John Hatch: [FINCA] set out to develop a poverty-targeting tool this year and we too wanted to face up to [these] myth[s] of it's too hard, it's too easy and it's too complex. We too found that was a myth. The way we approached it, though, from the beginning was we were not creating a scientific research tool and we were not pretending to do so. We were trying to create something easy enough that any manager can get a quick idea of what they're up against, what kind of clients they're getting.

The best markers, I think, for severe poverty that we found was starting at gross national product. If the gross national product of a country is extremely low, it is much easier to find poor people and serve poor people. The poorer the country and GNP, the easier it is to find a safe measure of poverty. Secondly, we found that single parent households were a good measure of absolute poverty and correlated to absolute poverty to about 60% frequency. We also found that large households, of seven or more members, correlated to severe poverty with an accuracy of about 82%. We found that families with not all school-aged children attending school correlated to severe poverty with an accuracy of about 72%. So, those are some of the things that we will be teaching field staff to use as ways of better targeting, better looking for these clients and looking for clients with those characteristics.

A very fundamental thing that's going to happen is that there are probably going to be incentives now for programs to start using poverty targeting tools to reach poorer people. But, some programs are going to reach poorer people without changing their services, without changing the way they work, and they are going to do a lot of damage. They are going to hurt a lot of people. Now, I actually can say this from some experience because when we started our program we always meant to try and reach the very poor. Long before we really had an understanding of poverty and before we developed poverty targeting tools, we had another program and we encouraged our staff to reach very poor people. Some of them were successful. But, we didn't know how to work with very poor people and so what we found happening quite a lot is that people came in and they took loans and weren't able to repay the loans.

Poverty targeting is just the beginning. We have to get from there to the social metrics to find out not just how poor people are, but of the income or expenditure levels they've attained: what are they doing with those resources? How does it impact health? How does it impact education? How does it impact women's empowerment? How does it impact housing quality? How does it impact social capital? One of the variables that we're not mentioning too often, but it's a critical one, is that when people join groups, like FINCA and other peer-lending groups, they begin to acquire friends. They make new acquaintances within the community; sometimes they begin to join other organizations as well.

What I would love to see five years from now is that when you interview a FINCA client she will not even mention the credit as the primary benefit of the program. She'll say FINCA is a program that cares that all my children get through high school and into college. FINCA is a program that cares that I have adequate health as a mother, adequate health for my babies. Those types of support built into the financial products can create a lot of synergy and a lot of strength in our methodologies for addressing the social issues.

Read remarks by Chris Dunford