PROMISING APPROACHES IN MF/MED SERVICES FOR VERY POOR PEOPLE

CASE STUDY FORMAT

 TABLE OF CONTENTS

Executive Summary.............................................................................................................i
1. Context ...........................................................................................................................1
1.1. Country Socioeconomic and Poverty Data
.........................................................................................................................................1
2. Organizational Framework...........................................................................................13
2.1. International Organization.....................................................................................13
2.2. Local organization.................................................................................................17
3. Description of “Very Poor” Target Group....................................................................24
3.1. Individual and Household conditions
.......................................................................................................................................24
3.2. Socioeconomic conditions.....................................................................................29
4. Poverty Targeting and Assessment...............................................................................33
4.1. Poverty measurement practices.............................................................................33
4.2. Available Poverty Data..........................................................................................36
4.3. Poverty Targeting..................................................................................................37
5. Products and Services...................................................................................................38
5.1. Financial Products.................................................................................................38
5.2. Microenterprise Development Services..................................................................44
5.3. Non-financial Services...........................................................................................48
5.4. Design and Product Development: .......................................................................52
5.5. Implementation Process ........................................................................................58
6. Results..........................................................................................................................59

6.1. Method of measuring results................................................................................59

6.2. Impact....................................................................................................................60
6.3. Cost Effectiveness and Sustainability ...................................................................62
7. Conclusions.................................................................................................................65
7.1 Challenges & Pitfalls.............................................................................................66
7.2 Lessons Learned...................................................................................................66

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 TITLE PAGE

Title of Project/Program: Livelihood and Economic Enhancement of Poor (LEEP)

Organization Name(s) Christian Children's Fund (CCF)
Location – Country India
Author(s) Devorah Miller, Senior MED Specialist
Guru Naik, Asia Region Technical Advisor,
Sustainable Livelihoods (Former CCF-India Director
Microfinance and Grants)
Month/Year June 2007

SEEP Network’s Poverty Outreach Working Group’s MF/MED Approaches Targeting

Very Poor People

Case Study No. X

 Executive Summary

Christian Children's Fund (CCF) is a child development organization dedicated to the

wellbeing of children belonging to poor communities all over the world. In India, CCF
works through local NGOs, and assists them to implement its child sponsorship program.
The partner NGOs implement programs in the core areas of Health, Education,
Livelihood, Emergencies and Child Protection in a defined cluster of CCF project
villages. The livelihood program of CCF-India is known as Livelihood and Economic
Enhancement of Poor (LEEP) Program - a child centered program that focuses on
enhancing the economic condition of poor families so that they will be in a position to
meet the basic and growing needs of their children. Launched in 2004, LEEP Program
has a very specific objective of moving families from Below Poverty Line (BPL) to
Above Poverty Line (APL). For LEEP, this translates into achieving a minimum
standard of Rs. 24000 net income per family per annum.

LEEP Program operates in 54 districts, covering 16 States and Union Territories of India.
The Central States where CCF primarily works are mostly rural and include remote forest
areas where 75% of the tribal populations of India live. The primary target group of
LEEP Program is the 70,000 families of CCF sponsored children. The secondary target
group is all poor families living in the villages where CCF children live. Assisting the
poorest, especially vulnerable children, defines the organizational culture and core values
of both CCF-India and the 74 NGO partners that implement LEEP Program as part of
their child sponsorship activities.

LEEP Program uses both an absolute and relative measure of poverty to determine
eligibility, and all LEEP participants are poor at the time of entry into the program. The
absolute measure of poverty is the appearance of a family on the government’s list as
being BPL, defined as income of less than Rs. 18000 per year. In addition, a NGO
administered Participatory Wealth Ranking (PWR) process provides a ranking of who in
the village is the poorest, in relative terms. CCF-India finds it is important to use both
the absolute and relative tools. The government BPL list is useful in identifying
communities with large concentrations of poor families, and helps prioritize area
selection. However, experience shows that in a given community, 60% to 70% of the
poor may not get identified through the government survey process. The PWR tool
catches those cases where a misclassification may have occurred, i.e. poor but not on the
government list. While it only classifies families as being BPL or APL, CCF-India and
NGO staffs estimate that 30% of LEEP participants are very poor when they enter the
program.

The LEEP approach ensures that a capacity to provide technical assistance precedes
financial assistance. LEEP only supports a limited number of priority activities, and CCF-
India takes the responsibility for doing the analysis that confirms those activities can
generate the desired income level. Participants are only offered the opportunity to do a
priority activity, which has been approved by CCF-India for their district. The focus is
on the income to be earned, not necessarily the preference of the client. The lending
product is an individual loan. Rs 20000 – 40000 ($500 - $1,000). This loan size is higher

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than a typical poverty lending program; however, it is central to the approach of LEEP, as
it relates back to the objective of financing an enterprise that will generate Rs. 24000 net
income per annum. Everything else remaining constant, the amount of return is related to
the amount of investment, e.g. one can not expect a large return from a small investment.
CCF-India understands that offering the very poor a relatively large loan can present a
risk. LEEP addresses this by providing a comprehensive technical assistance package of
support to ensure clients succeed. Because each NGO partner only provides support for
one or two types of businesses, they become proficient in all aspects of that specific
operation.

LEEP clients are assisted, step-by-step, through the critical aspects of business operation.
Having predictable outcomes is important, and helps to keep the risk tolerance in an
acceptable range. The strategic part of the business planning exercise is provided to
them, i.e. the combination of resources that will result in the target income. Clients are
essentially made responsible for the production side of the business, with CCF-India
taking the lead on orchestrating the input procurement and output marketing. At the
beginning, even the production process is carefully monitored. The strategy is to provide
inexperienced clients a standardized business model that generates a predictable income.
Services provided in conjunction with the loan include: 1) technical advisory services for
production. Each NGO has a technical expert for the core activity, who maintains direct
contact with each of the ~1,000 participants in his/her geographic area; 2) input supply
services. The NGO plays a role in reducing the cost and/or improving the quality of key
inputs; and 3) marketing assistance. Even before a core activity is selected, the market
has been identified. Knowing the specifics of the market is essential to accurate income
projections.

Data on client income that is generated from the LEEP supported business is the primary
measure of effectiveness and success. This relates back to the objective of LEEP to lift
poor families above the poverty line. With respect to operational efficiency, data on loan
disbursements and repayments are also tracked. Aggregate statistics on movement of
LEEP clients above the poverty line is not currently available. All income and portfolio
information is currently at the NGO level, and even there it is often in the client level data
sheets. That being said, the NGO technical expert reviews all client data monthly, and
knows those clients that are not progressing as expected. CCF-India is in the process of
installing a software package that will consolidate this data at the national level. Impact
is quite quick under LEEP Program. It is expected that all clients will be earning Rs.
24000 from LEEP Program alone within five years of beginning operation. Even when
the priority activity is not the first choice of employment options for a client, what is
ultimately attractive is the “guaranteed” income that will result

LEEP Program is based on the belief that cost must be evaluated in the context of the
benefit that it generates. For example, the provision of technical assistance is the largest
cost, but it also is the element that LEEP has determined is key to its success. LEEP
controls technical assistance costs by limiting the number of core activities an NGO
undertakes, most often to one. Not only does this strategy reduce staff costs, but the
increased scale of an activity also allows for the introduction of supporting activities like

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feed milling, bulk purchase of inputs, etc. LEEP has also been able to keep its costs low
by building upon the existing service delivery structure of its NGO partners. As
participants of an integrated program, LEEP clients have frequent contact with numerous
NGO staffs, which are trained to be proficient at specific, cross-sectoral tasks.

Its 55 year history of working with very poor families has convinced CCF-India that a
strategy that contributes to poverty reduction is not sufficient. Rather, it opted for a
strategy that results in the poor being lifted above the poverty line. This decision means
that a significant investment has to be made in each family. The trade-off is whether a
large number of family’s economic situation is improved, or a smaller number of families
are taken out of poverty on a sustainable basis. LEEP has opted for the later, and uses the
perpetual stream of sponsorship funds to systematically introduce new families over time.

More than any other factor, what is seen as defining LEEP’s success is the commitment
of CCF-India and its NGO partners to helping the most vulnerable members of a
community. A pro-poor ethos is evident at all levels of the organizations and in printed
material. While it is the parents that participate in livelihood activities, the voices behind
all program interventions are those of deprived, vulnerable, marginalized and excluded
children. An ever present child wellbeing focus keeps the livelihood outcomes in-line
with the objective of providing economic security through a stable source of family
income so that child needs can be met.

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 1. Context

1.1. Country Socioeconomic and Poverty Data

1.1.1. National Currency Rupees Rs

Amount Year
1.1.2. Population (millions) 1.087 2004
1.1.3. Population density per square kilometre 324 2001
28.5% /
1.1.4. Percentage urban / rural population 2004
71.5%
1.1.5. Inflation 5.3% 2006 est.
1.1.5. Nominal Exchange Rate (current, X Currency per US$1) 40.52 2007
1.1.6. PPP Exchange rate 15.02 1993
1.1.7. HDI value .611 2004
1.1.8. HDI ranking 126 2004
1.1.9. GDP/Capita (PPP US$) $3,139 2004
1.1.10. Local currency equivalent of $1-a-day international poverty 16.22
line
1.1.11. Population below national poverty line (%) 1 28.6% 1999-2002
1.1.12. Population living below $1 a day (%) 34.7% 1990-2004
1.1.13. Population living below $2 a day (%) 79.9% 1990-2004
1.1.14. Population living below $2 a day (%)
1.1.15. Population growth rate 1.3 2004-2005
1.1.16. Life expectancy 63.1 2000-2005
1.1.17. HIV prevalence (% ages 15-49) 0.9 2005
1.1.18. Malaria cases (per 100,000 people) 7 2000
1.1.19. Population undernourished 20% 2001-2003
1.1.20. Children underweight 49 1996-2004
Male 73.4%
1.1.21. Adult literacy 2004
Female 47.8%
Male 92
1.1.22. Net primary enrolment ratio 2000-2005
Female 87
Male 59
1.1.23. Net secondary enrolment ratio 2000-2005
Female 47
1.1.24. Physicians per 100,000 people 60 1990-2004
1.1.25. Health expenditures per capita 82 2003
1.1.26. Gender-related development index (GDI) rank 96 2004
1.1.27. Gender-related development index (GDI) value .591 2004

1 The Government of India sets the poverty line on the National Sample Survey using the criteria of per capita monthly consumption expenditures
necessary to meet minimum caloric norms. In operational terms, this translates to a government Below Povery Line (BPL) threshold of Rs. 18000 annual
income. sources: http:/hdr.undp.org/statistics/data and http://delhiplanning.nic.in/Economic%20Survey.

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1.2. Local context – target area

1.2.1. Briefly describe local socioeconomic conditions

1.2.1.1. Geographic reference of location and size of population

The Livelihood and Economic Enhancement of Poor (LEEP) program of CCF India
operates in 54 Districts in 16 States and Union Territories (UT). Collectively, the
states where LEEP operates represent 68.9% of the population of India. A map which
shows the states where CCF India operates is included as Appendix 1. At the current
level of funding, each of LEEP’s 74 partners serves about 1,000 participants that are
typically located in a clustered area of 20-30 villages.

State / UT Population # Districts with LEEP

As of June 2007
COUNTRY TOTAL 1,028,610,328

Orissa 26,945,829 5
Chhatisgarh 20,833,803 2
Jharkhard 26,945,829 9
Bihar 82,998,509 2
West Bengal 80,176,197 1
Uttaranchal 8,489,349 1
Uttar Pradesh 56,507,188 6
Maharastra 96,878,627 2
Madhya Pradesh 60,348,023 2
Rajasthan 56,507,188 3
Tamilnadu 62,405,679 7
Pondichery 974,345 2
Karnataka 52,850,562 7
Andhra Pradesh 76,210,007 5

Total population of 709,071,135 54 districts covered by

states where LEEP 74 LEEP partners
operates

Estd. # families2 141,814,227 LEEP families: 70,000

2
Assumes an average family size of 5.

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1.2.1.2. Local population characteristics:

The communities in which CCF-India operates are predominantly rural, and include
remote forest areas. Accessibility and mobility is a daily problem, and people often
have to walk for 2-5 hrs before reaching a main road or small rural market.
Infrastructure like paved roads and electricity is limited in small villages. The villages
may have a government primary school that has one/two rooms with one/two teachers
for five classes. Illiteracy is a common phenomenon in the area. Drinking water is also
a challenge, with people using streams or earthen wells for drinking water. Most of the
area is in the water scarcity zone, and there is little irrigation water. As a result,
people rely on one rain fed crop in a year, which is grown during the rainy season.
Even then, the distribution of rainfall is such that most crops do not get water during
the last growth stage and hence the productivity is reduced. The majority of people
living in these villages are challenged to meet their basic livelihood needs, and large
scale migration is common during the summer season. Finally, there are few
government health facilities at the village level, and malnourishment is common
among children.

