on a small scale. As a result, there is a need to
assess the efficacy of diverse Islamic social finance practices by developing a practical framework. Although
some believe that Islamic FSPs can also leverage USSPM to improve their social performance due to the
alignment of Islamic finance objectives and values with the standard, some aspects of Islamic finance may
not be fully captured or measured by the existing indicators and tools of USSPM, and considerable gaps
and challenges exist in such application. This sub-section section investigates several of these practices that
operate on a global level.
1. Akhuwat Islamic Microfinance
Established in 2001, this initiative was founded as a non-profit organization to provide support to the
underprivileged community in Pakistan. The primary source of funding for Akhuwat is through donations
made to the trust fund that was established by the company. The company offers cash financing through
the Qard Hasan structure to the impoverished community for various purposes, such as providing funds
to establish and expand business ventures, facilitating borrowing for small farmers to purchase agriculture
inputs and meet ancillary expenses, and providing loans to build and renovate houses for households.
Additionally, the company provides education loans to deserving students who come from poor backgrounds,
health loans for individuals suffering from severe illnesses, marriage loans for parents arranging daughter
marriages, and emergency loans for impoverished families that face unfortunate events and emergencies.
Akhuwat specializes in providing financing to micro-entrepreneurs who face significant obstacles in securing
traditional bank loans to establish their businesses. While there are other organizations in Pakistan that
support micro-entrepreneurs, Akhuwat’s focuses on providing interest-free loans to low-income individuals,
its specifically tailored repayment structure based on its borrowers’ financial capabilities, and its use of
a community-based model. Moreover, Akhuwat provides an array of support services to assist micro-
entrepreneurs in expanding their businesses.
Akhuwat Islamic Microfinance uses these Key Performance Indicators (KPIs) to assess and monitor its social
performance for several reasons:98
• Measuring poverty outreach: Akhuwat uses a poverty scorecard to identify clients who are most in
need of its services.
• Assessing client satisfaction and retention: The organization conducts regular client satisfaction
surveys to assess the satisfaction levels of its clients with its services.
98 Akhuwat. (2022). Impact. https://www.akhuwat.org.pk/impact/.
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• Monitoring financial inclusion: Akhuwat measures its contribution to financial inclusion by computing
the percentage of clients who are accessing formal financial services for the first time.
• Promoting gender inclusion: The institution measures its efforts to promote gender inclusion by
computing the percentage of female clients and the extent to which its services are tailored to meet
the specific needs of women.
2. The General Authority of Awqaf (GAA)
In 2016, the GAA based in Saudi Arabia was established with the objective of organizing, managing, and
advancing the Waqf to cater to its necessities and enhance economic and social progress. The above
objectives, necessitate managing a Waqf initiative through the development of:
1. Legal Framework: The initiative should have a clear legal framework that defines the scope,
purpose, and governance of the Waqf. The framework should be compliant with Islamic law and
local regulations.
2. Transparency and Accountability: The initiative should be transparent in its operations and
accountable to its stakeholders. It should have clear procedures for financial management, reporting,
and monitoring.
3. Effective Management: The initiative should have a competent and dedicated management team
that can manage the Waqf ’s resources effectively, identify potential investment opportunities, and
mitigate risks.
4. Community Participation: The initiative should involve the local community and stakeholders in the
decision-making process to ensure that the Waqf is aligned with their needs and priorities.
5. Impact Monitoring: The initiative should regularly assess its impact on the community and evaluate
the effectiveness of its strategies and interventions. This will help the initiative to refine its approach
and improve its outcomes over time.
6. Collaboration and Partnerships: The initiative should collaborate with other organizations,
stakeholders, and government agencies to leverage resources and expertise, share best practices,
and enhance the impact of the Waqf initiative.
In this regard, the GAA is responsible for not only managing the Waqf but also for developing legislative
and governance frameworks for Awqaf. The GAA has introduced various initiatives such as investment fund
licensing instructions, online platforms for financing, and the creation of the Kingdom’s knowledge base
for Awqaf through its Awqaf Property Inventory Project and the National Center for Awqaf Studies and
Research.99
GAA Waqf relies primarily on donations from individuals and entities as their primary source of revenue.
These funds are allocated towards the management of the mosques — i.e., The Two Holy Mosques and
other mosques in the kingdom — addressing concerns related to the COVID-19 pandemic, and providing
aid to the underprivileged communities in areas such as education and housing. Furthermore, GAA Waqf
funds are utilized to provide food, medical care, and support to farmers, and in the form of financial transfers
to the less privileged.
The priorities of the GAA are centered on poverty, education, healthcare, and social welfare, which are
imperative for community well-being and access to essential services. In line with these priorities, the
GAA is committed to promoting economic diversification, entrepreneurship, and job creation, which have
a positive impact on the local economy and the success of businesses and individuals. Notwithstanding,
99 Islamic Development Bank. (2020). Islamic Social Finance Report.
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GAA also prioritizes environmental sustainability and conservation, which involve the implementation of
programs that aim to reduce waste, promote the use of renewable energy, and safeguard natural resources.
The success of GAA Waqf can be attributed to the establishment of a robust regulatory framework by the
authority, which serves to promote transparency, accountability, and best practices in the management
and investment of Awqaf. This framework also facilitates interaction between the GAA and other pertinent
government departments and stakeholders, thereby contributing to the development of a more integrated
and cohesive system for the management of Awqaf, as well as the promotion of charitable and philanthropic
endeavors. Nevertheless, the absence of robust impact management tools limits the ability to gauge the
success of Awqaf in Saudi Arabia.
The GAA uses specific performance indicators to track progress and measure the impact of its
initiatives as they provide a standardized and objective way to evaluate the effectiveness of its
programs. Indicators that the GAA in Saudi Arabia uses to track progress and measure the impact of its
initiatives include, but are not limited to:
1. Number of Awqaf properties registered and managed by the authority
2. Amount of revenues generated from Awqaf properties and investments
3. Number of beneficiaries of Awqaf initiatives and programs
4. Amount of financial assistance provided to beneficiaries
5. Number of partnerships established with other government agencies, private sector entities, and
NGOs to support Awqaf initiatives
6. Level of transparency and accountability in the management of Awqaf
7. Degree of compliance with regulatory frameworks and best practices in Awqaf management and
investment
8. Effectiveness of outreach and awareness-raising efforts to promote charitable and philanthropic
activities in society
9. Impact on local communities and society as a whole in terms of social and economic development.
These indicators provide a standardized and objective way to evaluate the effectiveness of GAA’s
programs and initiatives, and to monitor progress over time. There are several reasons why the GAA uses
these indicators:
• Focus on specific goals and objectives: The GAA uses performance indicators that are designed
to assess the achievement of specific goals and objectives, such as the number of beneficiaries
served, the level of satisfaction among beneficiaries, or the impact on the community. By focusing
on specific goals and objectives, the GAA can ensure that its programs are aligned with its missions
and are achieving intended outcomes.
• Standardization and comparability: The use of standardized performance indicators allows the
GAA to compare the effectiveness of different initiatives and programs. This allows the GAA to
identify best practices and allocate resources to initiatives that are most effective in achieving
desired outcomes.
• Objectivity: Performance indicators provide an objective way to measure progress and assess the
effectiveness of initiatives. This allows the GAA to make informed decisions based on data and
evidence rather than relying on subjective assessments.
• Accountability and transparency: The use of performance indicators allows the GAA to be
accountable to stakeholders, including beneficiaries, partners, and the wider community. By
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publishing data on the impact of its initiatives, the GAA can demonstrate its commitment to
transparency and accountability.
• Counting: For performance indicators related to the number of beneficiaries or the amount of funds
disbursed, the GAA may use a simple counting method to track progress. For example, the GAA may
count the number of individuals who receive healthcare services or the amount of funds disbursed
for a specific initiative.
• Rating scales: For performance indicators related to satisfaction levels or efficiency, the GAA may
use rating scales to measure progress. For example, the GAA may ask beneficiaries to rate their
satisfaction with a service on a scale of 1 to 5 or track the percentage of funds disbursed that go
towards administrative costs.
• Time-based scales: For performance indicators related to sustainability or impact on the community,
the GAA may use time-based scales to measure progress over a specific period of time. For example,
the GAA may track improvements in health outcomes over a five-year period or assess the long-term
viability of a project over ten years.
• Economic scales: For performance indicators related to economic impact, such as job creation or
income generation, the GAA may use economic scales to measure progress. For example, the GAA
may assess the total value of economic activity generated by an initiative or track the number of jobs
created as a result of a specific project.
Despite these efforts, the GAA recognizes that there is still room for improvement in the monitoring of
the success of its Waqf initiatives. For example, the GAA has identified the need to develop more robust
impact monitoring tools that can provide a more comprehensive and accurate results on the social and
economic impact of Waqf projects. The GAA is also working to improve its data collection and analysis
processes to ensure that its KPIs accurately reflect the performance of its Waqf initiatives.
3. Badan Zakat Nasional Indonesia (BAZNAS Indonesia)
BAZNAS Indonesia primarily focuses on social aspects, particularly poverty alleviation, disaster relief,
education, health care, and other social welfare programs.100 While BAZNAS Indonesia recognizes the
importance of environmental sustainability and has launched some environmental programs, such as eco-
mosque initiatives, its primary focus remains on social welfare programs.
The impact indicators used by BAZNAS Indonesia were developed based on the specific needs and
characteristics of the target communities and the goals of zakat programs. BAZNAS Indonesia identified
the impact areas where zakat programs can make the most significant difference and developed indicators
that are specific, measurable, and relevant to those areas. For example, poverty reduction is one of the
most critical impact areas for zakat programs. Therefore, BAZNAS Indonesia developed indicators such as
household income and poverty rates to measure the impact of its zakat programs on poverty reduction.
Similarly, health care, education, job creation, and social empowerment are other impact areas where zakat
programs can make a significant difference.101
BAZNAS key performance indicators include:
• Household income: For household income, a scale is used to measure the percentage increase in
income before and after receiving zakat assistance.
100 BAZNAS. (2021). What We Do. https://baznas.go.id/profil#section-one/.
101 BAZNAS. (2020). An analysis of social investment impact of Baznas microfinance program using social return on investment (SROI) method. BAZNAS
Center of Strategic Studies.
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• Poverty rates: Poverty rates are measured using the Poverty Line Index (PLI) to track the percentage
decrease in poverty rates in the target communities. The PLI is commonly used by governments
and organizations to measure poverty and determine poverty reduction targets. In Indonesia, the
Central Bureau of Statistics (BPS) is responsible for collecting and analyzing data related to poverty
and developing poverty measures, including the PLI.
• Medical treatment: The number of beneficiaries who receive medical treatment through zakat
assistance.
