New Study Profiles Indonesian Technology Social Enterprise Using Progress Out of Poverty Index to Affirm its Social Accountability
Report Is First in a New Series Profiling Innovative Uses of the PPI
April 6, 2011 - Grameen Foundation today released a new study showcasing the first technology-for-development initiative to use the Progress out of Poverty Index™ (PPI™) to demonstrate its social mission. PT Rekan Usaha Mikro Anda (Ruma), an Indonesian social business that promotes mobile phone business microfranchises to poor entrepreneurs, selected the tool to ensure it was accurately targeting and reaching those clients. The study is the first in a new series that will profile the innovative uses of the poverty assessment tool. The report is available at http://www.progressoutofpoverty.org/pt-ruma.
Founded to provide telecommunications business opportunities to poor people, Ruma has set ambitious targets for reaching its social and financial goals. Its bylaws explicitly state that its clients must have an 80 percent likelihood of being poor (under $2.50/day) and a 15 percent likelihood of being very poor (under $1.25/day), and also mandate that shareholders cannot receive dividends unless the company meets these targets. Since 2009, Ruma has administered the PPI annually with each client so that it can track their economic well-being over time and demonstrate that progress to shareholders and other poverty-focused stakeholders.
PPI data collected during Ruma’s first year showed its clients had a 64 percent likelihood of being poor, with 10 percent falling into the category of very poor.
“The founders of Ruma want to set the gold standard for accountability by a social enterprise by measuring their social performance just as rigorously as their financial performance,” says Sean DeWitt, Grameen Foundation’s Technical Program Manager. Grameen Foundation and the PPI gave them the tools they needed to boldly include the ‘social charter’ in their Articles of Association.”
One key lesson from Ruma’s PPI results is that while a microentrepreneur’s poverty level did not determine the success of their business, it did have some impact on the drop-out rates. In the first year, the drop-out rates for the very poor microentrepreneurs in the first three days were dramatically higher than rates for those who were less poor. Equally important, Ruma also learned that the very poor clients who remained past the first week were just as successful as clients in other poverty levels.
These findings will help guide Ruma’s ambitious year-end goal of reaching 20,000 poor women across Indonesia who could deliver quality products and services to an estimated one million people.
The Progress out of Poverty Index™ (PPI™) is a country-specific assessment tool that helps institutions measure outreach to the poor, monitor changes in economic well-being of clients and provide data that helps managers improve the effectiveness of programs and services.. Building on the concept of Grameen Bank’s 10-Point System, the PPI was commissioned by Grameen Foundation, in collaboration with Consultative Group to Assist the Poor (CGAP), Ford Foundation and Microfinance Risk Management L.L.C. Launched in 2005, the PPI is now being used by 89 institutions worldwide. For more information, please visit www.progressoutofpoverty.org.
About Grameen Foundation
Grameen Foundation, a global nonprofit organization, helps the world’s poorest people lift themselves out of poverty by providing access to financing and management strategies to the local organizations that serve them. It also develops mobile phone-based solutions that address “information poverty” among the poor by providing tools, information and services in the fields of health, agriculture, financial services and livelihood creation. Founded in 1997, Grameen Foundation has offices in Washington, DC; Seattle, WA; Colombia; Ghana; Hong Kong; the Philippines; and Uganda. Microfinance pioneer Dr. Muhammad Yunus, founder of Grameen Bank and winner of the 2006 Nobel Peace Prize, is a founding member of its Board of Directors, and now serves as director emeritus. For more information, please visit www.grameenfoundation.org.