1.2.1.2.1. Ethnic groups

The Government of India refers indigenous peoples as Scheduled Tribes (ST), and
they constitute roughly 8% of the country’s population or nearly 68 million people.
The characteristics establishing a tribal identity include language, social
organization, religious affiliation, economic patterns, geographic location and self-
identification. There are some 573 communities recognized by the government as
ST, who are therefore eligible to receive special benefits and compete for reserved
seats in legislatures and schools. Recognized tribes typically live in hilly, remote,
heavily forested regions, and speak a tribal language. Tribes tend to form self-
sufficient economic units, and not be part of an integrated economic system. All of
these factors combine to result in limited political and economic significance.
Historically, the economy of most tribes was subsistence agriculture or hunting and
gathering. Many ST’s practice shifting cultivation – clearing a field with slash-and-
burn methods, planting it for a number of seasons, and then abandoning it for a
lengthy fallow period – rather than the intensive farming typical of most parts of
rural India. Land-use rights have evolved from traditional tribal procedures.

Like STs, Secheduled Castes (SCs) are communities that are accorded special status
by the Constitution of India. These communities were considered "outcastes", and
were excluded from the Chaturvarna system that was the descriptive social
superstructure of Hindu society in the India for thousands of years. These
communities had traditionally been relegated to the most menial labor with no
possibility of upward mobility, and subject to extensive social disadvantage and
exclusion, in comparison to the wider community. Lacking opportunities for
educational, social and economic growth, they could not integrate with rest of the
society. The Scheduled Caste peoples are also known as Dalits and the scheduled-
tribe people are also referred to as Adivasis.

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 Roughly 75% of the total ST population lives in the Central Indian States where CCF
India works, with the major concentration of tribal people living in Maharashtra,
Orissa, and West Bengal. The State-wide statistics in the following table understate
the participation of STs and SC’s in CCF India’s program. The poverty that minority
groups experience as a result of social and economic exclusion makes them more
likely to live in the vulnerable communities that CCF targets.

State / UT % of Scheduled % of Scheduled Caste

Tribe population population
COUNTRY 8.2% 16.2%
TOTAL

Orissa 22.1% 16.5%

Chhatisgarh 31.8% 11.6%
Jharkhard 11.8% 26.3%
Bihar 0.9% 15.1%
West Bengal 5.5% 23.0%
Uttaranchal 3.0% 17.9%
Uttar Pradesh 0.1% 21.1%
Maharastra 8.9% 10.2%
Madhya Pradesh 20.3% 15.2%
Rajasthan 12.6% 17.2%
Tamilnadu 1.0% 19.0%
Pondichery 0.0% 16.2%
Karnataka 6.6% 16.2%
Andhra Pradesh 6.6% 16.2%

1.2.1.2.2. Most important economic activities

The main economic activities in the target area are:

• Seasonal subsistence agriculture – food crops
• Rearing and selling/eating of small livestock (chicken, goat, sheep etc.)
• Collection and selling of minor (non-timber) forest products
• Daily wage labor in agriculture, government construction and other unskilled
work

A much smaller number of individuals are engaged in local government jobs

(teaching, health care posts, etc.) and the military. LEEP would not reach these
individuals because even though their annual income is small, it would still place
them above the poverty line (APL) and make them ineligible.

1.2.1.2.3. Cultural and religious background

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 LEEP serves all members of poor communities, without consideration of religious
background. The major religious groups in India are:

Hindu 82%
Muslin 12%
Christian 2%
Buddhist <1%

1.2.1.3. Natural resources, economic activities, markets, unemployment

The most important natural resources in the project areas are land, water and forest
products. Markets are normally small rural markets, which are within 5-10 kms. of the
project villages.

1.2.1.4. For rural areas only: most important crops and livestock activities, water
supply (irrigation, rain fed), seasons and number of harvests, land availability,
ownership patterns and contracts.

Agriculture is largely subsistence and rain fed. Most people harvest one crop during
the rainy season. In the uplands, people primarily produce millet and maize. In the low
land, flooded parcels are used for growing rice. About 70% of the people have a small
parcel of land between 1 to 2 acres, which is unfenced and not irrigated. This would
cover about six months of food needs. The remaining 30% of people are landless, and
their livelihood depends on wage labor, including working in other people’s fields.

1.2.1.5. Occurrence of droughts, floods, natural disasters or conflicts

Drought is the most common phenomena in most of the LEEP project areas, and water
scarcity is a constant problem to be copped with. Some low-lying areas are seasonally
threatened by floods. On a less predictable basis, certain project areas are affected by
earthquakes, cyclones and tsunamis.

CCF-India works with 46 of the 573 communities recognized by the government as

ST. Conflict is experienced through tribal insurgent groups engaged in anti-
government activity. Over the course of CCF India’s history, security issues have
occasionally resulted in withdrawal from communities.

1.2.2. Describe government policies aimed at the very poor

1.2.2.1. Social protection schemes by the government.

There is no universal, social protection scheme for the poor in India, and only 10% of
the population enjoys some level of social protection. The poor are seen to be on the
fringe of the political process, exerting little influence. To date, most social protection
schemes are micro-insurance at the State or local level. For example, self-employed

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women associations offer accidental death, life or asset protection insurance. In the
health sector, some States have expanded community programs to establish
partnerships with public and private insurance companies.

1.2.2.2. Policies aimed to integrate the very poor, such as anti-discrimination and
affirmative action laws.

The policy of affirmative action in India is based on a reservation system that uses
quotas to assure diversity in the educational system and certain sectors of the
workforce. While the policy of reservation in favor of the Scheduled Castes and Tribes
is in place, the same arrangement was not made for the Other Backward Castes
(OBC)s because the Constituent Assembly could not decide on whether the criteria for
defining ‘backwardness’ should be class or caste. This has called into question the
legitimacy of India’s reservation policy in general. In some cases, it has brought
benefits to members of groups with considerably weaker cases for preferential
treatment than the Scheduled Castes and the Scheduled Tribes.

To a large extent, the reservation policy has succeeded in providing opportunities to

people who did not have them. But in judging who should be eligible for reservation,
the focus has been placed on caste, and this has meant that many of the benefits of
reservation have gone to economically well-off groups. Furthermore, little effort has
been made to supplement reservation policy with an improvement of basic facilities
like good primary schools, better health facilities, and training programs. Neither the
Constitution nor public policy has been able to dramatically address inequality. This
has led to increasing resentment against beneficiary groups by more-advantaged
groups, whose members have traditionally enjoyed exclusive access to such positions.

1.2.2.3. Property and land rights.

Inheritance laws in India give supremacy to males – a fact that is true across all castes
and classes. Women typically become married, live in their husband’s house and
hence don’t have any right over the property of their parents.

Land rights for tribes remain a contentious problem. Large areas of India came under
the ownership of non-tribals in the early 1900’s when the government promoted
homestead-style settlement. Immigrants received free land in return for cultivating it.
The notion of individual ownership of land was foreign to most tribal people, and they
did not perceive the importance of protecting their land access rights. Generally
speaking, tribals were disadvantaged in dealing with the government officials who
granted land titles. By the time the need for legal ownership was recognized, they had
lost the right to claim. As a result, many tribal people became landless in the 1960s
and 1970s. Particularly tribals living in reserve forest areas don’t have land rights.
The government is typically the owner of these forest lands, and allows occupants to
stay there. However, without legal title, they could be displaced at any time.

1.2.2.4. Local government and non-governmental development programs.

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The Government of India (GOI) runs several poverty eradication programs, and is the
biggest development agency in terms its infrastructure, outreach and its financial
outlay. There has, however, been criticism of its efficiency. The current five year plan
of the GOI is for the period 2002 – 2007, and includes the following objectives:
• To achieve an overall target growth rate 7 percent per annum.
• To reduce the poverty through income and employment generating programs.
• To increase the literacy rate to 75 percent within the plan period.
• To improve the health parameters - birth rate, death rate, infant mortality rate and
maternal mortality rate and reduce the gap between the State and national averages.
• To bring down the population growth rate to 1.62 percent by 2011.
• To provide potable drinking water to all villages in the State.
• To ensure social, economic and political empowerment of the weaker sections of the
society.
• To increase the agricultural production through extensive and intensive cultivation.
• To expand the existing irrigation facilities and conservation of water resources.
• To improve the physical infrastructure like power and roads.
• To develop information technology and biotechnology.

These objectives often translate into local or state programs, to which CCF-India
attempts to facilitate linkages. Livelihood enhancement may mean getting the male
head of household temporary employment through a government program while his
wife pursues a longer-term activity. For example, in road construction, LEEP seeks
ways to include the unemployed in poor communities on local work crews. Most
often, facilitation efforts involve providing information and encouraging self-help
groups to collectively express their demands to local or state governments. It has been
LEEP’s experience that local government and state governments can make services
available, and it is an issue of influencing their priorities. Successful group petition
experiences shared by the SHGs interviewed as part of this case study include opening
primary schools and/or placing qualified teachers in the neighborhood so young
children did not have to travel, utility connection, street light installation, and opening
a milk collection site in the community which put poor communities in the national
production grid.

There are many NGOs working in India, and they tend to coordinate village coverage.
As a result, other NGOs are not present in the villages CCF-India serves, or they are
implementing different types of programs.

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 1.2.2.5. Other

1.2.3. Brief profile of microfinance environment.

1.2.3.1. List microfinance institutions (other than subject of case study) and other
financial institutions/services accessible by the poor.

In India there is a large network of some 33,000 branches of Regional Rural Banks
(RRBs) that serve rural areas. The performance of these banks has been dismal and
highly subsidized. For the very poor, who typically seek loans of less than Rs. 25000,
MFIs have emerged as key providers of financial services. The majority of Indian
MFIs are not-for-profit organizations that facilitate the formation of self-help groups
(SHGs) and link them with formal banks. The National Bank for Agriculture and
Development (NABARD) has promoted this model, which now accounts for 70
percent of microfinance in India. Sa-Dhan, the largest network of Indian MFIs,
estimates that there are over 1,000 NGOs and MFIs engaged in microfinance activity.
While the number of MFIs in India is large, these agencies put together may only
cover less than 5% of India. At the end of the day, a large majority of people living in
rural areas depend on the local money lenders or family for their financial needs.

Microfinance programs have rapidly expanded in recent years. Some examples are:

• Membership of Sa-Dhan has expanded from 43 to 96 Community Development

Finance Institutions during 2001-04. During the same period, loans outstanding of
these member MFIs have gone up from US$15 million to US$101 million.
• The CARE CASHE Program works with small NGO-MFIs and community
owned-managed microfinance organizations. Outreach has expanded from 39,000
to around 300,000 women members over 2001-05.
• In addition to the dominant SHG methodology, the portfolios of Grameen
replicators have also grown dramatically. The outreach of SHARE Microfin
Limited, for instance, grew from 1,875 to 86,905 members between 2000 and
2005 and its loan portfolio has grown from US$0.47 million to US$40 million.
• The impressive accomplishments of MFIs and their clients in one State — Andhra
Pradesh — provide a glimpse as to what is possible country-wide. In 2000 three
leading MFIs — SHARE, SKS and Spandana — reached fewer than 100,000
families. These three organizations now serve more than 1.5 million families.

Most MFIs in India focus on providing financial assistance. The major exception to
this rule is BASIX, the program after which LEEP is modeled. Established in 1996,
BASIX provides integrated financial services and technical assistance to over
190,000 poor households in 44 districts and eight states.

The geographic distribution of MFIs in India is focused in the south, which has about
60% of the outstanding portfolio. Sa-Dhan has identified one of the great challenges
of microfinance in India is to bring microfinance services to the currently
underserved, poor districts. Using a child focused ranking process that identified the
150 most backward districts in India, in 2004 CCF India realigned the areas in which

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it operates. As a result, LEEP is providing financial services in districts in the central
region, where concentrations of poverty are the highest.

1.2.3.2. Describe dominant microfinance models and services.

1. The SHG Model

The micro-finance scene in India is dominated by Self Help Groups (SHGs). A SHG
is a small voluntary association of poor people, preferably from the same
socioeconomic background. They come together for the purpose of solving their
common problems through mutual action. The SHG promotes small savings among its
members. The savings are kept in a consolidated, commercial bank account under the
name of the SHG. Usually, the number of members in one SHG does not exceed
twenty. The SHG provides a platform for an NGO facilitator to build a strong social
and financial entity. The SHG is strengthened to provide its members with financial
services, and the NGO provides them with the support services, training, systems, and
linkages to external finance sources.

2. The SHG Federation Model

A variation of the SHG model is the Federated SHG approach. In federations there is
a three-tier structure where the SHG is the basic unit, the SHG cluster is the
intermediate unit and an apex body or federation represents the entire membership.
The federation approach allows SHGs to access external funds, promote the formation
of new SHGs, expand products offered, i.e. insurance, and facilitate inter-group
exchange (both financial and non-financial). Federations promoted by Dhan
Foundation, PRADAN, Chaitanya, and SEWA are examples of this approach.

3. The Grameen Bank Model

The Grameen methodology has had exceptional success in India. SHARE Microfin
Ltd., Activists for Social Alternative (ASA) and CASHPOR Financial and Technical
Services Ltd. have adopted this methodology with little variation. The core of the
delivery structure is homogenous, affinity groups of five members. Eight groups
affiliate into a centre, which meets every week. Group discipline is enforced through
peer pressure.