• Health outcomes: Health outcomes of beneficiaries are measured by tracking the percentage who
report improvement after receiving zakat assistance.
• Access to education: It is measured by tracking the number of beneficiaries who receive education
through zakat assistance.
• Completion rates: BAZNAS completion rates are measured by tracking the percentage of
beneficiaries who have completed their education after receiving zakat assistance.
• Employment: This is measured by tracking the number of beneficiaries who gain employment
through zakat assistance.
• Self-employment: This indicator is measured by tracking the percentage of beneficiaries who
increase their income through self-employment after receiving zakat assistance.
• Access to social services: The number of beneficiaries who have been able to access social services
through zakat assistance.
• Social status: Measured using a scale that measures the percentage of beneficiaries who have
reported an increase in their social status after receiving zakat assistance.
It is noteworthy that the indicators used by BAZNAS Indonesia are consistent with the international
development goals, such as the Sustainable Development Goals (SDGs). BAZNAS Indonesia has aligned its
impact indicators with the SDGs to ensure that its zakat programs are contributing to global development goals.
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CHAPTER 4
Impact Monitoring and
Reporting of Social
Finance in Malaysia
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This chapter explores impact monitoring and reporting practices by Malaysian social finance participants,
specifically FIs offering social finance and social enterprises. Case studies on selected FIs offering iTEKAD
social finance is conducted on Bank Islam and Bank Rakyat’s impact monitoring and reporting practices.
Case studies on impact monitoring and reporting were also conducted on social enterprises, specifically
PichaEats and Mereka. This chapter concludes with comparison of impact monitoring and reporting practices
by Malaysian social finance participants and relevant international and national standards.
4.1 Impact Monitoring and Reporting by
Malaysian Social Enterprises
Impact monitoring and reporting practices by Malaysian financial institutions and social enterprises
vary in granularity and transparency. MECD reported that there is no consistent reporting of outcomes
or impact of activities by social enterprises in Malaysia.102 A survey conducted by the British Council in 2017
found that more than 60% of surveyed social enterprises in Malaysia monitor their social impact based on
metrics set by funders and support organizations.103 However, the survey also found that there was limited
capacity to conduct impact monitoring and there was a lack of standardized approach among funders and
support organizations.104 As impact monitoring and reporting are essential tools for business planning and
funding decisions by stakeholders, MECD has identified strategies to improve the monitoring mechanism
for social enterprises through a standard monitoring to gauge the impact on beneficiaries.105
FIGURE 4.1
Impact Monitoring by Surveyed Social Enterprises
13% 7% 66% 55% 21% 38%
Young SEs Older SEs
Yes: We have it Yes: We evaluate it No
externally evaluated ourselves
Source: The British Council. (2018). The State of Social Enterprise in Malaysia 2018.
The next section examines the impact monitoring and reporting by selected Malaysian banks and social
enterprises. The impact indicators monitored by the selected banks and social enterprises are summarized
in Appendix 7 of this report.
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4.2 Impact Monitoring and Reporting by
Malaysian Financial Institutions (FIs)
Besides iTEKAD participating banks, most banks do not report financing activities that are aligned to
BNM’s social finance objectives such as microSME financing, and financing for SME digitalization. The
indicators reported are based on statistical reporting to BNM such as financing disbursed to SMEs, and the
bank’s portfolio monitoring such as the number of approved loans under the bank’s SME Digital Financing
product. Indicators measured and reported by selected banks in their annual report or sustainability report
are listed in Table 4.1 below.
TABLE 4.1
Indicators Reported for Financing Aligned to Social Finance Objectives by Selected Banks
Banks Financing of SMEs and Micro SMEs Financing of SME Digitalization
Maybank106 i. Financing disbursed to SMEs i. Percentage of approved SME Digital
ii. Number of SMEs hosted on its digital Financing product comprising of
business platform startup and microenterprises
iii. Number of financial literacy program ii. Financing disbursed for digitization of
business
iii. Number of businesses registered
and transactions conducted on its
business banking app
iv. Number of merchants onboarded on
QRPay
CIMB107 i. Financing disbursed to SMEs No specific indicators
ii. Number of participants and
improvement in financial literacy
awareness
Bank Islam i. Financing disbursed to SMEs108 No specific indicators
ii. Sadaqa fund indicators: beneficiaries
impacted, income before and after,
demography of recipients, value-
added benefits109
MBSB110 Financing disbursed to SMEs No indicators reported although
BNM’s SME Fund for Automation and
Digitalisation Facility is offered.
RHB Bank111 Financing disbursed to SMEs No indicators
Source: World Bank’s analysis of banks’ annual reports and sustainability reports
106 Maybank. (2022, May 18). Sustainability Report 2021.
107 CIMB. (2023, March 16). Integrated Annual Report 2022.
108 Bank Islam. (2023). Bank Islam Integrated Report 2022.
109 Bank Islam Sadaqa House. (2022). 2021 Impact Report. Bank Islam.
110 MBSB. (2023). Sustainability Report 2022.
111 RHB Bank. (2023). Integrated Report 2022.
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4.3 Impact Monitoring and Reporting of
iTEKAD Social Finance Program by
Malaysian Banks
Impact indicators by iTEKAD participating banks are collected and reported to BNM to monitor the
outcomes of their contributions to social finance recipients. iTEKAD participating banks (see Appendix 1
for a list of iTEKAD participating banks) report bi-annually to BNM the following indicators to ensure that
the program delivers a positive impact to the recipients112:
i. Segmental reporting: Number of microentrepreneurs financed, business sectors financed, total
financing disbursed, total philanthropic capital mobilized, gender composition of recipients,
distribution by states, and percentage of recipients that completed training;
ii. Business growth indicators: Percentage of recipients generating an average monthly sale of more
than RM4000, and percentage of recipients with asset value above RM10,000;
iii. Employment indicators: Percentage of employee retention;
iv. Financial resilience indicators: Percentage of business income saved in deposits and other
investments; and
v. Digital upskilling indicators: Percentage of recipients adopting online sales and e-wallet payment
for business transactions, and number of businesses running official websites with secured payment
gateway.
The indicators monitored and reported to BNM are used to measure changes in the beneficiaries’ business
operations and financial wealth to indicate positive improvements from the program. The data for
indicators are collected and captured by implementation partners through surveys of the beneficiaries.
However, impact evaluation which identifies changes directly attributable to the program is not measured.
An ex-ante or ex-post impact evaluation would require a comparison of changes in indicators between
program beneficiaries and non-beneficiaries. A meaningful impact may only be captured some months or
years after the program. Although this methodology can provide evidence on program performance, it
is a costly exercise that is resource intensive since the data would be collected through surveys from the
beneficiaries. For example, the International Initiative for Impact Evaluation (3ie) reported an average cost
of US$334,000 to evaluate impact of its development programs113. Imposing impact evaluation on banks
could hamper BNM’s goal to scale up iTEKAD program, especially with the absence of immediate financial
returns. Nevertheless, outsourcing of this exercise is possible as several global advisory firms are offering
impact evaluation on ESG aspects (example: Deloitte, EY, KPMG and PwC).
112 Bank Negara Malaysia. (2022, March 30). Annual Report 2021.
113 Puri, J., and Rathinam, F. (2019, July 16). Often late and costs a pretty penny: do impact evaluations meet the opportunity window? Green Climate
Fund.
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4.4 BNM’s Guideline on Impact
Measurement, Monitoring, and
Reporting for Development Financial
Institutions (DFIs)
DFIs are guided by BNM’s Performance Measurement Framework Implementation Guide (PMF), issued in
2021, to measure, monitor and report the impact of their operations in relation to each institution’s
mandate for specific sectors and customer segments.114 An example of a mandate is SME Bank’s role to
drive SME growth through financing assistance and expertise development. The PMF was developed with
reference to international standards on impact reporting such as the World Bank’s Results Framework and
Impact Evaluation methodologies, the International Finance Corporation’s Anticipated Impact Measurement
and Monitoring (AIMM), and the African Development Bank’s Results Management Framework. The PMF
outlines key components of impact monitoring and reporting, as follows:115
a. Desired additionalities from the DFI’s financial, design, demonstration, and policy activities;
b. Social and cost-benefit measured by subsidy dependence index, output index, and net subsidy cost; and
c. Operational efficiency measured by cost-to-income and turnaround time.
In developing the socio-economic impact of their activities, the PMF describes the use of the theory of
change or logic model to design programs for a development challenge, as illustrated in Figure 4.2.116 In
addition, the PMF emphasizes the importance of reporting impacts that are attributable to the outputs
and outcomes of the activities to eliminate “impact washing.”117 Nevertheless, BNM acknowledges that this
process is complex, timely, and costly. When selecting and defining key performance indicators prior to
project execution, DFIs are recommended to ensure that it is SMART.118 The indicators can be aggregated
at an institutional level (example: number of jobs created, increase in customer’s income) or project-specific
(example: length of highway constructed, acres of farming land developed).119 DFIs should also establish
specific baselines and targets for the indicators.120
114 BNM. (May 27, 2021). Performance Measurement Framework. Implementation Guide.
115 Ibid.
116 Ibid.
117 Ibid.
118 Ibid.
119 Ibid.
120 Ibid.
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FIGURE 4.2
BNM’s Illustration of the Logic Model in the PMF
Input Output Outcome Impact
• What are the resources • What interventions/ • What does medium • What is the desired
needed for the solutions can result in term change look like? long term economic or
proposed solutions? the desired change? (e.g. increase in social change?
(e.g. capital, talent, (e.g. nancing, advisory, revenue, job creation, • Who is the targeted
process) technical assistance) increase in savings) group/bene ciary?
• Is the solution to be • Who is currently serving
developed in-house or the same targeted
require collaboration? segment? Are there any
overlaps in role?
Source: Bank Negara Malaysia. (2021, May 27). Performance Measurement Framework. Implementation Guide.
The PMF also recommends a periodic independent evaluation of the impact reports to ensure an
unbiased view of the actual impact of DFIs’ activities, although this could also be costly and complex.121
Currently, no DFIs have published or submitted reports to BNM based on the PMF. Implementation of the
PMF may take some time as it requires a deeper analysis of DFIs’ operations and data gathering. Thus, the
effectiveness of the PMF as a guide for impact monitoring and reporting for DFIs cannot be assessed yet.
