Empowering the “Ultra Poor”

March 1, 2009 Update

We speak often about microfinance being a proven method for alleviating poverty. And it’s true. Microfinance is an incredible tool for helping the poor work their way to a life of sustainability, opportunity, and ultimately, economic self-empowerment.

But it doesn’t work for all. For those living at the very bottom of the economic pyramid—those we refer to as the “ultra poor”—a microcredit loan is often not the best first step. Before becoming micro-entrepreneurs, the poorest of the poor need assistance in stabilizing their life circumstances, meeting their basic health and social needs, and learning the livelihood skills necessary to generate income.

Unitus, in partnership with the Sorenson Legacy Foundation, has created the Ultra Poor Initiative (UPI), a two-year initiative aimed at increasing the effectiveness of programs focused on this population. Using a combination of grants and advisory services to initiate new programs or improve existing outreach through partner organizations, we hope to identify and disseminate specific strategies that work best to increase access, sustainability, and effectiveness in getting this marginalized population off the bottom rung of extreme poverty.

Who Are the Ultra Poor? 
If you’ve traveled in the developing world, you have probably encountered the ultra poor. In cities, they are the unskilled and the exploited classes, such as beggars or manual laborers, often hungry, homeless, and suffering from chronic illness. In the rural areas, they live by subsistence farming and on handouts, bound by tribal customs or stringent caste systems that inhibit their ability to move beyond their pre-ordained status. They suffer from extreme malnutrition, have no productive assets, and are forced into a transient lifestyle in search of work, often brutal manual labor.

Working with two India-based organizations, Partners in Prosperity Society (PnP) and NEEDS, with a third partner to be identified this summer, Unitus is providing capital and consulting to help identify clients, create or refine outreach programs, and perhaps most importantly, track effectiveness. Getting ultra poor clients on a path to stability is a lengthy process and often starts by assisting with the most basic of necessities.

“It’s a fairly intense, long-term process,” said Sachita Shenoy, Innovations Manager at Unitus and the primary manager of the Ultra Poor Initiative. “Most of these clients are malnourished. We start with the basics first, like helping them develop a consistent source of food. Once those needs are met, we can begin to discuss upgrading and specializing their income-generating skills.”

Reaching the Rural Ultra Poor
For NEEDS clients who live in Jharkhand, one of the poorest states in India, the intervention is an intensive 24-month process. In this rural area, most people own small plots of land that are ancestral homes within a township or village. Participating families, usually the poorest, are carefully selected, working in conjunction with the greater community. The first 6 to 12 months focuses on food security by establishing agricultural subsistence in order to get the family producing food for their own consumption and nourishment, most commonly rice and potatoes.

After 12 months, other means of livelihood are introduced for income generation, such as cultivating mushrooms, basket weaving, or taking on a goat for milk. Mastering two to three livelihoods is ideal to help mitigate the effects of the dry season or unexpected obstacles. The final phase of the intervention is devoted to monitoring and fine tuning to ensure the clients reach a level of stability. Throughout the 24-month period, the beneficiaries participate weekly in “self-help group” (SHG) activities, where they upgrade their skills and collectively save money. They also receive counsel on healthcare, child education, and social empowerment.

“We have to be sensitive to the needs and beliefs of each client,” said Torie Fiore, lead manager for the NEEDS program. “One woman may decide she wants to own a cow to sell the milk. Another, due to religious beliefs and caste, would prefer not to work with animals, so we find something she can do without jeopardizing her beliefs. There is no blanket solution for all.”

Because of this, the initiative is “high touch” in comparison to a traditional microfinance program. One NEEDS field trainer can oversee the training of 30 or more households at once, all in different phases of the process.

Unskilled Laborers in New Delhi
For PnP, the problems are different but equally daunting. Unitus is partnering with PnP to create a new program to identify unskilled construction workers in New Delhi and train them into more skilled work. Mostly transient, these people migrate from poor rural areas like Bihar and Uttar Pradesh for hard-labor work such as moving heavy rocks and debris. Unitus is working with PnP to access and train these people through a pilot program, after which a modified version will launch to a wider group.

“This is one of the few pilots working with the ultra poor in urban areas,” said Himani Gupta, lead manager for the PnP program. “We look forward to developing innovative solutions to increase the income levels of this highly vulnerable section of our society.”

At the end of the two-year initiative, Unitus and the Sorenson Legacy Foundation will publish key findings to share with the greater microfinance industry in hopes of catalyzing more initiatives that aid the ultra poor. Six months into the initiative, Sachita is excited and encouraged by Unitus’s progress so far. “I really hope that our work here will demonstrate to other organizations, whether for-profit or nonprofit, that it is possible to find and effectively serve the needs of the poorest of the poor.”

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