4. The Co-operative Model

The leading proponent of this model has been the Cooperative Development Forum
(CDF) in Hyderabad. CDF’s approach has relied on a credit union model involving a
savings first strategy.

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 5. Non-Banking Finance Company Model
This is the legal form increasingly used by MFIs who want to go the for-profit route,
as it is the best way to operate in the capital markets. The best example of this model
is BASIX. However, it is recognized that it is not viable for a NBFC to invest in
developing a customer base – which is the task to be taken on by the NGO.

1.2.3.3. Demand versus supply of microfinance services.

With 75 million poor households potentially requiring financial services, the

microfinance market in India is among the largest in the world. Estimates of
household credit demand vary from a minimum of Rs. 2000 to Rs. 6000 in rural areas
and Rs. 9,000 in urban settings. Given that 80% of poor households are located in
rural areas, the total credit demand ranges between Rs. 255 billion and Rs. 500 billion.
Supply of microfinance services, however, falls significantly short of demand. Planet
Finance reports that in 1997-98, banks disbursed Rs. 97 billion in credit to the poor,
while MFIs and NABARD’s SHG Bank-Linkage program disbursed Rs. 1.4 billion –
covering only 20 percent of estimated demand. The annualized credit usage of a poor
family (rural and urban) is estimated at Rs. 6000 – Rs. 9000, of which 80% is met by
informal sources. It is further estimated that in 2003, SHG member households
received an average of Rs. 1766 in credit. Hence, not only is there an unmet demand
for loans, existing borrowers received smaller loans than they required.3 Additionally,
microfinance services remain predominantly in the form of credit and do not address
the poor’s need for savings and insurance services.

The above national demand estimates reflect LEEP’s potential. In the communities it
serves, as high as 80% of the families have indicated they want a loan. Credit is
currently being rationed because of the limited availability of loan funds and capacity
to provide complimentary technical services. During its pilot years, LEEP has focused
on establishing systems and procedures. With these tasks now accomplished, the legal
formation of LEEP India will allow for rapid scale-up through the use of commercial
capital. (Note: While a program operates under the legal umbrella of CCF, Inc. its
ability to access commercial loan funds is restricted.) Currently, CCF-India funding is
covering both loan and technical assistance costs, but in the future it can focus on
technical assistance.

1.2.3.4. Depth of microfinance outreach.

Based on an average loan size of Rs. 1766 per family under the SHG-Bank Linkage
program, which represents 70% of the microfinance market in India, there is good
depth of microfinance outreach. MFIs and SHGs are reaching the poor; the challenge
is the magnitude of the demand.
3
India Microfinance Investment Environment Profile, Slavea Chankova, Nathanel
Goldberg, Genevieve Melfore, Hind Tazi, and Shane Tomlinson.

10
 1.2.3.5. Existing MF/MED initiatives (other than case study) aimed at the very poor.

The major microfinance initiative of the GOI is the SHG Bank Linkage Program
implemented by NABARD – the apex bank formed to promote and develop
agriculture, small scale and cottage industries, and handicrafts in rural areas. Since its
1992 pilot linkage project, NABARD has provided 16.7 million families with financial
services through the formation and credit linkage of over one million SHGs.

The work of NABARD is supported on the policy front by the Reserve Bank of India
(RBI) who continues to encourage significant expansion of bank branches in rural
areas. RBI requires commercial banks to direct 40 percent of their lending to poorer
members of society and to priority sectors such as agriculture. These priority targets
have served to motivate banks to invest in microfinance. The linkages program has
been successful mainly due to promotion of SHGs by a large number of NGOs. The
relatively expensive cost of group formation and training has thus far been subsidized
by the NGOs through grants.

In absolute terms, the outreach of SHG-bank linkage may seem impressive, but in the
context of the magnitude of poverty in India it represents less than 5% of the banking
systems disbursements for agriculture and related activities.

1.2.4. Poverty

1.2.4.1. Existing poverty data and geographic areas of the country where extreme
poverty is most concentrated.

The poorest areas in India are those clustered in the Bimoru States, whose populations
are highly represented by indigenous tribes. The following table provides poverty data
for the states in which LEEP operates:

11
 India Poverty Data

State / UT % of rural # Districts with

population below LEEP
poverty line As of June 2007
2004-2005
COUNTRY TOTAL 28.3%
Orissa 46.8% 5
Chhatisgarh 40.8% 2
Jharkhard 46.3% 9 districts with 11
partners
Bihar 42.1% 2 districts with 3
partners
West Bengal 28.6% 1
Uttarakhand 40.8% 1
Uttar Pradesh 33.4% 6
Maharastra 29.6% 2
Madhya Pradesh 36.9% 2 districts with 5
partners
Rajasthan 18.7% 3 districts with 7
partners
Tamilnadu 22.8% 7
Pondichery 22.9% 2
Karnataka 20.8% 7 districts with 12
partners
Andhra Pradesh 11.2% 5 districts with 6
partners

Source: http://planningcommission.gov.in/news/prmar07.pdf

1.2.4.2. Does the target area fall within these extreme poor regions?

Traditionally, CCF-India has worked, with the exception of the North East and
Kashmir, all over the country. In July 2004, CCF India undertook a major study, e.g.
Identification of Backward Areas in India, to help it identify those districts most in
need of interventions. District level analysis was chosen over State-wide, to allow for
a more precise identification of target areas. Identification of backward districts
assured that a poor district would not be excluded on the grounds that the State it was
in is relatively more developed. The exercise was also useful in identifying clusters of
backward districts that are spread across more than one State, making operations more
efficient for CCF.

Consistent with CCF’s child centered focus, the ranking methodology selected
indicators that could provide insights into the “capability deprivations that are central
determinants of the status of people and especially children.” The following are the

12
 indicators CCF-India used to develop an index of development and subsequently rank
the 225 poorest districts in the country.

Health Infant survival rate.

Education Female literacy rate
Income Monthly per capita expenditure
Social Status Sex ratio among children;
% of Scheduled Caste /Scheduled Tribes
Access to facilities/markets % urbanization

The study revealed that nearly three quarters of the most backward districts (54 out of
75) are in the three Bimoru States of Madhya Pradesh, Orissa, and Uttar Pradesh. If
Rajasthan is added, two thirds of the backward districts are covered. Finally, if
Chhattisgarh and Jharkhand are added, 144 of the 150 most backward districts are
covered. The resulting rank order of backwardness was used to cluster districts into
operationally manageable units. At the end of the process, CCF- India – and by
relation LEEP, identified 122 districts or 54% of the total 225 most backward as
priority districts for program intervention.

1.2.4.3. If known, what is the proportion of population in the target area living below
$1-a-day and/or within bottom 50% of people living below the national poverty line?

Only state wide data, provided in section 1.2.4.1, is available for those falling under
the national poverty line.

1.2.4.4. Main determinants of poverty.

Traditional poverty indicators tend to focus on income or financial deprivation. CCF’s

DEV (deprivation, exclusion and vulnerability) framework considers the broader
range of social and economic factors. Within the poor communities where CCF-India
works, the factors used in the PWR process to indicate poverty include: # of children,
# of disabled/chronically ill dependents, size of land parcel owned, female head of
household, attendance of school aged children, quality of home. If one looks at the
determinants of poverty, the focus shifts to issues of land ownership, lack of water,
social status in a rigidly stratified, caste based society, low levels of education that
lead to high levels of illiteracy, limited access to markets, information and social
services, high population growth rates, and dependence on the agriculture sector which
has low returns.

2. Organizational Framework

2.1. International Organization

2.1.1. Name and type of the organization (INGO, multilateral agency, foundation, other)

13
Christian Children's Fund (CCF, Inc.) is an international, nonsectarian NGO founded in
1938 that assists over two million children in 33 countries worldwide, assisting more than
10.5 million children and families regardless of race, creed, or gender.

Headquartered in Richmond, Virginia, CCF operates with an annual budget of over $205
million, which is drawn largely from private contributions and government grants. CCF
partners with and supports over 970 affiliated projects that are community designed,
managed, and run. The “projects” that implement CCF’s child sponsorship programs hire
their own staff and are registered as local NGOs. CCF’s microfinance programs typically
begin as units under the national office, that ultimately spin-off as autonomous MFIs.

In India, CCF is registered as a “Foreign Company” under the “Company’s Act of 1956”,
and its national office is referred to as CCF-India. CCF-India has 4 offices, the country
office in Bangalore, and zonal offices in Hyderabad, New Delhi and Kolkata.

2.1.2. Organizational background

2.1.2.1. Mission and vision

CCF Mission Statement:

Too many of the world’s children suffer the debilitating effects of poverty and
violence.

Children have the right to experience life with as much joy and hope as possible.
Christian Children's Fund creates an environment of hope and respect for children in
need in which they have opportunities to achieve their full potential, and provides
children, families and communities with practical tools for positive change.

CCF Beliefs:

• all children deserve an environment of hope, respect and understanding;

• that poverty is a personal experience for every child and this insight and
sensitivity guides all of our actions;
• it takes a global perspective and collaborative effort in order to substantially
impact the issues of poverty that are facing children today;
• we must work together to create an environment of understanding towards all
children embracing cultural and religious differences;
• that all our actions must be guided by the utmost integrity and transparency;
• that we are accountable for all funds we receive, and we will always be upfront
and honest with our donors and stakeholders and use these funds in the most
efficient and productive manner.

14
2.1.2.2. Brief history

CCF emerged from a Richmond minister’s 1938 response to help thousands of

Chinese children left orphaned and homeless by the Japanese invasion. In the 1940s
and 1950s, as funding grew, so did the number of countries receiving aid. Work
expanded from China to other developing countries, and subsequently the name was
changed from China’s Children Fund to Christian Children’s Fund. During this same
time period, CCF developed its child sponsorship program, through which a donor
could sponsor an orphan for $2 a month. In response to direct mail and radio ads that
focused on connecting to an individual child, sponsors quickly signed on. In the
1960’s CCF moved away from support of orphans to helping vulnerable children stay
within their own families. Sponsorship became a practical method for inter-cultural
understanding, and for fund-raising to address the problems of children in poverty and
need. This child-focused approach remains at the center of all CCF, Inc. program
interventions.

Today, CCF, Inc. works in 31 countries, serving over 13.7 million children and their
families. CCF, Inc. is a founding member of the ChildFund International, a global
network of 12 child development organizations who provide more than $391 million
in assistance to children and families in 55 countries.

2.1.2.3. Type of support: funding, capacity building, technical assistance, direct

service provider, other

CCF is known for its Child-Focused Development approach that combines

interventions in core areas including:

• Early Childhood Development

• Education
• Livelihood/Microfinance
• Health, Nutrition, Water and Sanitation
• HIV/AIDs
• Nutrition and Food Security
• Emergency Response
• Child Protection

CCF is recognized as a leader in child protection and psychosocial interventions with

children in conflict and natural disasters. CCF recognizes the importance of
grassroots development by engaging parents, children, youth and local volunteers in
program decisions affecting their communities. CCF works in a highly participatory,
integrated, and community-based programming manner. It envisions empowered,
self-reliant, and resilient communities that receive appropriate government support
for meeting children's basic needs.

For each core program area, CCF, Inc. has a senior technical specialist that guides the
agency’s programming. MED became a core program sector for CCF in 1999, when
it launched an initiative to improve the quality of its lending programs at the country

15
 level. As of March 31, 2007, the 74 members of the CCF MFI Network have 74,000
outstanding clients, and an outstanding portfolio of $17 million. CCF microfinance
programs are recognized for the capacity to work in challenging environments, i.e.
post-conflict and disaster. In addition, the majority of CCF country programs are
implementing a variety of livelihood programs that do not include microfinance,
including vocational skills training for youth.

2.1.3. Development intervention approach

2.1.3.1. Primary target group and development focus

Children are the target population of all CCF programs. Since improved family
income is so central to child wellbeing, the MED target group is families living in
CCF supported communities, especially mothers. CCF’s approach to MED is to
strengthen parents’ income-earning capacity through some combination of micro-
credit, technical assistance, and skills or business training. CCF focuses on fostering
family self-reliance, responsibility, and creating a sustainable livelihood capacity.

The following key principles guide CCF microfinance programs:

• Target services to the poorest and most vulnerable, focusing particularly on
women.
• Use mutual guarantees rather than physical collateral for loans.
• Expect full and on-time repayment of loans.
• Offer initial loan sizes that are appropriate to the borrower’s capacity and needs.
• Microfinance activities achieve full financial sustainability in less than 7 years,
and spin-off from CCF to become autonomous MFI partners.
• Maximum integration of MED with other sector programs such as HIV/AIDS and
emergency response programs.
• Establish systems to monitor the impact of MED on families, especially children.

2.1.3.2. Specialized in MF/MED or multisectoral

CCF, Inc. does not advocate a single/preferred microfinance methodology or

approach. The role of the international organization is to provide quality standards
which all MED programs are expected to meet.