4.5 Case Studies on Impact Monitoring
and Reporting by iTEKAD
Participating Banks
1. Bank Islam’s Sadaqa House and BangKIT Microfinance Programs122
Bank Islam launched the Sadaqa House social finance program in 2018 to deliver positive and sustainable
impact to the underprivileged, facilitated by implementation partners such as NGOs. The Sadaqa House
social finance program has been included as part of the iTEKAD initiative. Bank Islam as the intermediary
and fund manager established the Sadaqa House as a crowdfunding platform for potential donors and
charity projects. The funds are sourced from Bank Islam’s purification fund and donation, a portion collected
from donations during Friday prayers, as well as donations from individuals, institutions and companies. The
funds are segregated into three buckets as follows:
121 Ibid.
122 Mohd Shairy, M.Z. (2023, March 6). Interview on Bank Islam’s Impact Reporting Practices, by Soraya Azhar and Bank Islam Sadaqa House. (2022).
2021 Impact Report. Bank Islam.
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i. A direct fund which is channeled to Asnafs123 and underprivileged communities in four main sectors
– Community Empowerment, Healthcare, Education, and Environment through implementation
partners.
ii. The perpetual fund received from institutional donors is distributed to underbanked B40124
microentrepreneurs via the BangKIT microfinance program which is based on Qard (benevolent loan)
contract. The principal from the BangKIT microfinance program will be returned to the perpetual
fund. The amount of BangKIT microfinance ranges from RM3,000 to RM20,000 per recipient.
iii. Money from the general fund is disbursed to other beneficiaries such as flood victims, university
entrepreneurship program, and rural development projects.
The strategies, processes and activities of Sadaqa House are overseen by the Sadaqa House and Zakat
Committee, guided by Sadaqa House Management Guideline approved by Bank Islam’s Management
Risk Control Committee and Shariah Supervisory Council. Bank Islam is also guided by BNM’s Corporate
Governance Policy issued in 2016 to manage the public donations for Sadaqa House. Bank Islam has also
referred to various international frameworks for the management of charitable contributions such as the
UK Charity Commission’s guidance and the Australian Charities and Not-for-profits Commission’s guides to
develop the Sadaqa House Management Guideline.
Bank Islam publishes the Sadaqa House Impact Report annually which discloses the governance structure,
impact, and financial position of Sadaqa House. For the donations to NGOs through direct fund, the
indicators reported include: the amount distributed to each implementation partner, and the number and
type of beneficiaries for the respective target sectors. Narratives of inputs and outputs by each of the
implementation partners are elaborated to show the use and benefits of the donation.
More impact indicators are monitored to measure the success of the BangKIT microfinance program.
BangKIT microfinance provides underbanked micro-entrepreneurs with affordable microfinancing at zero
financing rate, improve their business acumen, create perpetual social impact, and enhance their capacity
to access commercial banking facilities at the end of the program. The indicators are reported by the
beneficiaries for the bank, to evaluate the financial, business growth and utilization of Bank Islam’s facilities
and solutions, as illustrated in Figure 4.3. Demographic, financing distribution, and business sectors of
the beneficiaries are also reported to analyze the utilization and distribution of BangKIT microfinance.
Additional financial indicators such as repayment rate and non-performing financing are also monitored if
required by institutional donors. Bank Islam has engaged a Fintech partner, MesinKira, to develop a digital
solution to facilitate recipients’ business transactions (i.e. via point-of-sales, cashflow, and financial records
features) and the bank’s impact indicator monitoring. This digital solution will help to minimize the cost of
recipients’ business operations and the bank’s monitoring to support the growing number of underbanked
entrepreneurs under Bank Islam’s purview.
123 Asnaf are zakat beneficiaries that include the hardcore poor and destitute, the poor, and the oppressed Muslims.
124 B40 refers to Malaysian citizens in the bottom 40% of the household income range.
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FIGURE 4.3
BangKIT Microfinance Indicators Monitored by Bank Islam
No. Aspects Dimension
1. Financial
2. Business
Growth
3. Utilisation of
BIMB facilities
and solutions
Source: Bank Islam Sadaqa House. (2022). 2021 Impact Report. Bank Islam.
Based on feedback from Bank Islam, it is challenging to collect accurate and timely data from the
direct fund beneficiaries as it depends on the willingness of the beneficiaries to respond to surveys by
implementation partners. Some implementation partners charge fees of between RM2,000 and RM3,000
to train, coach and collect data from participants over a period of 12 to 36 months. For the BangKIT
microfinance program, Bank Islam gathers feedback directly from selected recipients to evaluate the need
for larger funding for business expansion and impact on society. The data and impact evaluation process
are resource-intensive, and expansion of the program will require a higher headcount. Impact evaluation
that identifies changes directly attributable to the program will require allowance for management fees to
compensate for the resource requirements.
2. Bank Rakyat’s Entrepreneurship Leadership Series125
Bank Rakyat’s Entrepreneurship Leadership Series consists of the RAKYATpreneur and Bank Rakyat
UNIpreneur social finance programs. The RAKYATpreneur is a philanthropic initiative to provide seed funding
for potential Asnaf micro-enterpreneurs, sourced from Zakat contributions. Besides financial assistance,
the program also helps to nurture entrepreneurship skills with the goal of enhancing their bankability via
access to business banking facilities at the end of a six-month program. The recipients are selected based
on a list of eligible Asnaf micro-entrepreneurs provided by the state Zakat authorities or Lembaga Zakat
Negeri. Seed funding of between RM5,000 to RM10,000 is provided to Asnaf micro businesses. Recipients
are required to attend structured coaching and mentoring sessions by Universiti Teknologi MARA (UiTM)
125 Kamarulzaman, A. (2023, March 16). Interview on Bank Rakyat’s Impact Reporting Practices, by Soraya Azhar
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lecturers and successful former recipients of the program for six months. Successful and qualified graduates
will be identified for access to further financing facilities.
The Bank Rakyat UNIpreneur program is a philanthropic initiative to assist potential young student
entrepreneurs from Asnaf families with initial capital using zakat funding, and the development of
entrepreneurial skills for six months. Bank Rakyat collaborates with selected universities to identify and
provide seed funding of RM3,000 to Asnaf student entrepreneurs with low monthly revenue. Bank Rakyat
also provides RM5,000 to the universities to coach and evaluate the progress of the recipients. At the end
of the six-month program, the mentors will evaluate participants’ communication skills, critical thinking,
creativity in problem-solving, time management, and public speaking.
Impact indicator data from participants are collected and reported by the trainers and mentors.
Implementation partners of RAKYATpreneur utilize online communication to receive feedback on the
non-financial impact of the program to indicate the improvements in survival and economic needs of the
participant’s family, self-competency skills, the support system to Asnaf entrepreneurs, and compatibility
of training modules. However, data collection is challenging, particularly in securing the commitment of
participants to provide progress updates every three months. On the other hand, data collection for Bank
Rakyat UNIpreneur program is less challenging since there is more frequent and closer communication
between the lecturers and student participants. Financial indicators of the Bank Rakyat UNIpreneur program
focus on the utilization of funds by participants such as upgrading of equipment, product restocking, rental,
and debt settlement. The performance and impact of the programs are then reported to Bank Rakyat’s
management for close oversight and strategy deliberation. However, the performance indicators are not
published. Impact evaluation to measure impact attributable to the programs is not evaluated as it is costly.
The cost is not commensurate with the size of funding of between RM3,000 and RM10,000 per participant.
Moving forward, Bank Rakyat aims to measure and report the performance and impact of the programs
based on BNM’s PMF to capture improvements in monthly sales revenue, the number of employees
retained and hired, and average monthly savings. Bank Rakyat is also exploring the use of Fintech to
facilitate the collection of data and monitor the savings behavior of participants for better performance and
impact monitoring.
4.6 Case Study on Impact Monitoring
and Reporting by Malaysian Social
Enterprises
1. PichaEats126
PichaEats is a social enterprise that provides platform for refugees in Malaysia to sell food cooked by
them to the public. PichaEats monitor and report impact indicators guided by Asian Development Bank’s
Sustainable Livelihoods Approach which monitors the following livelihoods assets127:
126 Lim, Y.K. (2023, May 18). Interview on PichaEats’ Impact Reporting Practices, by Soraya Azhar and PichaEats. (2023). PichaEats 2022 Impact Report.
127 Serrat, O. (2008, November). The Sustainable Livelihoods Approach.
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a. Human capital such as health, nutrition, education, knowledge and skills, capacity to work, capacity
to adapt.
b. Social capital such as networks and connections (patronage, neighborhoods, kinship), relations
of trust and mutual understanding and support, formal and informal groups, shared values and
behaviors, common rules and sanctions, collective representation, mechanisms for participation in
decision-making, and leadership.
c. Natural capital such as land and produce, water and aquatic resources, trees and forest products,
wildlife, wild foods and fibers, biodiversity, and environmental services.
d. Physical capital such as infrastructure (transport, roads, vehicles, secure shelter and buildings, water
supply and sanitation, energy, communications), tools and technology (tools and equipment for
production, seed, fertilizer, pesticides, traditional technology).
e. Financial capital such as savings, credit and debt (formal, informal), remittances, pensions, wages.
PichaEats measures and report the impact indicators on the livelihood of the chefs and their families’
overall well-being and business growth. These are measured based on financial, physical, human, and social
capital indicators as illustrated in Figure 4.4.
FIGURE 4.4
Impact Indicators Reported by PichaEats
FINANCIAL CAPITAL PHYSICAL CAPITAL
RM1,000,000 79% Chefs
given back to Picha Chefs are able to cover monthly rental
fully from income made with
17 Active Kitchens PichaEats alone
22 Picha Chefs
100% Chefs are able to
cover utilities bills monthly
(water, electricity, WiFi)
HUMAN CAPITAL SOCIAL CAPITAL
87.5% Monthly
of Picha Chefs' children of
schooling age (6-17) are in Town Halls to involve Picha
school Chefs in business discussion
& decision making
Bi-annual up-skilling
training for chefs to learn Quarterly 1:1 Check-Ins
new menu for Picha Chefs' & their
families' personal well-being
Health checkup & quarterly
hangout for all Picha Chefs
Source: PichaEats. (2023). PichaEats 2022 Impact Report.
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PichaEats conducts surveys on the Chefs to evaluate the following financial, health and livelihood indicators
to indicate the impact of PichaEats:
i. Financial well-being: Average income and ability to pay for medical fees before and with PichaEats;
ii. Improvements in livelihood: Rating of 1-5 to indicate life improvements since joining PichaEats, skills
and confidence gained after joining PichaEats; and
iii. Health improvements: Rating of 1-5 to indicate the state of mental health after joining PichaEats.
PichaEats also assess and report on impact indicators beyond Picha Chefs such as job creation, waste
management, reducing hunger of refugee children, and upskilling Picha Chefs. Data collection on the
indicators is relatively easy and not time consuming due to low number of Chefs and close communications
with its Chefs through monthly check-ins and quarterly gathering. However, impact evaluation that identifies
changes directly attributable to PichaEats activities is not conducted as it is a costly exercise and not a
standard practice in Malaysia. Additionally, targets on indicators are not established as it is hard to achieve
them as some of the refugee chefs resettles elsewhere. Although PichaEats do not rely on external investors
or grants to operate its business, PichaEats plans to continue publishing its impact report to ensure
transparency of its work and awareness on the impact of its program.
