Accelerating poverty elimination through the Poverty Stoplight program — Experience at Fundación Paraguaya

By Fabrizio Cabrera

Last winter, I did an internship at the Fundación Paraguaya, where I collaborated within the department of research and methodology. My role was to support the senior researcher Katharina Hammler, with quantitative and qualitative analysis in order to write a report on the preliminary evaluation findings of an ongoing study: the “add-on” impact of the Poverty Stoplight (PS) program for Fundación Paraguaya’s microfinance clients.

The PS program

The Poverty Stoplight (PS) is an interactive survey and coaching model that complements Fundación Paraguaya’s microfinance program, broadening the focus to multidimensional poverty. The Stoplight is characterized by three key features:

  1. Multidimensional snapshot of lived experience: Program staff work directly with participants to complete an easy-to-use, picture-based survey to represent their quality of life across six dimensions (Income & Employment, Health & Environment, Housing & Infrastructure, Education & Culture, Organization & Participation, and Interiority & Motivation). These indicators are self-assessed by clients as red (severe poverty), yellow (moderate poverty), or green (out of poverty). The approach is designed to center the lived experience of participants, creating data from the bottom up.
  2. Solutions that start from the participant: After the survey is facilitated, participants choose which specific indicators of poverty they want to change from red or yellow to green, as well as the action they think is most likely to produce change. Sometimes this involves taking action as individuals; sometimes it means utilizing community resources or peer-to-peer support; in other cases, it involves accessing government programs.
  3. Personalized coaching to support solution implementation: Program staff take an individualized approach to support participants as they pursue change. Supports include collaborative identification of core challenges, as well as reflection exercises to support continuous improvement of poverty alleviation approaches. 

The PS is applied across a broad range of contexts, ranging from poverty alleviation programs to assessments of quality of work life in professional contexts. The report focused on the application to microfinance, seeking to elucidate the “add-on” impact generated on top of the microfinance program. As a growing number of ever more diverse organizations implement the Poverty Stoplight model around the world, the need for robust evidence on the model’s impact is increasing, and so is the need for evidence on how to best implement the program.

Critical questions of the RCT

To support evidence-based scaling of the model, we deployed a rigorous randomized controlled trial design to engage three critical questions:

  1. What is the impact potential for this model?
  2. What types of participants are most likely to benefit?
  3. What programmatic features are most likely to optimize impact?

Summarized findings of the report

Our results show that the PS accelerated multidimensional poverty reduction by about half of a standard deviation, which corresponds to turning two or three PS indicators from red or yellow to green. While financial indicators showed the greatest poverty reduction, benefits also materialized in non-financial dimensions of poverty.

There were important nuances in program effects for participants with different baseline incomes. While we observed reductions in multidimensional poverty for participants across the income spectrum, suggestive evidence indicates that the microfinance program alone drove the lionshare of multidimensional poverty reduction for lower-income participants, while the PS survey and coaching model drove impact for higher-income participants. 

The results also revealed the impacts of mentoring could be increased slightly by 0.05 standard deviations (or about half a PS indicator) by providing coaches with explicit contact targets that guided how often they contact families). Qualitative follow-up suggests that the regular contact may have contributed to a critical trust-building process between coaches and participants. Notably, the study did not find evidence of impact for a group that just received the PS survey (without follow-up coaching).

Even though the findings are specific to the study context, some general recommendations arise, including (a) targeting participants across the spectrum of multidimensional and monetary poverty; (b) considering  the potential of attending to a broad range of multidimensional poverty indicators, even outside of an organization’s core area of competence; (c) providing follow-up support to participants; and (d) investing in relationship building, and considering setting explicit targets or guidelines around regularity of communication.

Reflections on the experience

My experience within this institution suggests that this program represents real hope for the less disadvantaged people in our community. By doing the field work and monitoring the progress of households in their way out of poverty, the institution is able to add value to design better policies in favor of the people whose voice we do not usually hear. Thus, the quantitative and qualitative analysis of this program not only gave us tools to help the households, but the analysis also empowered the households themselves. The recurrent meetings were a proof for this improvement. From the experience of visiting the households at their homes, I can tell that the program not only made them aware of the type of poverty they were having, i.e., their red dots, but it got them motivated to improve their quality of life by tackling specific aspects of their poverty. At the end of the day, their dedication was something so contagious that fueled the passion of the team  inside and outside the project. With projects like this, the Fundación helps more than 86.000 families and as households that join the different programs keep growing, the challenge is to meet the large scale demand without sacrificing the unique add-ons that the institution offers: providing follow-up support to participants; investing in relationship building; considering setting explicit targets or guidelines around regularity of communication; etc.

Fabrizio is a Fulbright Fellow that is currently doing an MA program in economics at New York University. Please feel free to contact him if you need any further information or you have any questions: