The 2014 State of the Campaign Report features various actors in the microfinance sector that are taking steps to helping their clients lift themselves out of poverty. In this interview with Julie Peachey (director of social performance management at the Grameen Foundation), learn about how the Progress out of Poverty Index® (PPI®) can help organizations better target the poorest. Peachey provides examples of PPI usage as well as recommendations on how to best make use of the results provided by the tool. Below is a summary of the key points from the interview.
The Grameen Foundation developed the Progress out of Poverty Index (PPI) because they noticed that microfinance institutions were failing to meet poverty outreach targets, and, worse, there really wasn’t a good way to determine how poor clients actually were.
The PPI is a ten question survey based on a household’s income and expenditures, and it is available for 50 countries. The PPI allows an organization to measure in absolute terms how poor a client’s household is by calculating the likelihood that they are living below one of several poverty lines. Further, the PPI can be used by any organization that has a social mission to serve and reach the poorest.
The PPI can be used for:
- Targeting the very poor (those living on less than $1.25 a day) to make sure that they aren’t being excluded.
- Product design to make sure that poorer clients aren’t being excluded from the organization’s services based on the way their products are designed.
- Tracking progress over time to see if the client is becoming better off and moving out of poverty.
Generally speaking, Grameen Foundation has found that organizations that start using the PPI find that their clients are not as poor as the organizations thought and, as a result, that they aren’t actually reaching the very poor.
For example, at CARD Bank in the Philippines, the Grameen Foundation used the PPI to survey the poverty level of clients receiving a new product in order to determine what CARD needed to do to make the product viable. When they saw the product was not taking off as expected, they lowered the price and then experienced a great increase in clients opening up a new account. They then looked at the PPI score before and after the prices were lowered.
Before the change, approximately 27% of clients who opened an account were below the $2.50 a day line; after the price was lowered, CARD saw an increase in the number of clients opening an account as well as a 7-8% increase in the number of clients opening accounts that were below the $2.50 a day line. The conclusion is that lowering the price of the product made it more feasible to the poorer population.
Organizations are also able to use the PPI to calculate the percentage of very poor households in a given area they are serving. The Grameen Foundation conducted a series of “poverty outreach reports” that looked at “concentration, penetration, and scale, which allows an organization to really look more deeply into what the overall total percentage of poor people that are [being] served ideally to be able to see the progress over time.”