2. Mereka128
Mereka is a talent development ecosystem for creatives talents, professionals and entrepreneurs to unleash
their potential in the creative and digital economy. Mereka’s ecosystem consists of exclusive access to
the learning community, application-based training programs, industry experts and a regional network
of creative hubs. For this case study, we examined the Future of Work (FOW) program, an employability
development program training youths to find jobs either as a freelancer or a full-time employee. Mereka
receives funding from its impact partners with the objective to increase employability of unemployed and
underemployed B40 youths. The program is managed using the theory of change model. Mereka monitors
and reports indicators against targets to its funders. The choice of indicators and the reporting
frequency is dependent on the funders’ reporting requirements. The indicators monitored and reported
intend to capture output, outcome and impact of the Future of Work, as follows:
i. Output: Number of youths trained
ii. Outcome: Number of trained youths that are employment ready
iii. Impact: (a) Number of trained youths employed after the program; (b) Change in monthly income
earned by trained youths pre- and post-program; and (c) Number of trained youths remaining in
employment after six months
The ability to perform impact evaluation to measure the impact attributable to the program depends largely
on the length of the training program, including time allocated for data collection and impact monitoring.
Employability-related impact indicators take time to materialize depending on the job market. Hence, a
follow-up period of at least one year is needed after the training program to collect meaningful impact
indicator data for employability-related programs. Currently, Mereka’s impact partners engage Mereka for
programs lasting one year or longer, allocating the necessary timeline and budget for collecting impact
indicators. Mereka allocates dedicated resources to collect data through emails, WhatsApp, telephone calls,
and as pre-requirement for participating in events. Mereka allocates approximately 10 percent of its project
cost for data collection on impact indicators.
128 Sangaran, A. (2023, April 19). Interview on Mereka’s Impact Reporting Practices, by Soraya Azhar
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However, these impact data collected, analyzed and measured still only measures the program within a
timeframe of one to two years. The longer-term impacts (i.e. three years, five years, ten years) of the FOW
program on their participants have not been evaluated as the program has only reached its third year,
and studying the long-term effects of the program requires costly and resource consuming effort. The
monitoring of the output, outcome, and impact above vis-à-vis targets is already challenging, particularly in
getting a timely and quality response from participants.
The impact indicators are currently not published but is shared with funders during reporting cycles. Mereka
plans to publish impact indicators of the FOW program on its website and impact reports by the end of
the year. Mereka is also considering conducting a Social Return on Investment (SROI) analysis on the FOW
program.
4.7 Comparing Impact Monitoring and
Reporting Practices by Malaysian and
Global Social Finance Participants
4.7.1 Goal and Target Setting
National and international guidelines on social finance and investment management such as BNM’s PMF,
BNM’s VBI Guideline, the USSPM, and GIIN’s IRIS+ outlined several common principles on social finance
program goal and target setting, as follows:
i. The goals and target should consider the positive and negative effects of social finance on the
community while balancing investors’ expectations for risk, return, liquidity, and impact. An example
of a strategic goal developed by GIIN is improving financial health for financial inclusion programs.129
ii. Strategies to achieve social goals and mitigate negative effects on the community should be
established. Strategies will identify inputs and activities such as resources to be invested, development
of appropriate product or financing solutions, and capacity building.
iii. Targets on outputs and outcomes should be measurable and linked to evidence that leads to the
achievement of goals. BNM’s VBI guideline cautioned against the use of process-oriented indicators
such as the number of engagement sessions, but encourage indicators that indicate impact such as
the number of jobs created in new growth areas.130 To guide members in the selection of targets,
GIIN has developed targets that are linked to evidence of successful achievement of goals.
iv. Goals and targets should be time-bound to ensure the achievement of goals that are aligned with
stakeholders’ expectations. For example, BNM’s PMF requires that indicators be established based
on the SMART principles which include the principle of timeliness.131
129 GIIN. IRIS+ System. Data. Impact Performance Benchmarks. Accessed on June 12, 2023 https://iris.thegiin.org/performance-analytics/
130 BNM. (October 3, 2018). Implementation Guide for Value-based Intermediation. p. 9.
131 BNM. (May 27, 2021). Performance Measurement Framework. Implementation Guide. p. 8.
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When comparing the practices of Malaysian social finance participants against the principles listed
above, several aspects of goal and target settings cannot be determined since it is not published. In the
case of Bank Islam132, the bank established annual targets on specific indicators for BangKIT microfinance
such as target disbursement, target reach, and target upward mobility. Bank Islam also outlined strategies
and targets for several Sadaqa House programs funded through the direct fund. However, monitoring of the
negative effects, evidence-based targets, and non-process-based indicators are not evident in Bank Islam’s
published Impact Report.
4.7.2 Impact Indicators, Monitoring, and Evaluation
Indicators are important data to demonstrate program results to influence project planning, management,
and reporting. Impact evaluation provides more concrete evidence of the targeted changes attributable
to the social finance program. There are several guidelines and references on indicators, monitoring and
impact evaluation methodologies such as BNM’s PMF and VBI guidelines, GIIN’s IRIS+, the World Bank’s
Results Framework and Impact Evaluation methodologies, IFC’s AIMM, and OECD’s Principles of Impact
Evaluation. The common principles for impact monitoring of indicators and results are as follows:
i. The indicators should follow the SMART principle and be minimal to avoid burdensome data
collection and monitoring. The World Bank’s Results Framework requires stakeholders to select
indicators that are necessary to measure the progress of the program without creating additional
burdens on respondents or staff.133 GIIN also recommends that the indicators selected to be backed
by evidence and based on best practices of the industry.134 GIIN has established a short list of key
indicators for each strategic goal for members’ reference. In addition, BNM requires that indicators
focus on the impact created rather than being process oriented.135
ii. Impact evaluation should consider the counterfactual of what the outcomes would have been
without the social finance program within a realistic timeline. This can be measured by comparing
the outcomes of social finance beneficiaries versus non-beneficiaries with similar characteristics.
There are many databases of metrics developed to support impact reporting such as GIIN’s IRIS+,
SPI4, B Analytics, and UN SDGs.
iii. Impact monitoring and evaluation is independently assessed to ensure an unbiased view and
prevent impact washing.
In Malaysia, FIs and social enterprises report selected impact indicators on social finance programs. The
common indicators are the demographic of beneficiaries and the improvement on the financial wealth
of beneficiaries. For instance, Bank Islam measures positive outcomes from its BangKIT microfinance by
monitoring the savings accumulation and income growth of participants. However, no impact evaluation has
not been conducted nor reported. This is partly due to the limitation in financial and manpower resources
to conduct a proper impact evaluation, particularly since the social finance programs do not generate
financial returns for the bank. This is also the case for Bank Rakyat’s Entrepreneurship Leadership Series.
The collection of data for indicators from beneficiaries and implementation partners is already challenging
due to the large number of participants that gives rise to communication and reachability issues.
132 Bank Islam Sadaqa House. (2022). 2021 Impact Report. Bank Islam.
133 Independent Evaluation Group. (2012). Designing a Results Framework for Achieving Results: A How-To Guide. The World Bank.
134 GIIN. An Introduction to Impact Measurement and Management. Accessed June 12, 2023 https://iris.thegiin.org/introduction/#b2
135 Bank Negara Malaysia. (October 3, 2018). Implementation Guide for Value-based Intermediation. p. 9.
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4.7.3 Indicator and Impact Reporting
The reporting of social finance indicators and impact is important to ensure transparency and accountability
on resources utilized, activities, and achievement of the desired outcomes. A robust report can also help
to secure additional funding from investors as it allows them to conduct risk-reward decisions. Common
practices on reporting of indicators and impact adopted by national and international organizations as well
as global FIs include the following:
i. Publication of annual impact reports that are separate from sustainability or ESG reports. The
separation of social finance impact report from sustainability or ESG reports provides clearer and
larger information on the activities and indicators related to the social finance programs.
ii. Regular reporting to the management, and the Board. This is important to ensure prudent use of
funding, risk management, and strategic decision on social finance programs.
iii. Report is validated by qualified social impact auditors. This process is particularly important for
social finance with financial returns to ensure an unbiased view of the social finance program and
prevents impact washing.
Most Malaysian FIs report social finance as part of the annual sustainability or ESG report. This would include
CSR programs. iTEKAD participating banks report the required indicators to BNM on bi-annual basis. Several
FIs and social enterprises such as Bank Islam and PichaEats publish annual impact reports. Others do not
publish but report to the management and Board of the FI or company. In addition, the impact reports are
validated by internal auditors as it can be costly to engage external auditors to validate impact reports and
may not be proportionate with the cost and scale of social finance programs.
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CHAPTER 5
Recommendations and
Lessons for Malaysia
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CHAPTER 5: Recommendations and Lessons for Malaysia
Given the growing importance of social finance in Malaysia and the declared objective in the Financial
Sector Blueprint 2022-2026 to mainstream it into the financial system, there is a need for concerted efforts
on various fronts to strengthen the framework for social finance impact monitoring and reporting in Malaysia.
Based on the review of principles, standards and practices described herewith, this chapter offers a set of
recommendations to serve as input into the ongoing efforts to develop a more robust framework for impact
monitoring and reporting of social finance in Malaysia. A well-defined framework would enable effective
evaluation of social impact within Islamic social finance practices and identify strengths and weaknesses
in the current practices. By gaining insights into areas where current practices excel or fall short, targeted
strategies for improvement can be developed, leading to enhanced overall effectiveness of social finance
offerings by Malaysian financial institutions. This is also to ensure a coherent and sustained effort to
strengthen the framework for impact monitoring and reporting.
The recommendations will be structured based on the Roadmap for Social Finance in Malaysia (Roadmap)
which identifies a series of complementary tools and incentives to further the financial regulator’s and
MECD’s goals in social finance, incorporating existing tools (such as social taxonomy, sustainable finance
standards, BNM’s Performance Measurement Framework, and SC’s SRI Taxonomy) and new ones (guidance
for project, and entity-level impact monitoring) (see Figure 5.1). This Roadmap should encompass four key
layers of action: 1) Clarify the principles of social finance; 2) Structural support; 3) Impact domains; and 4)
Impact monitoring and reporting.
