The PPI™ allows MFIs to divide their clients into distinct poverty bands (above and below certain poverty lines). Using the PPI an organization can track poverty levels of clients, see how those levels change over time and analyze the correlations between poverty probabilities and other variables. This information can be used to target, serve or track clients.

After field staff collect key information from the one-page PPI, each indicator receives a score that reflects client response, and all ten indicators receive a total score, as shown below:

Then field staff match the total points from a client’s PPI to a poverty level estimate using a simple chart.

In this way, individuals are ranked according to the applicable poverty line. Using this analysis, institutions can assess the poverty likelihood of clients by branch, by rural or urban setting and by client history (new or current).

Making Decisions Based on Information

By tracking poverty levels against other client demographic information, the results of the PPI allow an MFI to make key decisions about its mission and how to carry it out. By using the PPI over time, MFIs can:

• Better define and adhere to their missions
• Improve programs, products and delivery of services
• Increase their competitive edge, profitability, and ability to retain clients by responding more quickly and effectively to changes in their communities and by showing documented results
• Provide timely and accurate information to socially responsible investors who may want to provide financial resources to their programs

Following is an example of how one MFI, Negros Women for Tomorrow (NWTF) in the Philippines, analyzed and used the information from its PPI to make key decisions about its program.

Case Study: Negros Women for Tomorrow

NWTF is one of the largest MFIs in the Philippines, with more than 70,000 clients. After first piloting the PPI in 2005, NWTF has:

• Integrated the PPI collection across all 37 branches
• Compared data by branch to understand what products and services are most effective
• Collected information on additional indicators to use as it refines its outreach and its products and services

As a result of the information gathered, NWTF has:

• Changed its eligibility requirements for incoming clients by targeting 10 percent of clients above the poverty line
• Facilitated entry for the poorest clients by adjusting loan size, loan cycle period and possible pre-payment options

Click here for further reading on Harnessing the Results

* This description quotes from: The Progress out of Poverty Index^TM: A Simple Poverty Scorecard for Bolivia, Mark Schreiner, December 2009.