Many interventions designed to reduce poverty fail to improve the lives of the poorest of the poor, suggesting a need for targeted programs. Working with Bandhan, a microfinance institution based in West Bengal, we conducted baseline and post-program surveys of approximately 1,000 "ultra-poor" households. To be considered ultra-poor, households must meet a set of criteria including having an able-bodied female member and not being associated with any microfinance organization. In addition, households must meet three out of the five following requirements: primary source of income is informal labor or begging, land holdings are below 20 decimals, household owns no productive asset other than land, no able bodied males in the household, and school-aged children work instead of attending school.
Half of the sampled households were randomly selected to participate in Bandhan's "Targeting the Hard-Core Poor" (THP) program. The theory behind the program is that the poor are trapped in extreme poverty by their lack of assets and inability to use financial intermediation to overcome their lack of assets. Bandhan purchases and distributes assets such as livestock and inventory to program beneficiaries. The grants are also used to finance other inputs, such as fodder and sheds for livestock. Bandhan staff meet with participants to select the livelihood option best suited to the household. In the study sample, 90% of beneficiaries chose livestock, receiving either 2 cows, 4 goats or 1 cow and 2 goats. The value of the asset transferred was approximately US$100, equivalent to 20% of baseline hosuehold expenditure.
Over the next eighteen months, Bandhan staff meet weekly with beneficiaries. Staff provide information and training on topics related to the household's enterprise as well as broader social and health issues. Beneficiaries are also required to save Rs. 10 per week at these meetings. Eighteen months after receipt of the asset, the beneficiaries are "graduated" to microfinance and become eligible for regular microfinance loans provided by Bandhan.