Financial regulators and MECD could spearhead the implementation of the Roadmap, leveraging on its
prudential and market organizing role, with the involvement of all stakeholders (financial institutions, social
finance organizations, etc). For guidance, the roadmaps for the future of impact investing, developed by
the GIIN represent a significant effort to advance the scale and effectiveness of impact investing in the
conventional social finance environment. It could be regarded as good practices, covering the identification
of key areas of action to the introduction of an impact monitoring tool.
FIGURE 5.1
Roadmap for Social Finance in Malaysia
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CHAPTER 5: Recommendations and Lessons for Malaysia
Recommendation 1: Clarify the Principles of Social Finance in Malaysia
Social finance principles can be further clarified based on the Maqasid principles, both for conventional
and Islamic social finance. Maqasid refers to the intent, objective and purpose of public good to create
harmony with welfare of the society.136 The fundamental principles of Islamic social finance, which serve as
the guiding objectives, such as social justice, equity, and sustainable development. Islamic FIs providing
social finance are not only guided by general principles of social finance, such as creating positive social
and environmental impact, promoting financial inclusion and empowerment, and addressing market failures
and inequalities, but should also be governed by Maqasid Shariah, which are the higher objectives and
purposes of Islamic law. This process involves a comprehensive examination of the distinctive characteristics
of prevalent Islamic funding channels and the corresponding Maqasid Shariah principles that govern them.
BNM and SC should collaborate to establish the principles for Maqasid al-Shariah to ensure standardized
guide for Islamic social finance participants in the financial system.
For example, the Maqasid al-Shariah principles can be adopted from the Institute of Islamic Banking and
Insurance (IIBI) principles of Islamic finance that aligns with Maqasid Shariah, such as:137
i. Stakeholders must individually and collectively be willing to decline transactions that are prohibited
and can have harmful consequences for individuals and society as a whole; they have to uphold the
highest professional standards of honesty and justice.
ii. Funders and recipients must disclose all information and records that primarily show where the
revenues will come from and be judged for their intentions and actions in distinguishing transactions
or investments from what is halal, or permissible, and haram, or prohibited.
The objective for the establishment of social finance principles is to identify specific domains of impact
relevant to each funding channel, establish appropriate roles for Shariah supervision, and devise key
performance indicators (KPIs) that encompass both the Shariah aspect and the desired social outcomes.
For instance, when guided by the principles above, negative additionality should be evaluated and disclosed
by social finance providers to ensure no harmful consequences of transactions. Materiality of issues and
factors that are significant to Islamic social finance operations and their social impact can be determined
to optimize resource allocation and identify key domains of impact, including income, education, health,
and the environment. This analysis enables them to assess whether their impact aligns with the principles
of Maqasid Shariah and Islamic economics, which represent the ultimate objectives of Islamic social finance.
Through this analysis, they can ensure and advance social cohesion, justice, and equitable distribution in
their operational areas and beyond.
An example of a materiality analysis in Islamic social finance is using a standardized Maqasid Shariah
index tailored to address the common domains of impact targeted by Islamic social finance institutions.
This index serves as a comprehensive framework to evaluate social impact initiatives based on the principles
of Maqasid Shariah. The development of a standardized Maqasid Shariah index promotes consistency,
comparability, and transparency in social impact monitoring within the Islamic finance industry. It provides
stakeholders with a shared language and criteria to assess the effectiveness and alignment of different
initiatives. By utilizing this index, stakeholders can ensure that their activities are in line with Maqasid Shariah
and contribute to the broader objectives of Islamic social finance.
136 Institute of Islamic Banking and Insurance. (n.d.). Maqasid Al-Shariah. Accessed on June 17, 2023 https://www.islamic-banking.com/moral-oath/
maqasid-al-shariah
137 Ibid.
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Recommendation 2: Identify the Impact Domains for Social Finance in Malaysia
Identifying specific impact domains that social finance aims to address, such as building the capacity
of micro-entrepreneurs to sustain and scale up their businesses, and other key social issues plays a vital
role in effectively measuring and managing social impact. It brings clarity to the objectives, outcomes,
and indicators that guide impact management activities. This identification offers several valuable benefits
to social finance actors. It ensures alignment between their impact vision, mission, and core values and
capabilities. By focusing on the most significant and relevant impact areas, resources and efforts can be
prioritized effectively. Furthermore, it facilitates clear communication and reporting of impact performance
and contributions to stakeholders and society. Learning and comparing within the same or similar impact
domains becomes simpler, allowing for knowledge sharing. Moreover, impact domain identification aids in
continuous improvement and optimization of impact strategies and practices over time.
To illustrate, IRIS+ has defined its impact domains based on seven dimensions, including the nature of impact,
target beneficiaries, scale, depth, duration, contribution depth, and risk, along with the 16 SDGs. Similarly,
the USSPM framework identifies seven areas, such as social strategy, committed leadership, client-centered
products and services, client protection, responsible human resource development, responsible growth and
returns, and environmental performance management. Organizations can also define their own domains of
impact at an organizational level, such as Opportunity International’s focus on poverty alleviation, women
empowerment, education, agriculture, and vulnerable populations. For Malaysia, BNM could clarify that the
impact domain for social finance by FIs is on building the capacity of micro-entrepreneurs to sustain and skill
up their businesses. Additionally, MECD could establish their own impact domains based on most pressing
issues in the country that aligns to the government’s priorities in the 12th Malaysia Plan that would improve
the standards of living of the underprivileged such as reducing hardcore poverty, digitizing micro and SMEs
operations, and increasing highly skilled Malaysian workforce.138 The clarification on priority impact domains
by authorities will guide the funding activities of social finance providers and facilitate achievement of the
desired social outcomes.
Recommendation 3: Consult Stakeholders and Beneficiaries to Get Feedback on
the Development of a Social Finance Framework and Impact Reporting.
The development of a social finance framework and guideline on impact monitoring and reporting of
social finance will require the involvement of a broad ecosystem of actors along the entire investment
value chain, including authorities, issuers of financial products (companies, cities, countries), financial
intermediaries, providers of capital (banks and credit institutions), investors (private investors,
institutional investors, insurance companies, and development finance) and beneficiaries. While financial
regulators and MECD can play a central role in the design and dissemination of the social finance framework
and impact monitoring and reporting guideline, financial institutions and social organizations have to adopt
and implement the framework in carrying out their social finance activities. Obtaining buy-in and feedback
are therefore a key success factor.
To ensure that practices of impact monitoring and reporting percolates throughout the social finance
ecosystem, it is important to sensitize and educate potential beneficiaries on the importance of tracking
results. A key best practice in the philanthropic grantmaking sector is to announce intended areas of
impact and seek grant applications that articulate envisioned impact. It is recommended that social finance
providers consider (1) soliciting applications that include commitments to impact and (2) requiring, where
appropriate, recipients to regularly report on outcomes. Such reporting should protect the privacy of data
of participants and the identities of beneficiaries should not be disclosed. It may not be appropriate for
the social finance organizations themselves to solicit grant applications from ultimate beneficiaries (for
138 Ministry of Economy. (2021, September). Twelfth Malaysia Plan 2021-2025.
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reasons related to privacy and practicality), but social finance organizations can proactively follow up with
beneficiaries to report on impact. Further, financial institutions making grants to social finance organizations,
should be encouraged to engage with and convene social finance recipients as a means for feedback,
knowledge-sharing, and strategy refinement. The social finance providers themselves may also consider
such convenings of beneficiaries where appropriate.139
For Islamic social finance, it is important to address the different policies by state-level Islamic
authorities and federal-level regulatory bodies in Malaysia which may create a complex landscape
for the governance of Islamic social finance. This can result in conflicting interpretations and regulatory
inconsistencies, thereby posing a challenge to the seamless implementation of a standardized framework for
Islamic social finance. Addressing this challenge necessitates a harmonized effort to delineate responsibilities
and promoting cooperation among relevant authorities to ensure the effective and uniform application
within the Malaysian context.
Recommendation 4: Improve the Structural Support for Social Finance.
Financial regulators and MECD should continue to enhance the regulatory environment for social finance,
establish infrastructure for human capital development, technological and institutional structures to support
the social finance ecosystem, which are explained in the next points.
1. Regulatory Environment
A regulatory environment that is conducive for social finance can foster continuation, scaling up, and
enhancements to the social finance impact monitoring and reporting practices. The current regulatory
environment for Malaysian FIs already provides funding incentives such as iTEKAD and requires impact
indicator reporting to BNM on iTEKAD utilization. For financial institutions, the requirements by BNM can
be further expanded to include annual publication of the impact indicators of iTEKAD program, both
positive and negative, by respective FIs. This could facilitate consistency and coherence in measuring,
monitoring, and reporting social impact, fostering transparency and accountability to stakeholders. This
regulation method is also adopted by the European Union through the EU Sustainable Finance Disclosure
Regulation (SFDR) 2019/2088 that mandates financial market participants and advisers to disclose how
they incorporate sustainability risks and adverse sustainability impacts into their investment decisions
and advice.140 Other regulatory environment reforms proposed by the GIIN Roadmap for the Future of
Impact Investing for policymakers to facilitate impact investing are clarifying fiduciary duty, establishing tax
incentives for impact investments, and develop regulations that incentivizes product development, impact
monitoring and reporting, and the provision of capacity-building support.141
2. Human Capital Development
Promoting the new approach within social finance requires cultivating awareness among diverse
stakeholders and developing a capable human capital pool. As such, there exists a need to invest in
education and capacity-building programs aimed at equipping individuals with the required skills to
accurately measure, report, and audit. This can be achieved through comprehensive and esteemed
training programs that offer certification in social impact monitoring and evaluation. Programs such
as the International Training Centre’s Monitoring and Evaluation Certification Program, and certification
by the Evaluator’s Institute at Claremont Graduate University provide individuals with the knowledge,
skills, and expertise required to effectively assess and report on social impact outcomes. By successfully
139 Convenings need not gather all beneficiaries. Sampling methods can be used to efficiently gather data.
140 Eurosif. Sustainable Finance Disclosure Regulation (SFDR). Accessed on June 12, 2023 https://www.eurosif.org/policies/sfdr/
141 GIIN. (March, 2018). Roadmap for the Future of Impact Investing: Reshaping Financial Markets. p. 7.
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completing rigorous training and examinations, professionals can obtain the necessary credentials to
ensure accuracy, consistency, and credibility of social impact auditing. This commitment to professional
development contributes to the establishment of a skilled workforce capable of upholding the highest
standards in measuring and reporting social impact, ultimately enhancing the credibility and effectiveness
of the entire process. In order for an impact approach to work effectively, the training programs should also
emphasize on results as evidence for decision-making across the board.