4
CCF MFI Network members include: Afghanistan, Guatemala, Sierra Leone, Senegal,
Sri Lanka, Thailand and Timor Leste. CCF policy requires that all microfinance
activities ultimately spin-off into autonomous MFIs who maintain a programmatic
relationship with the CCF National office that founded them. The current membership is
a mix of CCF housed programs and independent MFIs. LEEP India will be added to the
reported numbers as soon as their new MIS permits consolidation of data.

16
 Some CCF programs focus exclusively on microfinance, others do only non-financial
services, and yet others do a blend. The subject of this case study, LEEP India, is an
example of a blended microfinance and non-financial services approach.

2.1.3.3. MF/MED model

CCF programs do not follow one specific lending methodology, and experiences vary
with local context, i.e. solidarity lending (Afghanistan, Sri Lanka, Thailand and Sierra
Leone), self-help groups (Timor Leste and India), village banking (Guatemala), and
credit unions (Senegal).

2.1.3.4. Other sectors

Core program sectors of CCF, Inc. are livelihoods/MED, Health, HIV/AIDS, Early
Childhood Development (ECD), Education, Emergency Response, Nutrition and Food
Security, and Child Protection.

2.2. Local organization

2.2.1. Organizational Development

Table 2.2. Institutional Background

Future – for
Current
microfinance
2.2.1.1. Name of the organization or
CCF-India
institution LEEP India
16 States and Union 16 States and Union
2.2.1.2. Geographic area of operation
Territories of India Territories of India
Section 25 not for
2.2.1.3. Legal structure PVO
profit
2.2.1.4. Registration status Foreign Company Pending
2.2.1.5. Regulation status
2.2.1.6. Date established 1951 Upcoming
CCF is LEEP India will be
multisectoral, child specialized in
sponsorship agency. microfinance, with
2.2.1.7. Specialized (MF/MED) or
Livelihood and CCF India’s partners
multisectoral
MED activities are providing the
conducted under the complimentary TA
LEEP program. services.
2.2.1.8. Start of MF/MED activities 2004 2008

17
 Future – for
Current
microfinance
CCF India’s core LEEP India’s core
business is child business will be
development. LEEP microcredit. TA
programs core will continue to be
2.2.1.9. Core business (f.i. credit, savings,
business is family provided by partner
…)
livelihood NGOs supported by
enhancement CCF-India.
through credit and
technical assistance.
Enhance livelihood
Lending to SHG
2.2.1.10. Business model of CCF India target
group members.
families
Primary target:
Primary target:
Families of CCF-
Families of CCF
India’s enrolled
India’s enrolled
children
children
Secondary target:
2.2.1.11. Target market – MF/MED Secondary target:
All poor families in
All poor families in
the villages where
the villages where
CCF-India’s
CCF India’s enrolled
enrolled children
children live
live
Primary clients: Primary clients:
2.2.1.12. Number of clients/participants – 70,000 70,000
MF/MED Total clients: Total clients:
350,000 350,000
2 staff at LEEP-
2 staff at CCF level.
India level. 222 staff
162 NGO staff in the
in the field (3 staff
field (3 staff each in
2.2.1.13. Number of staff each in 74 projects).
69 projects). LEEP
LEEP is also
is also assisted by
assisted by the NGO
the NGO field staff.
field staff.

2.2.2. Organizational Development

2.2.2.1. Mission and vision of CCF-India

CCF-India is a partnership-based child development organization representing the

voice of deprived, vulnerable, marginalized and excluded children in some of the
remote and hard-to-reach places in India, regardless of religion, race, creed and
gender. CCF-India strives to improve the well being of vulnerable children by

18
 empowering the community to undertake and manage holistic child development
programs and by networking with other stakeholders.

The following is the vision and mission of CCF-India, which currently houses LEEP.
As CCF-India implementing partners will be share holders of LEEP India, these child
centered values will be reflected in its mission statement as well.

Vision: An India where the disadvantaged, discriminated and excluded child is

supported and enabled to grow up playing an active and positive role within family,
community and nation.

Mission: To place the child at the center of its activity ensuring that the programs
which surround the child are of the highest quality and that recordable difference is
made to the quality of life of a large number of children. The programs to be of such
quality that they can serve to inspire others including the Government to improve the
implementation of child centered development initiatives.

All programs, including MED, must make a direct link to child wellbeing. This
emphasis is reflected in the goal of the Livelihood and Economic Enhancement
Program (LEEP):

“Livelihood and economic enhancement of poor families for improved wellbeing

of their children.”

2.2.2.2. Brief history

CCF started its operations in India in 1951 when the nation was celebrating its
newfound independent status. The focus of CCF during this early period was to
identify needy children and provide direct and individual support, which helped the
first generation children of post-independence get a quality education. This approach
has evolved into a community empowerment process, reflecting a conscious shift
based on CCF-India’s understanding that the child lives in a context and is molded by
the circumstances that it lives in.

CCF-India is an implementing NGO and it views is 745 affiliated NGOs as its

implementing partners. CCF-India commits to raise child sponsorship funds for its
affiliated NGO partners, who in turn implement CCF programs in their defined CCF
project areas. CCF-India currently reaches over 220,000 children and their families in
some of the poorest 1,600 communities in 14 States and one Union Territory.

5
Of these 74 partners, 69 are currently implementing microfinance/MED programs. All
are eventually expected to do so.

19
2.2.2.3. Objectives

CCF-India's comprehensive community development approach helps families

improve their economic status and cope with emerging health and survival
challenges.
CCF-India's program focus areas include:

• Health: Interventions related to reproductive and child health, nutrition,

HIV/AIDS, tuberculosis, malaria, disability, water and sanitation.
• Education: Ensuring universal primary education for all children under 14
years of age in communities where we work, and early childhood education.
• Livelihood: Target families to increase their income through investment and
support services. Microfinance, combined with extensive technical assistance, is
an integral part of addressing these challenges.
• Emergency Response: Because children are the worst victims and most likely
to be exploited during an emergency, CCF-India responds to both localized
emergencies in CCF communities like house fire and death, as well as National
disasters like the Tsunami, earthquakes, cyclones, etc.

2.2.2.4. Organizational culture, leadership, innovation

All LEEP activities are implemented by the network of 74 NGO partners through
which CCF-India implements its child sponsorship programs. As part of a strong
commitment for accountability to the sponsors of some 70,000 children, these partners
are carefully selected and held to high project implementation standards. The
common vision and mission across all partners is the upward mobility of all members
of the society. Universally, partners target the poorest and most vulnerable members
of the community. Assisting the poorest, especially vulnerable children, defines the
organizational culture and core values of both CCF-India and its partners. Livelihood
programs fit into the partner’s integrated programming approach, as enhanced family
income is seen as key factor that enables families to care for their children. In the case
of LEEP, replicable and fairly rigid program standards are provided to the partners by
CCF-India, i.e. if they decide to implement a livelihood program, it must be done
using the LEEP model. As it enters its third year of implementation, the focus has
been more on ensuring that the program delivers the desired outcome of at last Rs.
24000 in annual income for each participating family. During this period, the
opportunities for partner innovation have been limited. Ongoing feedback is provided
to CCF-India, who makes necessary modifications that all partners then implement.

2.2.2.5. Organizational structure, roles and responsibilities

All LEEP activities are implemented by the NGO partners as part of the package of
multi-sector services delivered to CCF sponsorship communities. Project
administration of LEEP uses the established organizational structure and procedures
already in place for these other sector projects. From the partner’s perspective, LEEP
is treated as another technical project, i.e. health, education, etc., that they implement

20
in a CCF community. A prerequisite to implementing LEEP (and livelihood
enhancement is one of the most demanded types of interventions in CCF-India
communities) is the hiring of a technical expert for the core economic activity
selected, i.e. a veterinarian for dairy. (Note: As will be described in section 5, a
critical design element of LEEP is that each partner selects one or at most two
economic activities from the approved LEEP list of activities that have proven their
potential to generate the desired level of income.) At the NGO partner level, three
staffs implement LEEP with support from CCF-India staff. The Technical Specialist
most often serves as the LEEP Manager and reports to the NGO Program Director.

CCF-India organization structure is shown in the following diagram. LEEP activities

come under the general supervision of the CCF-India Program Director. The
microfinance coordinator is currently focused on the installation of the federation wide
MIS system, but his TA visits also fill a major monitoring role. The Livelihood
Coordinator provides the policy guidance and partner coordination of LEEP activities,
ensuring they achieve the desired increases in family income.

21
2.2.2.6. General qualifications and profile of field staff

Each NGO partner typically has three full-time LEEP staffs:

• One Technical Specialist: Either a veterinary doctor, an agriculture specialist

or a marketing specialist, depending on the core activity being undertaken.
Most often this individual also serves as the LEEP Coordinator for the NGO.
The Technical Specialist spends 80% of his/her time in the field interacting
with clients. The transfer of technical expertise to clients, which in turn
guarantees the profitability of their enterprise, is a key responsibility. While
each has an advanced level of education, many prefer a salaried staff position
that does not require the development of a private client base. Also, those
interviewed during the preparation of this case study sited the satisfaction
gained from using their professional skill to serve a humanitarian purpose. At
the NGO level, it is the Technical Specialist who is responsible for analysis of
the business plan, monitoring cash-flow of businesses, and risk management.
He/She is supported by the CCF Livelihoods team.
• One SHG Coordinator: Responsible for group formation, training and
monitoring.
• One LEEP Accountant: Responsible for management of LEEP loans and the
client income tracking software.
• Part-time SHG coordinators who each cover 10-20 groups.

With guaranteed grant funding from CCF to implement their projects, the NGO LEEP
implementers are able to offer competitive salaries in their region of operation, and
can attract and maintain staff.

Normally the SHG coordinator is a female. Other positions could be male or female.

2.2.2.7. Training/sensitization (of staff, managers, board) on mission and poverty

outreach

No specific staff training or sensitization on poverty outreach is required because it is

the mission of the NGO. CCF-India’s strategic plan is based on a commitment to
work in the poorest districts in India, which were identified in a study it
commissioned. Once the priority districts were selected, CCF-India searched for
partners who had a presence in the target districts, and were capable of implementing
its programs. Poverty is the key criterion that identifies 1) the poorest communities
within the district and 2) poor families within those communities.

CCF undertakes a regular induction program of its partners, where poverty criteria are
explained, along with how to use tools to identify poorer members of the community.
CCF area field staffs monitor the families/children actually enrolled for the
sponsorship program to verify application of the poverty outreach policy.

22
 2.2.2.8. Incentives for poverty outreach

There are no specific incentives for reaching the poor. All entrants to LEEP, by
definition, are BPL. Because of the funding relationship between CCF-India and the
NGO, no tensions exist between achieving financial and social performance targets.
Profit maximization or full cost recovery is not an objective. Rather, the objective is
to use a perpetual stream of sponsorship funding in a manner that maximizes the
income of poor families. The NGO is held accountable for: 1) maintaining high
repayment rates on the loans given under LEEP and 2) delivering quality technical
support that is ultimately reflected as income generated by the supported enterprise.
While it has not happened to date, an NGO partner can be denied future funding for
livelihood programs if they do not meet the performance expectations. As funding
from CCF is often the major source of support of their activities, NGOs are unlikely to
allow this to occur.

2.2.2.9. Governance

At this point in time, there is no board of directors for LEEP. The NGO partners serve
as implementers, agreeing to follow the program conditions that accompany grant
funding. In the future, as the loan operation of LEEP-India transitions to a for-profit,
Section 25 Company, the NGO partners will have a role in governance. The loan
capital that has been provided through LEEP related grants will be used to purchase
equity shares in the new company. Subsidized technical assistance will continue to be
provided under the existing grantee relationship.

2.2.3. MF and MED services for the very poor

(Section 2.2.3 was not completed, as there is no distinction made between the poor and
very poor, e.g. everything described in Section 5 applies to both groups.)

2.2.3.1. MF model and products/services.

2.2.3.2. Description of main target group (if not the very poor).
2.2.3.3. Selection and/or eligibility criteria
2.2.3.4. Use of poverty assessment tool

2.2.4. Resources and external assistance

All of LEEP’s activities are currently funded through the allocation of donated funds that
are mobilized in support of CCF-India’s child sponsorship program. In FY 2006, CCF-
India provided more than $15 million in services to 1.02 million children and their
families. About 46% of these funds came from child sponsorship donations. At $4
million or 26% of total expenditures, livelihood is the largest program expenditure. Data
on the outstanding loan portfolio is only available at the NGO level, as the MIS program
that will consolidate this information is not yet operational. The same is true for portfolio

23
at risk. LEEP partners charge 9% per annum on their loans, and all interest payments are
retained by the NGO for on-lending. When LEEP-India is formed, the loan fund assets
and administration responsibility will be transferred to it, along with interest income
earned.

2.2.5. Relationships (networks, partnerships, other institutions)

2.2.5.1. Networks

CCF-India is an active member of Sa-Dhan, the largest network of microfinance

institutions in India. Sa-Dhan was primarily created to represent the voices and
concerns of the NGO MFIs with the Government. Recently, Sa-Dhan has been
instrumental in influencing formulation of an upcoming microfinance bill and in
coordinating the input of major MFIs.

