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What Happened When the Creator of a Tool Designed to Eliminate Poverty Learned a Sobering Truth About His Staff

Martin Burt September 27, 2019

The following is an extract from Burt’s book  “Who Owns Poverty?“, published September 3, 2019.

October 2010. Nearly two years had passed since the day when Luis Fernando challenged me to define poverty, and a lot was riding on my answer.

Like most microfinance institutions in the 80s and 90s, Fundación Paraguaya’s theory of change at the time was simple: increase incomes, and clients’ lives will improve. We didn’t use the word ‘poverty’ — poverty seemed too big and too complex to understand, let alone to do anything about. Our experience highlighted this point: some clients grew their businesses and created new jobs. But many didn’t, and we had no idea why. What’s more, it seemed like we should.

I broached the idea of focusing on poverty reduction (rather than income generation) with Luis Fernando, our Chief Operations Officer; he was right to be skeptical. He was worried about tinkering with our systems, now that the Foundation had achieved financial self-sufficiency. Also, he was afraid that clients would start viewing us as a charity and stop repaying their loans. Why risk all that for some wild goose chase after something we couldn’t even define?

The journey to arrive at the point where I could respond to his challenge had taken me far and wide. I had done deep research into existing tools and indicators, conducted extensive listening exercises with clients, and talked to thought leaders around the world who helped my team sharpen our ideas and bring them together into one coherent framework. At the heart of our methodology lies one audacious question: who owns poverty? It’s a deceptively simple question (first put to me by the father of integral theory, Ken Wilber), and asking it leads you to a startling insight: poor people have never owned their own poverty.

Our methodology, on the other hand, gives poverty back to poor families. First, families have naming power to decide what poverty means in the context of their lives. We ground the definition within the global canon of poverty literature, but the indicators we selected for our tool are those that our clients told us were important. In total, the methodology contains 50 indicators within six dimensions: income and employment; health and environment; housing and infrastructure; education and culture; organization and participation; and self esteem and motivation.

Importantly, each and every indicator is framed from the perspective of the client and their family — written in the first-person plural, rather than the third-person singular, making the family the protagonist: We save. We have diverse sources of income. We participate in the community. Our indicators were understandable, actionable, and achievable by clients themselves.

Second, the families have judgment power to decide where they stand, using thresholds (determined by the poor themselves) that differentiate between what it means to be very poor, poor, and non-poor in each indicator. To facilitate this, we assign a color to each state: green for non-poor, yellow for poor, and red for very poor (you can guess why we starting calling it the Poverty Stoplight). Families use a tablet computer to self-diagnose their poverty levels for each indicator by considering the pictorial representations. This step amounts to what Joseph Grenny (who taught me his theory of influence) would call making the invisible visible.

What the Poverty Stoplight does is to name all of the distinct faces of poverty at once, in a way that is comprehensive, easy to understand, and visible — all in one place and one moment. And the client, for the first time, has a visual record of their own personal poverty: a large, sturdy card with 50 colored dots describing their situation in relation to each indicator — where they’re doing well and where they can make improvements.

The final piece of the puzzle is about ensuring that families have the action power to do something about the various deprivations they’ve identified in their lives. That’s why the methodology includes a Life Map. Once a family assigns a color to each indicator, the facilitator starts a conversation about which five indicators are the family’s top priorities to tackle first. If you think about poverty as an ear of corn, the Poverty Stoplight simply breaks poverty down into bite-sized kernels.

Luis Fernando and I agreed on a conservative rollout plan of the Poverty Stoplight. Loan officers would handpick 10 percent of their clients to take part in the pilot. This felt like a reasonable means of learning by doing — and doing a little good along the way. And so it was that we learned that microfinance clients had an average of eight yellows and one red. Their most common deprivations were: ‘capacity to plan and budget’, ‘garbage disposal’, ‘income above the poverty line’, ‘proper roads’, ‘savings’, ‘healthy teeth and eyesight’, and ‘separate bedrooms for adults and children’.

To my relief, clients loved the Poverty Stoplight — seeing it as proof that the Foundation really cared about them as families, not just as clients. That accolade quickly turned into hard numbers in the form of lower client drop-out rates, lower loan-default rates, and higher client satisfaction results. Meanwhile, with repeated practice in applying the visual survey and mentoring methodology, loan officers started seeing the Poverty Stoplight not as a burden to lift a family out of poverty, but as a chance to help the family seize opportunities and leverage tools they already had in order to improve their lives.

That’s when Luis Fernando cornered me with unsettling news: the more clients our loan officers helped to get to green, the less satisfied those loan officers were. Luis Fernando didn’t mince his words: “Honestly, Martín, some of our loan officers are really upset by this. They feel that we worry too much about our clients and not enough about our own employees. What they really want is to participate in the Poverty Stoplight program themselves.”

This news left me speechless. We had designed the Poverty Stoplight to help our poor clients lift themselves out of poverty. How could my own staff be so poor that they wanted to use it too? It didn’t make any sense. While I found this news baffling, I didn’t hesitate for a moment about what to do with it. I asked our HR manager to hand his entire workload to a deputy and focus exclusively on guiding every member of staff through the Poverty Stoplight process. Honestly, none of us really understood the depth of the challenge I had laid at his door because no one had ever done it before. And, once we got started, it was clear that nothing would ever be the same again.

Applying the visual survey with staff was the easy part. Believing the survey results? That was the difficult part. We were shocked at how many staff members turned up yellow and red in income: 18 people on our payroll (out of 100 at the time) were living in income poverty or extreme income poverty. This wasn’t because their salary was low in absolute terms but because it was low relative to the number of mouths they had to feed. What’s more, our staff suffered an average of 5 yellows and 2.4 reds — in other words, more average reds than clients (who averaged 1 red per family).

And yet, perhaps, that’s what Ken Wilber meant when he said (cryptically, at the time) “we are all poor.” We had been applying the Poverty Stoplight to our clients who we approached because they looked like they might tick the income-poverty box — clients who, once they’d taken the Poverty Stoplight survey, might or might not have been red or yellow in income but were certainly grappling with deprivations in other areas of their lives. Whereas our staff, in theory, should have been green in income, and (according to the logic of the World Bank and the entire microfinance industry) green in everything else as a result. If we were looking for the final nail in the coffin of “fix income and the rest will fix itself,” this was it.

The staff survey results also made us question the value of our client education programs. Because our loan officers ran training modules on basic concepts in business and financial management in their client meetings, we were certain they knew the value of savings and of having a family budget. Yet the survey revealed that of our 55 loan officers, 49 percent were red or yellow in ‘savings’, and 46 percent were red or yellow in ‘family budget’.

It turns out knowing is not enough; doing is what matters. Training people isn’t enough because outputs aren’t what matter; outcomes are. Ken Wilber was right: we were all poor. We didn’t save. We didn’t budget. We didn’t have modern bathrooms. We didn’t have families free from violence. We all slept in the same bed. We should have known better, but we didn’t. Non-poor families are all alike; every poor family is poor in its own way.

We had work to do.

Learn more about “Who Owns Poverty?” here.

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