Based on our study, we found that there is a need for training and certification on impact monitoring
and evaluation skills by financial institutions offering social finance in Malaysia. Financial regulators
could coordinate with the Asian Institute of Chartered Bankers (AICB) or other training providers to develop
a capacity building module on impact monitoring and evaluation. The training programs should be designed
to facilitate units making lending decision, units evaluating the impact of social finance programs, and
independent validator of the impact evaluations. The training programs could be beneficial even for DFIs
to implement the BNM Performance Measurement Framework which requires monitoring on additionality,
social cost and benefit, and operational efficiency.
It is important to enhance the capability of social finance providers to carry out reliable impact evaluation
and reporting. This would also support financial regulators’ and MECD’s vision to enhance impact
monitoring by financial institutions and social enterprises. Financial regulators and MECD could promote
the development of monitoring and evaluation (M&E) capabilities within financial institutions and social
enterprises in order to create a central focal point for building and maintaining such capabilities. It is
not expected that FIs would create entire M&E departments, rather, they can allocate staff time to M&E
and engage external experts to support in monitoring and evaluation. The roles and responsibilities of
such M&E function should be made clear to ensure focus on the results. External expertise could be
obtained from other development organizations with a long history of monitoring and evaluation, as
well as from private advisory firms with relevant expertise.
3. Technological Infrastructure
Reporting to a centralized database can facilitate the documentation and analysis of social finance
practices, along with their corresponding impacts. A primary function of this database is to generate
comprehensive data and information that can be consolidated to aid the central bank to effectively
monitor the trajectory of social finance within the country and evaluate its overall impact. The data will
help authorities to coordinate effort in terms of what areas or beneficiaries to be targeted, the role of
implementation partners, avoid overlaps, and reduce financial waste. For instance, a database like IRIS+
which offers a user-friendly central web platform as part of its features, would simplify data collection
and reporting of social finance activities. The platform could provide easy access to a range of resources,
including core metric sets, thematic taxonomies, evidence base, and alignment guides, allowing users
to leverage impact metrics effectively. Moreover, the web platform allows users to tailor their own
impact monitoring and reporting frameworks according to their unique impact goals and strategies. For
the iTEKAD social finance program, BNM, Zakat authorities, and the state government can collaborate
to establish this database to facilitate monitoring of zakat fund utilization for the program and impact
of the iTEKAD social finance program.
In addition to these capabilities, the web platform could serve as a gateway to other useful tools and
platforms that support data collection, analysis, and reporting of social and environmental impact. For
instance, in IRIS+, users have the option to connect their IRIS+ frameworks with platforms like Impact Cloud
or SoPact, enabling them to consolidate and visualize data from multiple sources. Moreover, users of IRIS+
can seamlessly export their IRIS+ frameworks to widely recognized reporting platforms like the GRI or the
Sustainability Accounting Standards Board (SASB), which facilitates effective communication of their impact
performance to diverse stakeholders.
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Provision of this technological infrastructure such as IRIS+ aims to democratize and standardize social and
environmental impact monitoring and management for both impact investors and investees. The central
web platform enhances accountability, accessibility, comparability, and streamlines the process, ultimately
facilitating better decision-making and promoting greater transparency in the field of impact monitoring
and management. This will also foster enhanced collaboration and evidence-based policy development.
However, the main obstacle lies in incentivizing and regulating social finance institutions to consistently
report their impact data in a standardized format to this central repository. Achieving this objective demands
a harmonized approach that aligns incentives to encourage compliance.
4. Institutional Structure
A social finance governance framework for the financial industry is vital for defining the roles and
responsibilities of various stakeholders engaged in the process of social impact monitoring and
program management. Furthermore, the institutional infrastructure plays a crucial role in shaping policies,
procedures, systems, and standards that govern the institution’s social impact activities and practices.
These frameworks provide essential guidance and regulation, ensuring that social impact efforts align with
the overall mission and desired outcomes. For instance, financial regulators and MECD could introduce
social finance governance framework to guide FIs on sourcing of funds, funding utilization, monitoring
and governance. Such framework has been established by several financial institutions such as Bank Islam
and Bank Rakyat to ensure clear strategy to scale up social finance while ensuring prudent management of
funds and achievement of desired outcomes.
Recommendation 5: Provide Guidance on Impact Monitoring and Reporting of
Social Finance and Assess the Impact of Social Finance Programs.
1. Develop a Guideline for Impact Monitoring of Social Finance.
Drawing on global lessons of experience and guided by the Theory of Change model, we recommend
that the guidelines for impact monitoring and evaluation of social finance should contain the following
components:
a. Identify targets or goals: Identification of long-term goal of the social finance program will guide
the direction of program activities and funding decisions. The targets should be measurable and
linked to evidence that ensures achievement of the desired impact.
b. Input: Tracking the resources and efforts directed towards social impact, including investments
and initiatives. These measures can include financial contributions, technical support, and staff
time.
c. Output: Focusing on direct results, or the quantity of output of SDG investments or strategic
initiatives, for example, the number of essential goods and services provided. Output assessments
consider the activities undertaken.
d. Outcome: Focusing on the ultimate result of social investments or initiatives, beyond their direct
output. Examples of outcomes are increased youth employment, growth in income of vulnerable
households, increased digitalization of micro and SME customers, and increased access to financial
services of underserved segments. Outcome assessments can incorporate relevant metrics that
are rooted in widely adopted global frameworks such as the UN Sustainable Development Goals
and IRIS+ metrics for increased relevance, robustness and comparability with other jurisdictions.
e. Ex-ante and ex-post monitoring: Impact monitoring include both the assessment of development
outcomes (ex-ante), as well as the monitoring, supervision, and reporting of the development
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outcomes (ex-post). Reporting can be at the project or initiative level and at the overall
organizational level (as is the norm for multilateral development financial institutions).
f. Impact evaluation or additionality: Evaluation of impact attributable to the social program
is important to provide evidence of the impact achieved and avoid ‘impact washing’. Impact
evaluation identifies the causal effect where the change in outcomes is quantitatively and
qualitatively ascertained to be directly attributable to the program, program modality, or design
innovation. It refers to positive impact or outcome that would not have otherwise occurred
without additional resources or investment provided by social finance. However, impact may take
several years after the program completion to materialize. There are several methodologies to
quantitatively assess impact and a common method is the randomized controlled trial (RCT) where
change in outcomes is measured for social finance beneficiaries (known as treatment group) and
non-beneficiaries (known as comparison group) with the same conditions and environment. The
impact of the program will be the difference between outcomes of the treatment and comparison
groups. Data for qualitative assessment can be collected through surveys and interviews of
beneficiaries on the impact of the program. Depending on the program, impact evaluation can
be sufficiently conducted after three to five years from the start of the program to determine the
long-term outcomes. Data collection as well as technical and financial resources are crucial at each
step of the way. A handbook on impact evaluation produced by the World Bank can be used to
guide impact evaluation implementation.
In pursuing the practical application of these elements, policymakers must be careful to balance the
costs and benefits. For example, there are concerns that costly impact evaluation required of social
finance providers may be a disincentive for FIs to continue offering social finance that is accessible to
the underserved segments. It is important to ensure that the expectations on impact evaluation are
commensurate with the size and stage of the social finance programs so as to not deter continuity and
scaling up of the programs. For example, expecting FIs to conduct impact evaluation to show that the
social finance programs are directly responsible for the impact is costly and may discourage programs
with high volume and low returns from continuing. Thus, implementation of good global practices in
impact evaluation could be adopted in stages, starting with indicator monitoring. It is important to
monitor intermediate results along the theory of change that can be reported on to make sure the
program is heading in the right direction. The theory of change model is an important tool to help
program managers adjust and course correct during the lifetime of a program.
2. Standardized Reporting Framework
Establishing a standardized reporting framework ensures consistent and transparent reporting of social
impact data. The reporting of social finance activities and impact should also be separate from sustainability
and ESG reports to allow stakeholders to easily identify and assess social finance programs. The standardized
reporting framework could also be complemented with the development of guidance on impact indicator
monitoring including a library of common impact indicators for lending to different sectors that are aligned to
international best practice. For instance, the common indicators identified by HIPSO for lending to education
sector are number of students enrolled and number of female students enrolled.142 This would help create a
standardized indicator reporting approach that would be useful for comparison by investors and decision-
makers. To ensure adherence to these standards, financial regulators and MECD could establish a requirement
on social finance providers and social enterprises to disclose their social impact results using standardized
monitoring and reporting frameworks. This proactive role by the government reinforces accountability, fosters
trust among stakeholders, and paves the way for a more robust and effective social finance system.
142 Harmonized Indicators for Private Sector Operations. (n.d.). Joint Impact Indicators: Education. Access on June 16, 2023 https://indicators.
ifipartnership.org/education/
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3. Independent Impact Validation
Independent validation of impact reports by internal audit or external verifiers can be established
as a requirement to ensure an unbiased view of the social finance program and prevents impact
washing. Independent validation of social impact reports is a common principle adopted by international
impact standard setting organizations, global impact investors and social organizations. This principle is
also recommended by BNM in its Performance Measurement Framework for DFIs. Independent validation
can be conducted by the organization’s internal auditors or by qualified external social impact auditors. For
example, the impact evaluation for the World Bank lending programs is conducted by the Independent
Evaluation Group which reports on the results to the Board of the World Bank.
4. Rating Mechanism
When social finance in Malaysia is mainstream and evolved, it may be useful to implement a rating
system to assess and compare the performance of social finance initiatives based on their social impact
outcomes. The Micro-Credit Ratings International Limited (M-CRIL), a microfinance rating and assessment
agency based in India, offers rating assessment based on the USSPM to independently rate microfinance
institutions’ achievements of social performance management and governance, social responsibility to staff
and clients, depth of outreach, and quality of services.143 The rating could be conducted by financial regulators
and MECD, considering the importance of evaluating the performance of agencies and institutions engaged
in social finance. The viability of the rating mechanism is contingent upon the successful implementation of
impact monitoring guideline, scorecard, and reporting framework as explained above. Nevertheless, due
care is required when implementing rating mechanism so as to avoid sole incentives to achieve high rating
rather at the expense of target beneficiaries.
Recommendation 6: Customize Social Finance Framework and Impact Monitoring
and Reporting Guidelines for Islamic Financial Institutions (Islamic FIs).
