The PPI is an effective decision-making tool. It provides a snapshot of a client's and/or group of clients' poverty likelihood at any given point in time, which can be tracked to show the change in poverty levels over time. Identifying changes in poverty levels over time can guide institutional policy on what target cut-offs to set, how to deepen outreach to the poor, and what types of interventions to apply to different market segments.

The PPI can help an organization:

• Divide clients into distinct poverty bands (above or below one or more poverty lines.)
• Track movement of clients across the poverty line.
• Inform management decisions about processes, programs, products, and provision of services.
• Respond to competitive pressures, by better meeting client needs
• Provide timely and accurate social performance information to regulatory bodies, social investors, donors and rating agencies.
• Assess mission achievements

Target and Segment Clients

Those who score at or below the chosen cut-off are the targeted group, while those who score above the cut-off are the non-targeted group.An organization can set a specific cut-off score based on its social and financial objectives to make targeting and selection of clients a more efficient process.

PPI Data Analysis (PPI Pilot Training Guide)

Track Changes Over Time

Over time, the MFI can track the progress of a group of clients by monitoring the change in the estimated poverty rate. Tracking the poverty likelihoods of a group of clients at regular intervals will provide an understanding of poverty movement over time within that group. An organization can administer the PPI on a sample basis or upon every loan renewal.

For example, suppose a microlender or organization had a portfolio of clients on Jan. 1, 2006 with average poverty likelihood of 58 percent. In other words, 58 percent of the clients in the organization's portfolio fall under the poverty line. Then suppose that on Jan. 1, 2007 (a year later), the organization's average poverty likelihood is now 39 percent, an improvement of 58 - 39 = 19 percentage points in one year. This means 19 of every 100 clients progressed out of poverty (crossed over the poverty line). Given that 58 percent of clients were poor in the first place, one in three (19 ÷ 58 = 33 percent) poor clients left poverty.

The PPI does not explain what caused progress, but only indicates that there has been increase in economic status.

PPI Data Analysis (PPI Pilot Training Guide)