2.2.5.2. Partnerships

LEEP is based on a partnership model. Within the priority districts that CCF-India has
identified as being the “most backward” or in need, local NGO partners who share
CCF-India’s mission are identified. The scale of CCF-India’s operations, e.g. serving
1.02 million children, makes the use of partnerships a necessity. It allows for quality
programming in the context of intimate familiarly with the local context. Management
and accountability are decentralized to the local level. Partnerships are entered into
through an elaborate process of screening and negotiations. Partners not only benefit
from the funding, but the relationship strengthens their organizational capacity. For
LEEP, partners are rated as category A, B or C, each of which has its own
development challenges and needs. It is the long-term plan that all partners become
“A” category implementers. The partnership/grant model is sustainable in the sense
that CCF-India has been working for 55 years, and the level of sponsorship funding is
a reliable source that continues to grow.

2.2.5.3. Other institutions

The primary service provider to the poor in CCF communities is the government.
Unfortunately, the quality of services can be poor. CCF-India maximizes
opportunities to support and build public service providers, especially health facilities
and community schools. In livelihood programs, LEEP has worked to link with
government funded milk collection centres.

3. Description of “Very Poor” Target Group

3.1. Individual and Household conditions

The following sections describe the conditions of individuals and families participating in
LEEP. LEEP uses an absolute definition of poverty, which is whether a family is above
or below the poverty line (APL or BPL) defined by the Government of India as Rp.

24
18000 ($450) per annum. To be eligible, all LEEP participants must be BPL at the time
of entry. The identification of the very poor is only done on a relative basis by the 69
implementing partners as part of their participatory wealth ranking (PWR) process that
determines family eligibility for CCF child sponsorship. It is estimated that 30% of LEEP
participants are identified as very poor through the PWR.

3.1.1. Gender

Of the 332,621 family members (adults and children) covered by CCF-India as of

December 2006, 50.2% were female. LEEP participation is not tracked by gender, since
it is the family that is the unit of interest. However, anecdotal evidence suggests that
more than 70% of the loans given are in the name of a female. This is done to encourage
female leadership and involvement in LEEP. It is the female who represents the family
in the SHG, which is the major platform for introducing information relevant to improved
child well-being.

3.1.2. Age

Statistics are annually collected for all families covered under CCF India’s child
sponsorship data collection system, e.g. Annual Impact Monitoring and Evaluation
Systems (AIMES) As an agency focused on child well-being, the age distribution of
children is the demographic characteristic of interest, with adults falling into two broad
categories, e.g. 15-20 and over 20. The total population, which includes all family
members, is 332,621, with the 63,691 families being a proxy for the current number of
LEEP India clients. The following table is the end of year 2006 age category data that is
collected.

DEMOGRAPHICS
MALE FEMALE TOTAL
UNDER 5 17,148 17,004 34,152
5+ to 15 61,152 60,669 121,821
Total Child Population A + B 78,300 77,673 155,973
15+ to 20 16,900 15,217 32,117
OVER TWENTY 70,508 74,023 144,531
Total Adult Population D + E 87,408 89,240 176,648
TOTAL POPULATION C + F 165,708 166,913 332,621

FAMILIES 63,691
TWENTY YEARS
OLD* 3,052 2,478 5,530
1 to 2 YEARS OLD 3,540 3,287 6,827
LIVE BIRTHS 2,177 2,291 4,468
*Count girls and boys completing 20 years of age during the
12 months preceding the cut-off date.

25
3.1.3. Disability and chronic disease

Disability and chronic disease is not directly monitored for LEEP participants. It is the
cause of death of family members that is seen to be most relevant to the mission of child
protection and well-being. The following 2006 AIMES data for CCF India shows that
accidents, AIDS, cancer, and tuberculosis are leading health threats affecting adults.

DEATHS
AGE GROUPS
5+ to 15 => 15
CODES < 1 YR 1+ to 5 YRS YRS YRS TOTAL**

ACCIDENTS 3 4 32 59 98
AIDS 5 3 5 78 91
ARI 23 9 3 4 39
CANCER 1 0 3 41 45
DENGUE 2 0 1 12 15
DIARRHEA 12 16 17 14 59
DIPHTHERIA 1 1 1 1 4
MALARIA 8 18 15 25 66
MATERNAL 0 0 2 13 15
MEASLES 11 13 5 0 29
NEO. TETANUS 22 0 0 0 22
OLD AGE 0 0 0 365 365
OTHERS* 35 40 64 241 380
PERTUSSIS 0 0 4 18 22
TUBERCULOSIS 0 0 3 63 66
UNKNOWN 25 6 10 54 95
TOTAL 148 110 165 988 1,411
Source: Annual AIMS data collected for the period Jan. 1 – Dec. 31, 2006.

3.1.4. Culture or religion

Deprivation, exclusion and vulnerability are all key considerations that determine the
communities where CCF India, and thus LEEP work. In this framework, poverty is
experienced as social exclusion as much as an economic or material phenomenon.
Psychosocial experiences such as discrimination are often as important to people as
hunger, and religion can serve as a basis for discrimination. It is most likely that within
any specific community, all LEEP participants will belong to the same religious group.
While client or family data on religion is not collected, CCF-India communities can
generally be expected to reflect the national distribution, e.g. Hindus – 81%, Muslim –
12%, and Christian – 2%.

3.1.5. Ethnicity

Ethnic populations in India are collectively referred to as Scheduled Tribes (STs) by the
Government of India. While ethnicity does not determine poverty, it does act as a

26
predictor of the likelihood of poverty given the implications of traditional economic
activities undertaken by tribes. STs live in forest areas in the interior, are inaccessible
and have remained outside the mainstream of development. Health and education
facilities have not reached them, resulting in low levels of education and health status.
All of these circumstances combine to make ST communities a priority for CCF India
activities, and an influence on community selection. When giving priority ranking to
districts, the combined percent of the population considered Scheduled Tribes (ST) and
Scheduled Castes (SC) was a factor. Of the 74 partners (the future branches of LEEP
India) with whom CCF India works, 30 work with ST communities.

The following is how CCF India describes Schedules Tribe children and their families
within its Deprivation, Exclusion and Vulnerability (DEV) framework.

Population Deprivation Exclusion Vulnerability

Tribal • Lack of basic • Working children • Family Indebtedness
infrastructure • Neglected children • Displacement
children in
• Food insufficiency • Insecure childhood • Drought
forest areas • Lack of drinking water • Single parenting • Parent’s
• Lack of irrigation water • Excluded from mainstream Unemployment
• Lack of opportunities
• Hunger deaths
• State/Policy led
situation

3.1.6. Membership to socioeconomic groups, such as caste and class

Social discrimination based on caste hierarchy is still a dominant feature of social

structure in India. Dalits are the former untouchables, and are included in the category of
Schedules Castes (SC). There is evidence that they are still discriminated against, and the
proportion of SCs is a good indicator of the proportion of disadvantaged people living in
an area. Like religion and ethnic group, caste membership is not tracked by CCF India.
However, at the implementing partner level, the membership in these groups is certainly
known. The most significant role membership to a socioeconomic group plays is in the
initial selection of CCF communities. One of the stated strategies of CCF India is
“Within the least developed 150 districts, CCF India will further focus in areas with high
concerntration of tribal, Dalit, or minority communities and work for the wellbeing of
children belonging to those communities.” One CCF NGO partner focuses exclusively
on Dalit caste members.

The following is how CCF India describes Scheduled Caste children within its DEV
framework:

27
Population Deprivation Exclusion Vulnerability
Dalit children • Lack of basic • Bonded families • Criminal environment
infrastructure • Discrimination of girl • Caste exploitation
in feudal
• Food insufficiency children • Child sexual abuse
societies • Lack of drinking water • Skewed land distribution • Hunger death
• Lack of irrigation water • Dalit atrocity
Minority • Landlessness • Child marriage • Caste/religious
• Discrimination of girl conflict
children in
children • HIV/AIDS
caste • Child trafficking • Lack of opportunity
religious • Child prostitution • Political turmoil
conflict areas • Dalit atrocity

3.1.7. Household type, composition, marital status

The table provided in section 3.1.2 provides the overall profile of the household. The
average LEEP family consists of 5.2 members. At the village or community level,
implementing partners know which households are headed by females, but this data is not
yet consolidated at the national level. Having a large number of children and being a
female head of household are both characteristics that are used to determine vulnerability
and priority participation through the PWR process.

3.1.8. Literacy

Literacy statistics are based on the 2006 data collected for all members of the 63,691
families covered under CCF India’s child sponsorship data collection system, e.g.
AIMES. The adult literacy rate for CCF family members is 49.65%. For the same CCF
population, adult male literacy is 58.62% and female literacy is 40.86%. The later ratio is
most descriptive of the LEEP borrower, who is typically female. The sited CCF literacy
statistics compare to a national literacy rate (ages 15 and older) of 73.4% male, and
47.8% female.

3.1.9. Education

The following table from 2006 AIMES data, reflects the education level of children of
LEEP participants up to 20 years of age. Education data on adults, which would include
LEEP borrowers, is not collected.

CHILDREN'S PARTICIPATION IN SCHOOLS

Non-
Age Group Formal Formal None

5+ To 15 Years Male # 52,020 3,966 5,166

% 85.07% 6.49% 8.45%
Female # 49,774 3,948 6,947

28
 % 82.04% 6.51% 11.45%
Total # 101,794 7,914 12,113

HIGHER EDUCATION/SKILL DEVELOPMENT

Primary/
Elementary Universit Skill
Age Group School High school y Training

15+ to 20 yrs Male # 2,848 6,698 1,426 834

% 16.85% 39.63% 8.44% 4.93%
Female # 2,496 5,618 1,203 910
% 16.40% 36.92% 7.91% 5.98%
Total # 5,344 12,316 2,629 1,744

20 YEAR OLDS' LEVEL OF LEARNING ACHIEVEMENTS*

Learning Levels Male Female Total

Passed Grade VII # 1,054 655 1,709

% 34.53% 26.43% 1.10%
High School Graduates # 668 522 1,190
% 21.89% 21.07% 21.52%
College Gratuates # 309 219 528
% 10.12% 8.84% 9.55%
Skill Training Dgree/Diploma # 215 191 406
% 7.04% 7.71% 7.34%
None # 806 891 1,697
% 26.41% 35.96% 30.69%
Total # 3,052 2,478 5,530

* All girls and boys completing 20 years of age during the year.

The above data can be put in the context of a national net primary enrolment ratio of male
92% and female 87%.

3.2. Socioeconomic conditions

3.2.1. Refugee or IDP status

Included in the 75 partners implementing CCF India programs, there are two who work
exclusively with Tibet refugee camps. These two partners are a part of a network of
NGOs responsible for the management of 18 refugee camps throughout the country. As
the administrator of all camp activities, these NGOs understand the needs of these
communities well. IDP and refugee LEEP participants typically have few assets or
developed land. While the government has provided land, it requires extensive cleaning
and preparation to be cultivatable. Land reclamation is an activity common in other poor
communities, and LEEP is experienced in facilitating that process through loans and
technical assistance. Trading, especially in linens, is another traditional activity that

29
many IDP communities engage in. Grants were initially provided for infrastructure
development, but at this point most have been converted to loan activities.

3.2.2. Economic conditions

3.2.2.1. Underemployment

LEEP analyzes employment by looking at two types of workers:

1. Small and marginal farmers (60%)

If they do not have irrigation, the small and marginal farmer can expect 3 months
of employment or a one crop season. With irrigation (20% of the 60% farmers),
this can be extended to two crops resulting in 8 months of employment. During
the remainder of the year, farmers are forced to migrate for employment, often
with their families.

2. Landless (40%)

For those not owning land, wage employment as a daily laborer or employee is the
only alternative. Employees who have work all year represent less than 5% of the
landless. Most of the landless rely on daily labor, working an average of 180 days
per year. On average, for 4-6 months of the year, landless, wage labors must resort
to migration to find employment.

Underemployment leads to migration, an outcome of particular concern to CCF-India

because of the disruption it can have on the education of children. LEEP activities
strive to generate income so families, especially the mother, can remain in the home
community. Approval of loans for activities like dairy includes an analysis of who
will remain with the asset throughout the year. By creating a consistent income stream
in the community, it is far more likely migration will be curtailed.

3.2.2.2. Income Sources

Depending on the area, rain feed agriculture, collection of non-timber forest products,
small livestock and unskilled wage employment are the main income and/or
subsistence sources of income for the very poor. A family is typically engaged in
some combination of all of these, and after LEEP (which will establish a primary or
core source of income) will continue with a diversified income strategy.

3.2.2.3. Land ownership

LEEP considers two categories of land ownership which includes 60% of participating
families: 1) Between .5 and 2 acres non-irrigated and 2) 1 acre irrigated. If irrigated,
1 acre of land can meet the subsistence needs of a family and even create a surplus for

30
 income. However, irrigation requires an investment that is often beyond the capacity
of the very poor. Land reclamation is a national priority activity of LEEP, and assists
small farmers to make this transition. Non-irrigated land meets less than 50% of
household subsistence needs.