Despite the overall alignment of Islamic Finance values with that of conventional finance, the gaps
in applying the conventional social impact monitoring frameworks to Islamic FIs offering social
finance should be analyzed. The analysis can be conducted on institution, recipient, and funding source
levels to ensure that the unique attributes of Islamic social finance particularly the Maqasid Shariah is
preserved. Implementing the recommendations for Islamic social finance in Malaysia poses challenges,
predominantly rooted in the diversity of Islamic financial instruments. In comparison to the conventional
social finance ecosystem, where the establishment of universal standards is a more streamlined process,
harmonizing principles within Islamic social finance could be challenging. One of the central challenges in
taking a standardized approach towards Islamic social finance is the inherent heterogeneity of the underlying
financial instruments. For example, Zakat, Sadaqah, and Waqf each embodies distinct characteristics and
operational details and attempting to merge these differing mechanisms under a single impact measurement
framework requires a novel approach. When implementing the recommendations above, the following
analysis for Islamic finance institutions should also be conducted by financial regulators and Islamic FIs:
1. Institution centered gap analysis
The institution-centric gap analysis can concentrate on the unique attributes of Islamic FIs offering
social finance and the disparities that exist between their operations and the commonly utilized
framework in the conventional sphere. This approach is vital to avoid duplicating efforts and to establish
compatibility in terms of best practices. The gap analysis should center around five key elements:
143 Micro-Credit Ratings International Limited. (n.d.) Ratings – inclusive financial service providers (FSPs): Social Ratings. Accessed on June 18, 2023 at
https://www.m-cril.com/services-2/ratings-certifications/ratings-inclusive-financial-service-providersfsps/social-rating/
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KPI setting, governance, talent development, monitoring and evaluation processes, and reporting
standards. This approach entails conducting a comprehensive examination of the operations of Islamic
FIs and pinpointing any discrepancies that may arise when comparing them to existing conventional
social impact monitoring frameworks. For instance, conventional social impact monitoring prioritizes
comparability, allowing stakeholders to evaluate and communicate the effectiveness of interventions.
In contrast, Islamic social impact monitoring lacks standardization, hindering comparability and limiting
stakeholders’ ability to assess and demonstrate their social impact. Nonetheless, conventional social
impact monitoring often focuses on numbers and quantitative metrics, neglecting the values and
principles guiding social finance. In contrast, Islamic social impact monitoring considers the qualitative
aspects and is driven by religious considerations, aiming to enhance well-being and be in alignment
with the objectives of Islamic law. Thus, there is a need to develop a comprehensive understanding of
social impact, incorporating ethical and spiritual dimensions.
It is important to prioritize the identified gaps by considering factors such as urgency, feasibility, and
impact, and to formulate specific strategies to tackle them. To facilitate this process, an action group
comprising representatives from Islamic FIs, financial regulators, Shariah advisors, government authorities,
and researchers could be established. This group would be responsible for conducting the gap analysis and
reporting its findings to financial regulators.
2. Recipient centered gap analysis
A client-centric approach in measuring social impact within the domain of Islamic social finance
can also be analyzed. Presently, IFIs tend to adopt an institution-centric approach, which may not
adequately recognize the distinct characteristics and diverse profiles of clients associated with Islamic
social finance recipients. The significance of the clientele effect should not be overlooked, as the
profiles of zakat and awqaf recipients can vary significantly. To assess the compatibility of social impact
monitoring frameworks with the unique features of a financial institution, a client-focused approach can
be adopted. This involves developing a comprehensive client profile that describes the characteristics,
needs, preferences, and expectations of the institution’s target customers or beneficiaries. By creating
this profile, the institution can gain valuable insights into the impact objectives and outcomes it seeks
to achieve. Additionally, it allows for the identification of relevant indicators and data sources necessary
for measuring and reporting on social impact.
During this process, any gaps between the client-based set of KPIs in conventional social finance frameworks
and the specific client profiles can be identified. These gaps serve as areas of improvement, prompting
the development of new and relevant KPIs that align with the unique features of the financial institution’s
clientele. By bridging these gaps, the institution can ensure that the social impact monitoring frameworks
accurately capture the desired outcomes and effectively reflect the needs and expectations of its clients.
This process, too, can be performed by the aforementioned action group reporting to financial regulators.
3. Funding source-centered gap analysis
An analysis on the funding source gap ensures optimization of the collection process within Islamic
social finance institutions, which encompass activities such as Zakat, Sadaqah, and Waqf. There
exists a significant gap between the potential and actual collection rates in this domain. Regulatory
constraints and scalability issues are two main obstacles that hinder the improvement of collections for
Islamic social finance.
Drawing from the principles of Shariah and common Islamic practices, funding sources within Islamic
social finance institutions are intricately linked to specific client profiles. For instance, the recipients
of Zakat differ significantly from those of Waqaf. Recognizing this unique characteristic is crucial, recipients
should be funded in accordance with Shariah-based priorities and specific domains of impact aligned with
each fund source. Conducting a thorough gap analysis enables a comprehensive understanding of the
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distinct requirements and objectives associated with different funding sources. It allows for the identification
of gaps that may arise in aligning recipients with their corresponding fund channels, ensuring adherence to
Shariah principles and optimizing the intended social impact outcomes. By addressing these gaps, Islamic
social finance institutions can ensure that funds are allocated in a manner that aligns with the priorities set
forth by Shariah and the specific objectives of each fund source. The funding source-centered gap analysis
is as well performed by the action group specified earlier.
In addition, as part of customizing for Islamic finance, it is useful to develop industry benchmarks for
Islamic FIs to compare and evaluate their performance against other players in the market. Indicators
should be developed to compare an institution’s performance in three dimensions: i) through time; ii)
against peers; and iii) against benchmarks. Evaluating performance through time allows the institutions
to track their performance as well as the impact of relevant variables, enforced policies, and institutional
changes. Moreover, performance assessment against peers of the same group enables IFIs to not only
compare their performance with other players, but also balance their priorities with that of their peers.
Finally, benchmark-based evaluation allows the Islamic FIs to set benchmarks for their KPIs of concern, and
compare their performance in each period to their projected benchmarks. A benchmark analysis allows
for a benchmark development among peers of the same group and allows Islamic FIs to compare their
performance against group benchmarks, as well.
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Appendices
Appendix 1: List of iTEKAD Participating Banks and Program Features
Financial Value-added Target
Program Name Funding Features
Institutions Propositions Beneficiaries
AmBank AmBank Returned zakat Zakat-funded Asnaf
Islamic Islamic’s iTEKAD and access to grants with support entrepreneurs.
Programme microfinancing for enhancement
UDA Signing Backdrop 2016 GCCM - Branding
facility. of business digital
capability
Bank Islam iTEKAD Maju Returned Zakat-funded B40 and Asnaf
Microfinance zakat and purchase microentrepreneurs
microfinancing of business
facility. equipment
for business
expansion.
iTEKAD BangKIT Donations-funded Benevolent loan Microentrepeneurs
Microfinance microfinancing for business start- who are ineligible
facility. up and business for ordinary banking
expansion. financing facilities.
Bank iTEKAD Mawaddah Returned zakat Facilitation of Halal
Muamalat and two-tier halal certification microentrepreneurs
Mudarabah process.
investment.
iTEKAD Mahabbah Return zakat and Benevolent loan to Microentrepreneurs
microfinancing support businesses in food and
facility. in food and beverage, and gig
beverage, and gig economy.
economy sectors.
CIMB Islamic CIMB Islamic Rider CSR grant, CSR- and Individuals from
Bank Entrepreneur Asnaf cash waqf, waqf-funded B40 and Asnaf
Programme zakat fund and motorcycles and categories.
microfinancing entrepreneurship
facility training program
for beneficiaries,
with prospective
opportunity for
business financing
if required
RHB Islamic BEST-BYOB Returned zakat Zakat-funded Asnaf venturing
Bank (B40 and access to SME grants and/or in pre-franchise
Empowerment financing facility. benevolent loans business.
Strategy – Be Your for start-up of
Own Boss) franchise business.
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Appendices
Financial Value-added Target
Program Name Funding Features
Institutions Propositions Beneficiaries
Bank BSN MulaNiaga Returned zakat Zakat-funded Asnaf and
Simpanan with graduation grants and/or graduated Asnaf,
Nasional to microfinancing graduation to who may not be
facility microfinancing for eligible for zakat
business expansion assistance nor
ordinary banking
financing faciilities.
Bank Rakyat RAKYATpreneur Returned zakat Zakat-funded Microentrepreneurs
and access to grants for at early stage of
microfinancing expansion of new their business.
facility business
Bank Rakyat Aspiring youth
UNIpreneur venturing into
entrepreneurship
Agrobank Hijrah Asnaf Returned zakat Zakat-funded Asnaf who are
Tanaman Nanas and access to grants paired with committed
Berkelompok microfinancing microfinancing to to become
facility support ventures agripreneur.
into agricultural
Inkubator Asnaf / students
project
Usahawan Tanaman from B40 or asnaf
Rock Melon background, who
are committed
Program Hijrah
to become
Asnaf Ayam
agripreneurs.
Kampung,
Program Hijrah
Asnaf Ruminan,
Program Hijrah
Asnaf Tanaman
Cili Fertigasi,
Program Hijrah
Asnaf Tanaman
Hidroponik Meja
and Program Hijrah
Asnaf Tanaman
SME Bank Group Logo - English & Bahasa Malaysia
Cendawan
SME Bank SME Bank iTEKAD Returned zakat, Zakat- and/or CSR- B40
Penjana Komuniti CSR contributions funded grants for microentrepreneurs
and access to business start-up inclusive of asnaf
microfinancing or expansion and single mothers
facility
SME Bank iTEKAD Asnaf
Ishraf entrepreneurs.
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Financial Value-added Target
Program Name Funding Features
Institutions Propositions Beneficiaries
Public Islamic iTEKAD Micro Returned zakat Entrepreneurship Asnaf
Bank Entrepreneurs and access to development entrepreneurs.
Development microfinancing through funding
Programme facility support and
training in digital
marketing and
operations.
Maybank Aspirasi Wanita Zakat and access Funding and Aspiring
Islamic Bank to microfinancing training to support microentrepreneurs
facilities. start-up of business or gig workers from
or gig career. Asnaf categories.
Hong Leong Business Benevolent Funding and B40 with focus on:
Islamic Bank Foundation financing funded training to 1. Single parents
Program by CSR funds with support start- 2. Housewives
subsequent access up of business, 3. People with
to financing enhanced with disabilities
facility. digital onboarding 4. Unemployed
methods. youth
5. Women
entrepreneurs
Marginalized Asnaf Zakat-funded Technical training Women Asnaf
Empowerment grants with access and funding for
Program to financing business assets to
facility. instil tailoring and
entrepreneurship
skills.
Source: Bank Negara Malaysia. (n.d.) Social Finance. Accessed October 19, 2023. https://www.bnm.gov.my/social-finance.
Appendix 2: Comparisons of Commonly Adopted Impact Monitoring Standards
Aspect Universal Standards for Global Reporting Impact Reporting and
Social and Environmental Initiative (GRI)144 Investment Standards
Performance (IRIS)
Management (USSPM)
Overview The Universal Standards GRI developed standards IRIS is a comprehensive
are a comprehensive to guide any organization framework that provides
manual designed to help on reporting of impacts guidance on how investors
financial service providers on the economy, can effectively measure
to put the end client and environment and people in and manage the social
the environment at the a comparable and credible and environmental
center of their activities. way. performance of their
investments.
