Grameen Foundation Develops Standards to Strengthen Use of the Progress out of Poverty Index™ (PPI™)

NGO to Certify PPI Users Who Comply with New Standards for Using the Poverty Assessment Tool

August 23, 2010 - Grameen Foundation today announced the release of a set of standards [1] for using its poverty assessment tool, the Progress out of Poverty Index [2] (PPI). The standards are a pre-cursor to a formal certification program the foundation will roll out this fall.   PPI users can apply the standards to assess their use of PPI data and identify areas for improvement.   Technical assistance providers supporting the use of the PPI can use the standards to target interventions more effectively.

With these Standards of Use now in place, Grameen Foundation is piloting a certification process to be finalized later this year. Through that certification, microfinance institutions (MFIs) and other PPI users will be able to receive a seal of approval signaling that they are using the tool correctly.  This certification process, the first of its kind for poverty assessment tools, is designed to strengthen the use of the PPI by ensuring its accuracy for decision-makers who will use its results, such as investors, donors, and rating agencies.

“Having these standards in place is a huge step forward in formalizing the use of the PPI,” said Camilla Nestor, Vice President for Microfinance at Grameen Foundation.  “We are ensuring that best practices for using the PPI will be applied uniformly, demonstrating that the PPI will continue to be the trusted industry standard for poverty assessment.”

The standards have been endorsed by key microfinance networks and investors, including Oikocredit, Catholic Relief Services, and Plan International Asia. A number of MFIs have already welcomed the opportunity to be certified.

Among the prominent supporters of the program is the Microfinance Information Exchange (MIX), the primary source for published financial and social performance data on MFIs across the globe. “Poverty measurement is one of the standard social performance indicators that [the] MIX collects and analyzes,” says Micol Pistelli, Manager of the MIX Social Performance Program. “Establishing a set of easily verifiable standards for PPI implementation would significantly enhance the quality of PPI data reported to MIX and improve poverty analysis overall.”

The standards cover the data collection process, training, data analysis and reporting, and are available for three levels of use: basic, advanced, and tracking over time.  The basic standards are a minimal level of PPI use, while the advanced and tracking-over-time standards apply to institutions that have integrated the use of PPI data more deeply into operations and decision-making.

Launched in 2005, the PPI is now being used by 75 institutions worldwide.  It was designed to help MFIs better identify and target the poorest populations and track their movement out of poverty. Some MFI users have already made significant changes to their programs and services based on their PPI results. For example, Philippines’ based Negros Women for Tomorrow Foundation (NWTF) changed its client targeting strategy when its pilot PPI revealed that 40 percent of its clients were above the poverty line. In response, NWTF set a target that only 10 percent of new clients should be above the poverty line, and changed its incentives for loan officers to achieve greater outreach to the poorest. PRISMA, a Peruvian MFI, found that its early PPI results have helped attract new investors to the MFI. By being able to demonstrate that it is reaching rural poor clients, PRISMA received preferential loan terms from a range of investors. This funding will enable PRISMA to target its microfinance loans to even more poor people living in hard-to-reach rural areas.

About Grameen Foundation
Grameen Foundation, a global nonprofit organization, helps the world’s poorest people access financial services and technology solutions by providing financing, technology support and management strategies to the local organizations that serve them. It also spearheads technology initiatives that create new microbusiness opportunities for the poor, provide telecommunications access for the world's rural poor, and improve their access to health and agriculture information and other services.  Founded in 1997, Grameen Foundation has offices in Washington, D.C., Seattle, Washington, Hong Kong, Ghana, the Philippines and Uganda. Dr. Muhammad Yunus, the founder of Grameen Bank and the 2006 Nobel Peace Prize Laureate, is a founding member of its board of directors, and now serves as director emeritus.  For more information, please visit www.grameenfoundation.org [3].

Translated press releases
La Fondation Grameen a développé des normes pour accroitre l’utilisation de Progress out of Poverty Index [4]
La Fundación Grameen publicará estándares para fortalecer el uso del Progress out of Poverty Index [5]