(World Bank and IMF Global Monitoring Report 2015)
Several initiatives are aimed at increasing the assets of people living in poverty, especially in terms
of their income. One of the programs that has proven to be most effective in building productive
and social capacities and putting families on a path to development that can carry them out of
extreme poverty is the Graduation program.
WHAT IS GRADUATION?
Graduation programs were initially designed and implemented by BRAC in Bangladesh. Following
several years of testing, perfecting and adapting the model, the program began to expand across
the globe. Today, nearly 60 Graduation programs are underway in close to 40 countries.
Graduation has been defined in different ways, but for Fundación Capital it means strengthening
the productive, financial, human and social assets of people living in extreme poverty so that they
may become self-sufficient, build the capacities necessary to face adversity (resilience) and stay
on the path to autonomous development. This often occurs at the same time people cross over the
income-based or multidimensional extreme poverty line set by the government in their country, but
The five basic components of the Graduation strategy are:
- Support for Purchasing: Small monetary stipends are given to program participants to provide
them with food security and reduce the stress of daily life.
- Savings Promotion: Participants are encouraged to save, preferably through formal financial
institutions to ensure their savings are secure and allow them to build their assets.
- Asset Transfers: The purpose of this is to strengthen participants’ productive activities.
- Training in business, finance and life skills: Visits are made to participants’ homes where they
receive professional guidance regarding their business ideas and support in other areas including
basic entrepreneurship skills, financial literacy, and personal development.
- Technical Assistance: This is to help participants run their businesses.
Graduation programs have proven so effective that they have influenced public policy, especially in
the realm of social protection systems aimed at creating safety nets for the most vulnerable
citizens living in the poorest conditions. There is growing interest in incorporating the productive
component into social safety nets and in building skills and knowledge, developing sustainable
means of subsistence and increasing resilience.
WHAT MAKES THE GRADUATION APPROACH EFFECTIVE?
The Graduation approach is recognized as one of the most effective methods for lifting people out
of extreme poverty for good. In the words of Esther Duflo, professor at MIT and director of J-PAL,
“All over the world it has been found to be one of the most successful anti-poverty programs in
terms of increased consumption, food security, dignity and sense of belonging.”
Key results of this approach include:
- A broad and lasting economic impact
- Increased income (+37.5%)
- Increased savings (+97.5%)
- Increased food consumption (+7.5%)
- Improved psychological well-being in terms of health and happiness
- Effectiveness in many different contexts and with different implementing partners
- Favorable cost-benefit relationship
FUNDACIÓN CAPITAL’S EXPERIENCE WITH THE GRADUATION APPROACH
Fundación Capital’s goal is to turn the Graduation model into a massive program for reducing
extreme poverty. With the support of the Ford Foundation and the International Development
Research Centre (IDRC) in Canada, since 2011 Fundación Capital has been working with
governments in Latin America, the Caribbean, and Africa to adapt to public policy requirements.
While maintaining the principle components, Fundación Capital has introduced innovative
elements to the traditional model including cash transfers as opposed to in-kind benefits, ICTs as
part of a training system using tablets and an online course for trainers.
The successful incorporation of the Graduation approach into public policy in Latin America has
caught the attention of several African nations. As a result, in 2016 Fundación Capital began
working with Tanzania’s social protection program lead by TASAF and financed by Irish Aid.
Fundación Capital has signed technical cooperation agreements for designing and implementing
Graduation projects with the governments of Colombia (Social Prosperity and the Unit for
Comprehensive Victim Support and Reparation), Paraguay (Technical Secretariat of Planning),
Honduras (Sub-Secretariat of Social Inclusion and the Inter-American Development Bank), Mexico
(PROSPERA) and Tanzania (Tanzania Social Action Fund). Similar cooperation agreements with
other countries are currently being explored.
Since Fundación Capital designed and began implementing this program in 2011, more than
28,500 families have participated in the Graduation initiative. This includes more than 14,100
families in Colombia, 13,000 in Paraguay, 400 in Mexico and 840 in Honduras. The initiative has
reached a total of 145,000 people in these countries to date. As a result of Fundación Capital’s
commitment and capacity to ensure that this approach continues to grow, national governments
have exceeded donor contributions, investing approximately USD $26 million in the Graduation
programs led by Fundación Capital in Latin America and the Caribbean.
By the end of 2019, Fundación Capital is counting on allied national governments to invest more
than USD $70 million to implement Graduation programs and reach an estimated 75,000 families
(approximately 400,000 people).
28,500 families directly impacted
145,000 people impacted
USD $26 million invested by allied governments
Fundación Capital focuses on learning and continuous improvement, which is why it has teamed
up with the Ford Foundation and the IDRC in Canada to create an Assessment, Research and Learning Platform for its programs in Latin America and the Caribbean. The platform is coordinated
by the University of the Andes in Colombia.
Assessment methodologies have now been designed for Colombia, Mexico, and Paraguay, where
baseline studies have already been carried out as well. The platform has also designed an impact
assessment test (RCT or random controlled test) to assess the project in Honduras. The goal of
the platform is to produce comparative studies to stimulate the spread and exchange of
knowledge; the focus on gender is one area where this is particularly important.
In addition, Fundación Capital uses concept and needs assessments to design all its programs.
These assessments have been fundamental to adapting the Graduation approach to each country
by taking local needs into account. They generate the knowledge needed to adapt training
materials and tools to each country in terms of language, content, illustrations, distribution
channels and group activities. Qualitative assessments have also helped Fundación Capital to
continue rejuvenating and improving the program.