Beyond impact measurement: Fostering inclusion through the “poverty stoplight”

Between 2003 and 2013, more than 70 million people moved out of poverty in Latin America. During 2015 and 2016, however, the number of poor people increased, and some 25 to 30 million people are at risk of sliding back into poverty. With constrained public budgets and declining international assistance in the region, there is growing pressure on the private sector to play a greater role in inclusive development, and there are growing demands for social innovation to foster inclusion.

The “poverty stoplight” (PS), developed by Fundación Paraguaya de Cooperación y Desarrollo, a social enterprise in Paraguay, seeks to activate the potential of individuals and families to eliminate poverty. The PS is a self-evaluation tool for poor families to assess their poverty levels and identify and implement solutions. The tool has generated global interest and has been presented in key international gatherings such as the World Economic Forum. It has also generated interest within the private sector, as a tool to understand and enhance the social impact of businesses. In Paraguay, 90 private companies are using the tool, reaching 17,000 families. This created the "Business without poverty" program, which uses the PS to foster awareness about workers’ quality of life.

This project, implemented by Fundación Paraguaya de Cooperación y Desarrollo, will support scaling of the PS globally. It will refine and validate the methodology by defining a core set of indicators, which will include a focus on women’s economic empowerment. It will generate evidence on the PS’s impact on poverty and empowerment, and it will assess the impact on business productivity. The project will support the development of a platform that will allow future use of technologies for PS implementation and data collection. The project will enhance the use of the PS as an impact management tool for the private sector by providing evidence of its impact on productivity.