3.2.2.4. Asset ownership

The following are the typical assets, productive and household, owned by a very poor
family participating in LEEP:

- Small house of poor quality

- Mats for sleeping, but sometimes even on the ground
- Basic cooking utensils
- Small animals like chickens or even a goat
- Transistor radio
- Limited and inadequate clothing
- Perhaps a used bicycle

3.2.2.5. Income level

The average wage for daily labor is Rs. 50 per day for women and Rs. 70 for men.
While the GOI has a minimum wage requirement of Rs. 63 per day, it is difficult to
enforce, especially in the rural areas.

The main objective of LEEP is to move families from BPL to APL. The way progress
toward this objective is measured in net income derived from the supported
microenterprise activity. A diary of income and expenses is maintained by the client,
with the assistance of the NGO social worker. On a monthly basis, this data is
forwarded to the NGO office, which monitors progress toward achieving the minimum
of Rp. 24000 per annum.

3.2.3. Geographic conditions

3.2.3.1. Rural/urban, remoteness from trading centers and roads, population density

About 80% of LEEP participants live in remote, rural areas that have limited public
transport. Out of the 74 partner NGOs, 30 work with tribal communities that are
particularly difficult to reach. While NGO offices are on paved roads, accessibility is
often an issue for the communities they serve. Remoteness has a direct link to
livelihood opportunities, and is a major factor to a community’s being identified by
CCF-India as vulnerable. Other factors considered include tsunami affected, high
HIV/AIDS prevalence, and water scarcity.

3.2.3.1. Access to markets

31
 While all communities are within 5 – 10 kms. of a rural market, these rural markets
are not seen as the outlet for LEEP producers. LEEP takes responsibility for bringing
the market to the producers – an important advantage of focusing on a limited number
of priority activities. One example is dairy, where LEEP works to get milk collection
sites established to get communities into the national grid of Milk Collection Routes.

3.2.3.1. Access to banks

In the rural communities where CCF-India works, the poor have very limited access to
banks, and depend on money lenders. SHGs are one way that the poor can be linked
to a bank when member demand exceeds savings. SHG loans are typically for
emergency and consumption purposes. Under LEEP, the principle business activity is
supported with a loan provided by the NGO because of its size and need for technical
support. Banks are simply not willing to finance such a large loan without a track
record.

3.2.3.1. Access to doctors and clinics

The government is the primary provider of medical services, but access is generally
poor in rural areas. CCF-India works primarily works to improve access by improving
facilities and building the capacity of health staff. A common service the partner
NGO provides is transport of more complex cases to a more equipped facility.
Implicit in the livelihood strategy is that improved income will enable families to pay
for medical services when needed. Improved income raises the economic status of the
community at large, and the government is more likely to respond with a higher level
of social services. Economic strength translates into political strength.

3.2.3.1. Proneness to natural disasters

India is prone to wide range disasters. Some, like flood, are inevitable/seasonal and it
is just that the exact date or time is not known. In this case, emergency preparedness
is encouraged. Then there are disasters that may occur, like earth quake zones and
Tsunamis. In all of the LEEP areas, two things are common, e.g. flood and drought,
depending on whether it is a hilly area or the plains. Plains are prone to seasonal
flooding. The hills have chronic water shortages, and the deep water table makes
irrigation for agriculture expensive. So, the priority activity selected has to not require
extensive water, or have water management systems like drip irrigation built in.

3.2.4. Major vulnerabilities and risks encountered by target group

Drought is most common and largest risk, followed by flood. Lack of rainfall and the
resulting drought is an extreme condition. Migration is the common coping strategy.
Unfortunately, this results in children missing school and raises HIV/AIDS transmission.
The LEEP response strategy to reduce migration is to provide a reliable family income
source. If there is income, an individual can go to the market and purchase what is
needed. An example of how improved income reduces risk is seen in the dairy activity.

32
Now, when a husband leaves to find work, there is an asset at home. So, the wife stays
behind with the children who continue in school. The HIV/AIDS concern is addressed
through intense education campaigns that raise awareness of the risks.

4. Poverty Targeting and Assessment

4.1. Poverty measurement practices

4.1.1. Poverty data collection

4.1.1.1. Which poverty indicators are collected?

LEEP uses two types of poverty indicators, one is an absolute, universal measure of
whether a family is above or below the poverty line (APL or BPL), and the other is a
set of indicators that provide a relative measure of the poverty of the participant’s
family in relation to its position within the community.

The absolute measure of poverty is the appearance of a family on the government’s

list as being BPL.

At the community level, relative poverty looks at indicators of vulnerability, like

female headed households, above average number of dependents, or family member
with a disability or chronic illness that requires special care. The community also
considers the assets of the family, like land owned, condition of house, animals,
appliances, and any forms of transportation, as mobility is a major indicator of wealth.
The final indicator is the existence of a regular job.

4.1.1.2. What poverty assessment tool is used?

The Government BPL List

For the absolute measure, LEEP measures poverty using the Government of India
definition, e.g. Rs. 18000 income per year. As part of its poverty eradication program,
the government uses survey data to maintain a community specific list of families that
are defined as being BPL.

Participatory Wealth Ranking (PWR)

With the PWR indicator, it is the relative poverty vis a via the other families in the
community that matters. Household characteristics combined with asset ownership
are used to determine a families wealth, or lack thereof. The process concludes with a
ranking of who in the village is the poorest, in relative terms. While there are
similarities, each PWR index is based on what the community feels is important.

33
 CCF-India finds it is important to use both the absolute and relative tools. The
government BPL list is particularly useful in identifying communities with large
concentrations of poor families, and helps prioritize selection. While the BPL list is a
good starting point, one of the dangers is its objectivity, i.e. the political considerations
that affect how/if one gets on the list. Experience has shows that in a given
community, only 60% to 70% of the poor get identified. The PWR tool catches those
cases where a misclassification may have occurred, i.e. poor but not on the
government list. The PWR also acts as a crosscheck of government data.

4.1.1.3. When and how often are poverty data collected?

The PWR and government BPL poverty data is collected for all families when they
become enrolled in the sponsorship program as part of the eligibility criteria applied
by the NGO. The PWR process is not repeated, so it is not really a baseline data
source. Monitoring of the absolute measure of poverty is done on a monthly basis
from the participant diaries to ensure that a family is moving APL.

4.1.1.4. Which clients are measured?

All incoming clients are measured. To be eligible to participate in LEEP, a family

must be identified through the PWR process as being among the poorest in the
community.

4.1.2. Use of poverty data

4.1.2.1. What, if any, are poverty categories distinguished by poverty data?

The major poverty category, which defines all of LEEP’s work, is whether a family is
APL or BPL. The objective of LEEP is quite specific, e.g. moving families from BPL
to APL.

4.1.2.2. How are each of these categories defined?

The LEEP measure of poverty is based on family income APL, e.g. Rs. 24000 net
income.

4.1.2.3. How are poverty data used by organization?

The government BPL list is used as an initial screening tool, in that those APL do not
meet the eligibility criteria for child sponsorship, and thus are not eligible to
participate in LEEP. At this point in time participation in LEEP is limited to
sponsored families because of funding limitations. The logic of focusing on CCF
families is that they have already been identified as those that are most vulnerable and
in need.

34
 4.1.2.3.1. For client monitoring?

It is the explicit goal of LEEP to ensure that every family is earning at least
Rs.18000, which would move them from BPL to APL. In this context, the
poverty line becomes a universal monitoring tool that measures the success of
participants. Monthly income diaries are used to monitor how much income is
being generated. If income is not reaching the anticipated target level, LEEP
assumes responsibility for investigating and addressing the cause. The term used
by LEEP staff to describe this monitoring process was “aggressive.”

4.1.2.3.2. For client screening?

LEEP is one component in the integrated package of health, education and

livelihood programs delivered to a CCF community. The entry point for a family
is eligibility for child sponsorship. Once a family is selected, a parent is eligible
to participate in LEEP, e.g. the livelihood support program. Resource limitations
have necessitated the rationing of participation to CCF enrolled families, who by
the community’s definition are the poorest. As resources grow in the future, non-
sponsorship families in the community will be able to participate, but they will
always be required to be BPL at the point of entry into the program.

In theory, all those living below the poverty line would appear on the government
list. CCF-India understands that there are political considerations that can
influence appearance on the list, and inclusion is not always objective. In reality,
CCF estimates that 70% of the poor actually appear on the BPL list. That means
that are some 30% who qualify, but are not properly identified. CCF-India
compensates for clear cases of list exclusion, but considering the BPL status in
conjunction with the PWR described below.

4.1.2.3.3. For client targeting?

A major purpose of the poverty assessment tool is client targeting. First, priority
districts are identified as having the highest proportion of people living in
poverty. Within these priority districts, NGO partners identify clusters of
communities that have the highest concentration of poor. Finally, the selected
communities participate in a ranking process that identifies those most in need.
The families emerging from this process become CCF sponsorship families,
LEEP participants, and ultimately loan clients.

4.1.2.3.4. For impact monitoring/assessment?

35
 The findings coming from the PWR not only indicate that a family is in the
poorest category (the face of poverty), but provide insight into why the family is
there (the root cause(s) of poverty). CCF-India works to influence a wide range
of determinants of family poverty. As such, it collects a range of data covering
health, education and income using CCF, Inc’s. Annual Impact Monitors and
Evaluation System (AIMES) tool (see Appendix 2 for consolidated statistics).

The link between poverty monitoring/assessment and LEEP product development

is quite simple, e.g. if the program does not move clients APL – revisit the design.
At this point, LEEP is satisfied with the progress that is being made, and is
content to continue to make minor refinements to its existing loan products and
services.

4.1.2.3.5. For other uses?

Child sponsorship funding is most effective when a personal link between the
child and a sponsor is established. Anecdotal examples of how the lives of the
child’s family and community have been impacted by program interventions
typically appears in fundraising materials, annual reports and other publications of
CCF-India.

4.2. Available Poverty Data

4.2.1. Poverty distribution results by internal poverty data collection method

Results for moving families APL are currently only available at the NGO level. The new
MIS will allow soon allow for analysis of overall performance. Currently, knowledge
about a specific family is know and monitored by the Technical Specialist. If progress is
not being made, the family is identified for follow-up.

4.2.2. Poverty data from a recent poverty and/or impact assessment study

LEEP has not had an independent impact assessment. This exercise is seen to be more
instructive after the program passes the five-year benchmark. Five years is selected
because by that time the first participants should have been raised APL. Data will allow
for analysis of the performance across the various priority activities.

4.2.3. Poverty Data obtained through use of USAID certified poverty tool

4.2.3.1. Which USAID certified poverty tool was used? Which poverty criterion was
used: $1 a day or bottom 50% below poverty line?
4.2.3.2. Provide details on poverty assessment exercise: time conducted, sample size
and selection…
4.2.3.3. Poverty results: proportion of very poor clients versus poor clients.

No study using a USAID certified poverty tool has been completed.

36
4.2.4. Interpretation of Poverty data

4.2.4.1. Comparison between internal and USAID poverty tool data

Not applicable.

4.2.4.2. Organization’s own interpretation of poverty outreach

The Country Strategy Paper (CSP) of CCF-India reflects a commitment to work in the
most backward districts and vulnerable communities in India. Because it gives
priority to working in the districts ranked as being the poorest, combined with the fact
that it then goes into more remote areas within that district, CCF-India is satisfied with
its poverty outreach. The strategic decision to work in the priority districts is what is
seen as being the primary determinant of poverty outreach success. Within the
priority districts, CCF-India’s NGO partners continue the process by identifying
communities that are most vulnerable. It is through the on-going application of this
final step that the current level of poverty outreach will be maintained. Ultimately,
success is attributed to and depends upon working from the list of least developed
districts.

4.3. Poverty Targeting

4.3.1. Does the organization use a poverty targeting tool?

There are several levels of poverty targeting, beginning with the district targeting analysis
done for the country strategy and determines the districts where CCF-India works. Then
within the districts vulnerable communities are identified based upon the NGO partner
analysis of need. Finally, the PWR tool is used to identify the poorest families in the
community for enrollment.

4.3.2. What is the client poverty target level?

The effective cut-off line is the government’s BPL list. The objective of LEEP is to
move families from BPL to APL or Rs. 24000.

4.3.3. Staff use of poverty targeting (S, F)

4.3.3.1. Training/sensitization (of staff, managers, board) related to poverty outreach
How is staff trained in poverty targeting?

Participatory wealth ranking staff training of field staff is done by NGO partner. CCF-
India initially trains the NGO project team leaders so there is consistent application of
the tool among partners.

37
 4.3.3.2. Staff incentive schemes

No specific staff incentives for poverty outreach are used.

4.3.4. Issues with poverty targeting

The objectivity and reliability of the BPL government list, used as the initial screening
tool to determine family eligibility, has been questioned. The NGOs have found cases
where those know to be poor in a community are not on the list, and vice versa. These
obvious cases of misclassification bring the selection process into doubt. To compensate,
the NGO partners do not use the BPL list alone, but combine that information with the
PWR results when selecting families.