144 Global Reporting Initiative. The GRI Standards A Guide for Policy Makers. Accessed on June 20, 2023 at https://www.globalreporting.org/
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Appendices
Aspect Universal Standards for Global Reporting Impact Reporting and
Social and Environmental Initiative (GRI)145 Investment Standards
Performance (IRIS)
Management (USSPM)
Scope A comprehensive • GRI Universal Standards IRIS covers a broad range
framework that covers on human rights and of social and environmental
multiple dimensions of environmental due performance areas,
social and environmental diligence. including poverty, health,
performance, including • GRI Sector Standards education, gender
social strategy, leadership, for 40 sectors. So equality, water and
client-centered products far, standards have sanitation, energy, climate
and services, client been developed for change, and biodiversity.
protection, responsible Oil & Gas, Coal, and
human resource Agriculture sectors.
development, responsible
growth and returns, • GRI Topic Standards
and environmental on waste, occupational
performance management. health and safety, and
tax.
Indicators Includes 20 universal Over 100 standards by IRIS includes over 500
standards that are further sector and topics with indicators for measuring
broken down into more relevant indicators. the financial, social
than 180 indicators. and environmental
performance of
investments.
Implementation Requires Financial GRI provides free access IRIS provides a set of
Service Providers to to the standards by any standardized indicators
undergo an audit process organization. External and guidance for
to assess their social validation of sustainability investors to measure
and environmental reports is recommended and report on the social
performance against the but not required. GRI and environmental
20 universal standards and does not provide services performance of their
their respective indicators. to verify or certify investments.
The audit is carried out sustainability reports.
by qualified social and
environmental auditors,
using SPI4 tools.
Flexibility A flexible framework Users can customize IRIS is flexible and allows
that can be adapted to their sustainability report for customization to fit
the specific context and based on stakeholder the specific context and
needs of each MFI. The information requirements. investment strategy of the
framework allows for MFIs Users can use a variety of investor.
to set their own targets approaches to enhance
and indicators, as long credibility of the report.
as they align with the 20
universal standards.
145 Global Reporting Initiative. The GRI Standards A Guide for Policy Makers. Accessed on June 20, 2023 at https://www.globalreporting.org/
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Appendix 3: Summary of Global Practices by Conventional Microfinance
Institutions
Primary Secondary Countries of Social Impact
MFI Focus Groups
Principle Principles Focus Monitoring
FINCA Women, small Poverty Provide 40+ countries ValiData
International business Alleviation. financial across Africa, (In-house
owners, inclusion, Eurasia, Latin method) /
farmers income & America and Universal
employment, the Middle Standards.
women’s East.
empowerment. FINCA Client
Assessment
Tool.
Grameen Poor women in Empowerment of Provide access Bangladesh 10-point
Bank rural areas the marginalized to credit system similar
poor / Poverty for income- to PPI.
alleviation. generating
activities,
promote
banking
services to
the poor,
promote social
development,
empower
women.
Opportunity Women, Empowerment of Provide 22 countries USSPM, PPI.
International farmers, small the poor. financial across Africa,
business inclusion, Asia, Europe,
owners education, Latin America,
women and the Middle
empowerment, East.
and livelihood
development.
VisionFund Children, End Promote Over 20 USSPM, PPI.
youth, women, intergenerational economic countries
small farmers, poverty development, across Africa,
small business financial Asia, Latin
owners inclusion, America, and
women Eastern Europe
empowerment,
rural
agriculture,
and poverty
reduction.
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Appendices
Appendix 4: Summary of Global Practices by Charities
Primary Secondary Countries of Social Impact
Charity Focus Areas
Principle Principles Focus Monitoring
International Preventing Protect life Offering a range 192 Results
Committee of and and health and of essential countries. Monitoring
the Red Cross alleviating ensure respect services to Framework, and
(ICRC) human for human those impacted Activity and
suffering beings. by disasters, Resource Plan
wherever including shelter, tools. Disclosure
it may be food, healthcare, using GRI
found. and mental Standards.
health support,
as well as the
distribution
of necessary
supplies to
fulfil their basic
needs.
Appendix 5: Summary of Global Practices by Conventional Impact Investors
Impact Secondary Countries Social Impact
Focus Areas Primary Principle
Investor Principles of Focus Monitoring
Nuveen Charities, Inclusion, Investing in United IRIS.
Family offices, diversity and the growth of States, Latin
Pension equity. businesses, America,
funds, Asset real estate, Europe,
managers, infrastructure, Asia.
Banks, farmland
Sovereign and forests
wealth funds. while building
long-term
relationships
with clients
from all over
the globe.
Triodos Energy & Sustainability, Supporting Europe, GIIRS, IRIS.
Investment Climate, Transparency, the transition Latin
Management Financial Excellence, and towards a America,
Inclusion, Entrepreneurship. sustainable Asia.
Agriculture. society.
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Impact Secondary Countries Social Impact
Focus Areas Primary Principle
Investor Principles of Focus Monitoring
BlueOrchard Microfinance, Alleviating Small/ Medium Africa, GIIRS, IRIS,
Finance S.A. Climate & poverty; Business Asia, Latin SPIRIT (in-
Environment, Increasing Development; America, house impact
Sustainable access to Microfinance, Eastern monitoring
Infrastructure. financial services; financial Europe. scorecard).
Increasing access services to the
to healthcare low-income
services and & micro-
improving health; insurance.
Addressing
climate
change and
environmental
issues; Alleviating
poverty;
Conserving land,
ecosystems and
natural resources;
Creating jobs;
Increasing access
to education
and improving
educational
outcomes;
Increasing
access to
financial services;
Addressing
Gender
Inequality.
LeapFrog Financial Alleviating Microfinance, Africa, IRIS, GIIRS.
inclusion, poverty. financial Asia, Latin
Healthcare, services to America.
Education, the low-
Insurance. income; micro-
insurance.
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Appendices
Appendix 6: Summary of Global Practices of Islamic Social Finance Providers
Institution/ Secondary Countries Social Impact
Focus Groups Primary Principle
program Principles of Focus Monitoring
Akhuwat Underprivileged Provide cash Provide Pakistan. In-house
Islamic community, financing support education, Performance
Microfinance business start- for business health, Indicators.
ups, farmers, ventures, marriage, and
home builders, agriculture, and emergency
students, accommodation. loans.
unmarried
woman.
The General Community Develop Organize, Saudi In-house
Authority of well-being legislative and manage, Arabia. Performance
Awqaf (GAA) and access governance and advance Indicators.
to essential framework. the Waqf -
services. economy,
healthcare and
social welfare;
prioritize
environmental
sustainability
and
conservation;
preserve
and develop
community
culture;
promote
innovation and
technology
advancement.
Badan Zakat Underprivileged Focus on social Recognize the Indonesia. In-house
Nasional community. aspects such importance of Performance
(BAZNAS) as poverty environmental Indicators.
alleviation, sustainability.
disaster relief,
education, health
care, and other
social welfare
programs.
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Appendix 7: List of Social Impact Indicators Monitored by Selected Malaysian
Banks and Social Enterprises
Company Program Impact indicators
Bank Islam146 Sadaqa House: Charity 1. Amount distributed
crowdfunding platform for 2. Beneficiaries impacted
potential donors and charity
projects.
BangKIT Microfinance: Zero Financial
percent financing facility for 1. Average sales/ revenue
underbanked micro-enterpreneurs. 2. Business assets
3. Average savings from business revenue
4. Zakat payment (if any)
Business growth
1. Number of employees
2. Types of savings made from business
revenue
3. Use of ICT and gadgets in business
4. Use of e-commerce platform in business
5. Use of e-wallet of digital payment
solution in business
Utilisation of BIMB facilities and solutions
1. Internet banking (e-Banker) in business
2. BIMB GoBiz app in business
3. BIMB SMEXpert in business
4. BIMB current account as main business
account
5. BIMB merchant payment terminal
Profile of BangKIT microfinance
1. Applications approved
2. Fund disbursed
3. Amount range
4. Age range
5. Gender
6. Location
7. Business sector
8. Race
Bank Rakyat147 RAKYATpreneur: Capital seed Indicators on number of beneficiaries and
funding and coaching for potential improvements on livelihood.
Asnaf micro entrepreneurs.
Bank Rakyat UNIpreneur: Capital Indicators on demographic distribution,
seed funding and coaching for improvement in business income and
Asnaf student entrepreneurs. wealth.
146 Bank Islam Sadaqa House. (2022). 2021 Impact Report. Bank Islam. https://www.sadaqahouse.com.my/wp-content/uploads/2022/04/SadaqaIR21.pdf
147 Kamarulzaman, A. (2023, March 16). Interview on Bank Rakyat’s Impact Reporting Practices, by Soraya Azhar
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Appendices
Company Program Impact indicators
PichaEats 148
PichaEats platform for refugees in Financial impact:
Malaysia to sell food cooked by 1. Number of active kitchens and Chefs
them to the public. 2. Amount of capital given back to Picha
Chefs
3. Average income before and with
PichaEats
Physical impact:
1. Percentage of Chefs able to cover
monthly rental fully from income made
with PichaEats alone
2. Percentage of Chefs able to cover
monthly utilities bills
Human Capital:
1. Percentage of Picha Chefs’ children of
schooling age (6-17 years old) in school
2. Bi-annual upskilling training for Chefs to
learn new menu
3. Health checkup and quarterly hangout
for all Picha Chefs
4. Skills gained since joining PichaEats
5. Confidence level in cooking
6. Number of refugees trained and training
hours in F&B and culinary knowledge.
Social Capital:
1. Monthly townhalls to involve Picha Chefs
in business decisions
2. Quarterly 1:1 check-in with Picha
Chefs and their families to assess their
personal well-being.
3. Life improvement since joining PichaEats
4. Ability to pay for medical fees before
and after PichaEats
5. Mental health after joining PichaEats
6. Part-time employment for refugee
community
Mereka149 Future of Work: An employability 1. Output: Number of youths trained
development program training 2. Outcome: Number of trained youths
B40 youths to find jobs. that are employment ready
3. Impact: Number of trained youths
employed after the program; Change
in monthly income earned by trained
youths pre- and post-program,
Number of trained youths remaining in
employment after six months.
148 PichaEats. (2023). PichaEats 2022 Impact Report.
149 Sangaran, A. (2023, April 19). Interview on Mereka’s Impact Reporting Practices, by Soraya Azhar
92 Impact Monitoring of Social Finance | NOVEMBER 2023
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