Indicators are criteria or measures against which changes can be assessed. Microfinance institutions (MFIs) need to use a variety of financial and social indicators, to track both their financial and social performance and the impacts they are having on their intended beneficiaries. There is a set of standardized financial indicators that allow financial performance measurement, but indicators of social performance are usually more complicated. This is because an almost infinite number of changes can be brought about by a programme, and each possible change can be measured by a number of different indicators. However, as this Practice Note shows, it is possible for MFIs to develop and apply a set of useful indicators, if they follow some simple steps and have a particular goal in mind.


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