5. Products and Services

The services offered by LEEP are the same for all clients. The operational poverty
categories used by LEEP are below the poverty line (BPL) and above the poverty line
(APL). All LEEP clients are BPL at the time of entry. The concept of “the poorest” is
not directly used. However, as a program supported by CCF and its implementing NGO
partner, there is certainly an indirect link to the category of “the poorest.” LEEP’s
livelihood activities are part of a package of services delivered to CCF eligible families.
Eligibility for all services is determined through a PWR process that identifies the poorest
members of the community. Since all LEEP clients are currently.6 CCF families, one can
say in relative terms they were all identified as the poorest at the time of entry. For
purposes of this case study then, integration of the poorest into the mainstream of
financial services is not an issue for LEEP. There is only one set of credit officers, and
all of the SHG members are the poorest of their community at the time the group is
formed. The same staff members stay with them throughout. Microfinance is just one
component of the livelihood package that is designed to move the poor above the poverty
line.

5.1. Financial Products

6
As resources expand in the future, it is anticipated that the entire community will be
offered the opportunity to participate. Currently, loan funds and resources for TA are
rationing participation to CCF families.

38
Table 5.1. Microfinance Product Details

Product Features and Policies

5.1.1. microcredit
5.1.1.1. Individual or group product
5.1.1.2. Loan terms (maturity, interest
rate, interest type, flexibility)
5.1.1.3. Loan source
The lending product is an individual loan. In
less than 10% of the cases, individuals come
together and apply for a joint enterprise.
Loan terms vary with the activity undertaken.
Maturity: 3-5 years.
Interest rate: 9% per annum, determined by
the priority sector lending rate of Reserve
Bank of India (RBI).
Paid on a daily reducing balance basis.
Repayment schedule is established based on
anticipated income for activity, thus matching
borrower capacity.
CCF sponsorship funds that are provided to
the partner NGO as a grant for on-lending.
Once LEEP-India becomes a registered MFI,
it plans to expand its portfolio by accessing
loan funds from apex Commercial Banks like
ICICI, NABARD etc.
Loans directly financed through LEEP are
exclusively for production purposes. The
loan can finance purchases of a fixed asset,
like a milk buffalo, or inputs needed to
support the activity.

In addition to LEEP, SHGs can be linked to

5.1.1.4. Loan use
banks, and those loans may be for
consumption or production.

Savings of the self-help group provide a

revolving loan fund for consumption and
emergency loans.

39
 Product Features and Policies
Rs 20000 – 40000 ($500 - $1,000)

The above loan sizes may appear large for a

poverty lending program, however, they are
central to the approach of LEEP. The loan
size relates back to the objective of moving
families BPL to APL, or financing an
enterprise that will generate Rs. 24000
income per annum. Priority activities are
selected to yield this result. To finance these
enterprises, a significant investment in each
family is required. A small loan will simply
not be adequate to yield the desired result.
When working with the very poor, this
relatively large loan can present a risk. LEEP
addresses this by providing a comprehensive
5.1.1.5. Loan size (first loan, average
technical assistance package of support to
loan, maximum loan size)
ensure the clients succeed.

The loan size does not vary by cycle, so the

first loan may be the same as the second, etc.
The size is dependent on the amount of
borrowed funds required. For each of the
priority types of enterprises supported, LEEP
staffs know the investment that is required,
monthly operating costs, and anticipated
income. Loan approval is based upon this
financial analysis and the borrower’s capacity
to implement.

LEEP anticipates that each family may need 4

to 5 loans to stabilize their income.

40
 Product Features and Policies
5.1.1.6. Meeting requirement and
frequency
5.1.1.7. Mandatory savings requirement
and amount
5.1.1.8. Collateral requirement
5.1.1.9. Other eligibility requirements
5.1.1.10. Loan default policy
All LEEP participants must belong to a SHG
in their community. The LEEP loan,
however, is made to the individual, and no
special meeting is required. All LEEP clients
receive technical assistance and on-going
support – at least on a monthly basis, but
typically more frequently. Loan repayments
are collected by the NGO social worker, and
are monitored by the technical expert, who
serves as the NGO’s LEEP Coordinator.
The meeting frequency of SHGs is
determined locally, but is typically bi-weekly.
The compulsory monthly savings is Rs. 25 to
100. SHGs determine the exact amount. The
objective is to establish a savings habit and
convey the feeling that it is the group’s
money.
Collateral is not required, nor is a
compensating saving balance a requirement.
SHG membership is an eligibility
requirement. SHG members approve the
LEEP loan application, including the size of
the loan. Loan size is based on the
investment needed to yield the desired net
income of Rs. 25000. This process serves to
validate the information provided, and
addresses the repayment capacity of the
lendee, including character.
The SHG is expected to guarantee cases of
wilful default. Most often this is when a
family migrates for seasonal labour, and does
not return. Because residents of a community
benefit from a range of services provided by
the NGO, there is an incentive to remain in
good standing, e.g. a social benefit. This,
combined with success in fulfilling the
income expectations, has resulted in less than
<1% loan loss or drop-out for LEEP.
41
 Product Features and Policies
5.1.1.11. Repayment flexibility
5.1.1.12. Other
5.1.2. microsavings
5.1.2.1. Individual or group
5.1.2.2. Savings Type
5.1.2.3. Deposit/collection location
5.1.2.4. Deposit frequency, amounts,
flexibility
5.1.2.5. Meeting requirement and
frequency
5.1.2.6. Savings terms (interest rate,
minimum deposit, …)
5.1.2.7. Withdrawal and savings use
policies
5.1.2.8. Record keeping and accounting
5.1.2.9. Investment of deposits
5.1.2.10. Other
5.1.3. microinsurance
5.1.3.1. Microinsurance Type
5.1.3.2. Group or individual product
5.1.3.3. Term
5.1.3.4. Eligibility requirements
While the above statement regarding loan
loss is true, on-time repayment remains a
challenge for LEEP. LEEP eventually gets
its money, but is quite flexible in how that
happens, using frequent rescheduling. While
close association with the NGO and CCF
sponsorship activities is positive in most
regards, the NGOs do find it difficult to
enforce timely repayment. There is a bias to
considering the challenges the family is
facing, and making accommodations in the
repayment expected. This is the first time
participants have received anything but
granted services/commodities, and the
conversion from grant to loan can be difficult
for both parties.
Self-help Group
Individual member savings accounts within
the group.
SHG meeting
Depends on SHG policies, typically Rs. 25 –
100 monthly.
Weekly, bi-weekly, or monthly
Set by NGO partners
4% per annum paid on the cumulative
balance every 6 months.
Members can withdraw their savings
whenever they need for consumption or
emergency needs.
SHG managed, and monitored by technical
specialist/livelihood manager
Held by SHG and used to make internal
emergency loans to members.
Livestock (major LEEP insurance product)
Individual
Year
Animal inspected prior to purchase
42
 Product Features and Policies
Renewal subject to annual inspection of
5.1.3.5. Renewal requirements
animal.
No LEEP client has yet been rejected.
What has made LEEP clients attractive is that
insurance companies perceive the training
5.1.3.6. Rejection rate
and technical assistance package as
dramatically lowering their risk.

5.1.3.7. Voluntary or compulsory Compulsory for cattle loans

5.1.3.8. Product coverage (benefits)
5.1.3.9. Key exclusions
5.1.3.10. Pricing – premiums
5.1.3.11. Pricing – co-payments and
deductibles
5.1.3.12. Pricing – other fees
Replacement value of animals
Negotiated with national insurance
companies. Competitive
Client pays 4% of the value of the animal,
and receives the purchase price in the event of
its death.
Some partner NGOs offer life insurance,
where SHG members pay premium of Rs. 50
per annum, and get Rs.5000 upon death.
Many life policies also include disability
coverage.

Other insurance products Crop insurance has also been explored, but
there are few local insurance companies
willing to provide coverage.

CCF plays an important role in identifying

insurance providers and negotiating the
terms.
5.1.4. microgrants
5.1.4.1. Individual or group product n.a.
5.1.4.2. Amount (and number of grants) n.a
5.1.4.3. Eligibility requirements n.a.
5.1.4.4. Grant use and other conditions n.a.
5.1.4.5. Savings requirement or matched
n.a.
savings arrangement
5.1.4.6. Straight grant, no interest or
n.a.
partial repayment
5.1.4.7. Other n.a.

43
 5.2. Microenterprise Development Services

Table 5.2. MED Service Details

Service Types and Features

5.2.1. Training
LEEP does not have a special financial
literacy program. However, these topics are
included in the training related to the
operation of their specific businesses. For
example, clients are taught how to record
expenses and income and calculate the return
5.2.1.1. Financial literacy
they receive on their investment.

SHGs, especially members of the

management team, are taught how to
maintain the group books and record
transactions.

44
 Service Types and Features
Business planning is a major aspect of the
LEEP package. Because each NGO partner
only provides support for one or two types of
businesses, they become proficient in
identifying the key elements of that specific
operation. For the very poor, it is useful to
have clear direction as to what is to be done
and when. Having predictable outcomes is
also important, and helps to keep the risk
tolerance in an acceptable range. Poor clients
are assisted, step-by-step, through the critical
stages of business operation, which is
unfamiliar ground. The strategic part of the
business planning exercise is provided to
them, i.e. the combination of resources that
will result in the target income. Clients are
essentially made responsible for the
production side of the business, with CCF
taking the lead on orchestrating the inputs and
marketing. At the beginning, even the
production process is carefully monitored.
The strategy is to provide a standardized
5.2.1.2. Business planning and
business model that generates a predictable
management
income. This model looks at every aspect of
the operation, and breaks it down into simple
steps to be taken. Ideally the business is
already familiar to the prospective client, and
the focus can be directed to improving
efficiency and profitability. Because the
exact circumstances are being replicated
many times, there is a vast experience base
from which practical guidance can be given.

The following are the current priority

activities of LEEP:

Dairy 45%
Small orchards 20%
Small business/trading 20%
Local priorities7 & other 15%

After formation of LEEP-India to offer

financial services, the business planning and
TA activities will continue to be offered by
7
Activities specific to an area like bangle joining and motorization of small fishing boats.

45
 Service Types and Features
5.2.1.3. Marketing
5.2.1.4. Recordkeeping and
bookkeeping
5.2.1.5. Skill development
5.2.1.6. Technical assistance
Only businesses with demonstrated market
potential are included under LEEP, e.g. the
priority activities selected are such that all
clients know where they can sell and an
anticipated price before they even begin
production. The common LEEP strategy is to
find ways to avoid the middle man and link
producers directly with buyers. Volume and
quality control make it possible for CCF to
negotiate market linkages. Markets are a
primary consideration in the selection of the
priority business that CCF is willing to
support, which is typically one per NGO
partner or district. Dairy is a good example
where CCF-India worked to negotiate with
the government to open local milk collection
sites that would purchase all milk produced.
From the perspective of the LEEP producer,
the market immediately became infinite with
a secured buyer. A factor in government’s
decision to participate was the volume of
producers that CCF alone could guarantee,
making the facility viable. The consistent
quality, in the form of high fat content, also
made LEEP producer’s milk desirable.
All LEEP businesses are required to maintain
daily journals of expense and income. Each
month NGO staff collects the consolidated
results for that period, which are recorded in
the PVOs data base. This simple, profit
calculation enables both the client and NGO
to see if the desired result of income for the
family is being realized.
Skill development is mostly in the form of
TA provided by the technical advisor on an
individual basis.
TA is the cornerstone of the LEEP program.
A prerequisite for an NGO partner to be
transferred grant funding for LEEP, is CCF-
India approval of a technical expert for the
activity they will support. After LEEP-India
takes on responsibility for provision of
financial, supporting technical assistance will
continue to be provided by the NGO as part
of its grant implementation of CCF programs.
46
 Service Types and Features
5.2.1.7. Training method
5.2.1.8. Other?
5.2.1.9. Costs to client
5.2.2. Business Consultancy and Advisory Services
5.2.2.1. Individual or group sessions
5.2.2.2. Frequency
5.2.2.3. Topics
5.2.2.4. Confidence Building
5.2.2.5. Other
5.2.2.6. Costs to client
5.2.3. Market Linkages
5.2.3.1. Input supply
5.2.3.2. Marketing Assistance
5.2.3.3. Market Information
5.2.3.4. Producer organizations
Applied and on-site TA
Clients only pay interest on their loans.
At the SHG level, members pay for their
group’s operating costs, like salary of
bookkeeper, stationary, and member training
activities.
The NGO pays all technical assistance costs,
including the salary of the technical advisor.
Funding for this is provided by a grant from
CCF-India. The only direct cost CCF-India
covers is the new MIS which will allow
consolidation of the 69 NGO’s performance
statistics.
Individual
As required
All aspects of business activities
Covered by CCF-India
Bulk purchase of fortified cattle feed, which
is offered to clients at cost is one example of
input supply support. Identification of quality
livestock for purchase is another.
The NGO plays a major role in the
identification of markets for its clients. The
existence of a substantial market is a major
consideration in the identification of priority
businesses areas.
CCF-India, and to a lesser extent the partner
NGO, assume responsibility for providing
market information to clients. In all cases, a
specific market for the producers is identified.
Producer organizations are encouraged where
appropriate. One example is the organization
of poultry producers who buy in bulk and
distribute outputs collectively.
47
 Service Types and Features
5.2.3.5. Business linkage promotion
5.2.3.6. Quality Control
5.2.3.7. Other
5.2.3.8. Costs to client
5.2.4. Other
5.2.4.1. Employment generation
5.2.4.2. Technology development
The most important and common example of
linkage is the relationship established
between the individual dairy producers and
community located milk collection sites. In
many cases, CCF has had to negotiate with
the government to open these facilities, which
provide an unlimited market for the
producers.
Clients are trained to improve the quality of
their product. Markets are sensitive to
quality, i.e. fat content of milk, and clients
quickly learn to respond to price differentials.
Only interest on loans.
Employment generation under LEEP
primarily remains at the family level. In a
few cases, like an urban based priority
activity that supports bangle production,
clients hire additional workers.
In most instances, it is not new technology
that is developed, but bringing improved
technology to the poor, who typically did not
have prior access. To date, traditional
technology like the internet is used to
communicate with partners. The adaptation
of new technology is certainly an interest and
future priority of LEEP.

5.3. Non-financial Services

All of the following services are provided by the NGO as they implement CCF’s child
sponsorship program. While there is not a direct link to LEEP’s livelihood work, the
logic is that improved income will provide families resources to implement the
behavioral changes advocated in other programs.

48
Table 5.3. Non-financial Services Details
Service Types and Features
5.3.1. Nutrition
The objective of the nutrition program is to
reduce malnutrition among children <5 years
Nutrition education to affect behaviour from 46% to 20% by 2010.
change offered through the SHGs,
emphasizing the use of locally available One example of a nutrition education and
foods. Pregnant women are a focus. LEEP linkage includes the training of
mothers who have a dairy project to reserve 1
cup of milk for each child.
5.3.2. Health and Sanitation
States where CCF operates have high malaria
prevalence, accounting for 90% of the
Malaria nation’s cases; emphasis is on promoting
clean environment, good hygiene, vector
control measures and treated bed-nets.
Emphasis is placed on early identification,
linkage with National TB Program for
sputum examination, X-rays, drugs and
Tuberculosis
capacity building of Directly Observed
Therapy Short course (DOTS) providers in
villages.
Awareness, counselling, linkages with testing
HIV &AIDS
centres, and home based care.
Family planning, ante natal care, post natal
care – including iron promotion, breast
Reproduction and Child Health feeding promotion, immunization and
management of childhood diseases like
diarrhoea, pneumonia, and measles.
5.3.3. Education
Interventions include:
Construction of schools, classrooms and ECD
centres;
Helping families meet cost of education;
Education strategy: Complement and Equipping schools with textbooks, materials
support government programs rather and furniture;
than undertake parallel programs. Tutoring and mentoring assistance; and
Sector goals are driven by goals of: Provision of additional teachers in
equitable access to education, quality in government schools.
learning experience and enhanced local
capacity to manage education.

49
 Service Types and Features
5.3.4. Social Capital Development

Work with the SHGs to strengthen

community empowerment, resulting in
articulation of needs and linkages to
government services.

5.3.5. Other

LEEP has not done significant work in the area of household budgeting, emergency
planning and cash flow management. It remains an area for improved impact in the
future. Financial education for CCF-India focuses more on the use of the additional
income. The idea is to get them to spend more on child well being, like education and
health. This is the link to the super goal of LEEP, which is to improve family income,
and child wellbeing.

5.3.6. Empowerment and confidence building

Building the confidence of LEEP clients, who are typically poor women, is part of the
complete package. TA plays an important role in giving inexperienced women the
confidence that they can handle an initial loan as high as $1,250. Many are intimated by
this size, and doubt their ability to successfully manage it. Taking the loan is a big risk,
and intense technical support is key to showing them how they can earn the revenue to
repay the loan. Clients go into the loan empowered with information, and it is important
that they do not feel alone after the loan is given

LEEP only gives loans for a limited number of priority activities, and CCF-India takes
the responsibility for doing the analysis that confirms a priority economic activity can be
profitable. This responsibility includes a commitment to provide necessary technical
assistance and identification of markets that will deliver the targeted level of income.
LEEP clients are subsequently limited to doing the priority enterprise that the NGO in her
area has elected, based on a careful analysis of the market. The NGO can suggest priority
areas, but CCF ultimately determines if it is viable. Clients are not involved in program
design. They are offered the opportunity to do a specific activity, which CCF-India has
determined can generate the target income. The focus is on the income to be earned, not
necessarily the preference of the client. It is important to note that an additional criteria
of the priority area is that is something that the typical poor women could engage in, i.e.
builds upon traditional activities and/or incorporates easily learned skills. Where clients
do have a voice is when problem areas are identified, and the promised results are not
forthcoming. In this case, CCF would look at the quality of the TA (technical advisors
have been fired for poor performance), and if necessary the selection of the priority area.

50
The LEEP approach is market led, and there is on-going effort to seek out new activities
which have large market potential (i.e. could be done by a large number of families) and
are also technically feasible. It is most often the case that the markets for priority
activities is outside of the NGO’s program area, and LEEP producers are not familiar
with. Most recently Small Orchard (Lemon + Drum stick + Cucumber) was introduced
as a new activity and LEEP built its in-house technical capacity for this activity. The
economic environment is not static, and LEEP must constantly monitor its portfolio of
priority activities. If an existing priority activity does not produce desired results, clients
will be shifted.

The implication of this market let approach is that activities are promoted that 1) have a
viable market and 2) that LEEP has the capacity to provide extensive technical support.
This approach is followed understanding that some families who do not have that specific
interest may be excluded. Ultimately, the decision to do a few things very well is
justified by the desire to assure success and a guaranteed level income.

In summary, LEEP priority activities are selected based on:

• Assessment of market for products
• Ability of activity to be undertaken by large number of people
• Availability of technical experts – possibly in large numbers

LEEP is designed to give clients negotiating power. For example, clients are trained to
understand milk quality testing and measuring procedures. They come to the milk
collection centre empowered to protest if they feel they are being cheated. The producers
are trained in the testing procedures, and know if they are told they have 1.6% fat
content, but in reality they have 1.7%. Since they are all selling the same product, the
size of the producer volume also gives the group a negotiating power that they would not
have as individuals. In many cases, the guarantee of a higher volume of product of
predictable quality can be used to negotiate a higher price. Because diary producers are
part of the national grid, the market they face is national.

Another aspect of empowerment is helping villages work collectively to voice concerns

and demand services from the government. One example sited by SHGs interviewed
during the preparation of the case study was complaints of health works not visiting the
villages as intended, but sitting at the clinic. As a result of collective action, the
government enforced village visitation schedules.

Which challenges remain?

While progress has been made in marketing, there is still much work to be done.
Regardless of the enterprise activity, the overall strategy is to link the producer and
buyer. LEEP finds clients are still vulnerable to the market price, which LEEP can’t
control. The key is the selection of the proper businesses in the first place. Beyond that,
LEEP must continue to refine opportunities to increase the price received through
improved quality and to provide information about and improves linkages to the market.
In many cases, especially agriculture, farmers are still not getting fair prices.

51
Migration is a challenge for LEEP. People take a loan, then go elsewhere, and LEEP is
not in a position to locate them. Working with women has an interesting impact in this
regard. If the mother has a dairy animal, for example, she needs to be physically present
to care for it. The animal is a productive asset that merits protection. So, the asset
becomes a bond that ties the family to the community. Even when the husband leaves for
seasonal wage labor, the rest of the family is more likely to remain behind.

Another limitation of the LEEP assuming full responsibility for market analysis is that
clients are not trained in the skill of identifying a profitable business idea. This capacity
could be very empowering to the client, and is an area for consideration as the very poor
move to higher levels of entrepreneurship.

5.3.7. Graduation of very poor clients into mainstream MF/MED services

With an average of 3 years in a community, LEEP is at an early stage in microfinance.

Clients are still closely linked to child sponsorship activities, and will continue to benefit
during the 12 year life cycle of an NGO in a community. A few clients will generate an
annual income of Rs. 24000 (placing them above the poverty line) by the end of the first
loan cycle. Typically, it takes 3 to 5 loans for a family to be firmly above the poverty
line, and not subject to vulnerability. Within the next year, LEEP will have an MIS
operational that generates income data. The problem now is that the data is at the partner
NGO level, and is not consolidated.

LEEP’s perspective on graduation is that the very poor are already in the NGO’s pool of
participants, and LEEP commits to getting them above the poverty line. LEEP is
designed for and its success is judged by that accomplishment. Once a client is APL, the
need for TA will diminish, and she will be able to continue to access loans through her
SHG. An important role for LEEP-India will be to link SHGs to external sources of
capital.

5.4. Design and Product Development:

5.4.1. Program rationale/ theory of change?

The program rationale is to provide an opportunity for poor families to engage in an

economic activity that can earn a minimum of Rs. 24000 annually, putting them above
the poverty line. The change that is anticipated is that LEEP borrowers, typically
poor women, will be able to reduce the economic vulnerability of their families.
Specially, LEEP will provide a proven capacity to generate a minimum level of
income that provides her family a financial safety-net. From that stable base, she can
use her experience and confidence to expand the initial activity or move into new
ones.

52
5.4.1.1. Main issues and challenges of very poor clients which the organization seeks
to address

LEEP is still in the process of transitioning the mindset of the poor from one of a
beneficiary (grants) to client (loans). It continues to be a process, with steps taken
forward and then backwards. This is most clearly reflected in lax attitudes, on the part
of both the NGOs and clients, regarding timely repayment of loans. Default is
uncommon, but loan funds are often slow to be repaid. Sole reliance on a granted loan
fund has most likely contributed to this behavior. Two things will help in this regard:
1) use of borrowed loan funds when LEEP-India is registered, and 2) consolidation of
NGO performance data at the national level – which will improve monitoring

One of the challenges LEEP had to overcome was the risk adverse behavior that is
typical of very poor clients who face a subsistence existence. This characteristic tends
to make the poor less entrepreneurial and innovative. There is a need to prove to
them there is profitability before they will assume responsibility for a large loan, and
LEEP has found that not all people believe at first. The large majority wait until they
physically see the results that others in a similar situation achieve. The lesson LEEP
learned was the importance of first identifying the innovators in the village, and
making sure that they earned a profit. The program needs to control their risk
exposure to the maximum extent possible. LEEP did this by offering a proven,
replicable business template and accompanied the financial service with technical
assistance.

Another weakness that LEEP considered in its design was the general lack of business
experience that made it difficult for the poor to cope with the basic production,
management, quality control, and especially the marketing aspects of their business.
The LEEP design came out of some 55 years of CCF-India’s support of livelihood
activities, through which time they learned that the poor faced challenges at every
turn. Competency in even the simplest tasks could not be assumed. In dairy for
example, the client needed to be accompanied when they selected their animal, to
ensure quality was reflected in the price paid. The shelter for the animal needed to
pass inspection, along with help in making arrangements for the feeding. The biggest
learning from earlier livelihood programs design was that finance alone will not
ensure success and that the very poor need much more support. LEEP accepted that it
was in the programs best interest to understand the challenges of the poor and provide
services that addressed those needs. The focus was not so much on maintaining the
client on a long-term basis. That may or may not happen. The focus was on providing
the family a basic financial platform, in the form of an enterprise that generated at
least Rs. 24000.

5.4.1.2. Intended outcomes and impacts

CCF-India expects to immediately see changes in child investment as a result of

improved family income, i.e. school enrollment and improved food security. When a
family is above the poverty line, one would expect to observe improved well-being of

53
 children in the household, including health and the average level education achieved.
Another longer-term impact would be investment in assets, including improved
housing.

5.4.1.3. How are products and inputs designed to achieve those intended impacts?

LEEP integrates financial and technical assistance services. LEEP also has the
advantage of operating in the context of an integrated child sponsorship area, where
clients benefit from multi-sector services provided by the NGO.

LEEP uses three strategies to ensure that program benefits are directed to children:
1. Activities that are not child-friendly are not promoted. For example, goat rearing
is not promoted because parents often take children out of school so they can
manage grazing.
2. Activities are designed to include women, which are known to spend more money
on children then men.
3. Children issues are discussed during SHG meetings for the purpose of improving
awareness on the importance of investing in children.

5.4.2. Concept development

5.4.2.1. Client Survey Demand/Needs assessment

Each partner of CCF-India operates under a strategic plan that is based upon an
assessment of the districts immediate and long-term needs. The next step is the
identification of communities, through which family level data is collected. By the
time the plan comes to CCF-India for approval, the NGO has identified those
communities most in need, and presented data to support its priorities.

5.4.2.2. Competition analysis

While there is some competition, it is not significant. Within the districts that CCF-
India operates - which are largely selected from the list of the 150 most backward
districts – the need far exceeds the capacity of service providers. Access to other
resources would include other NGOs and be reflected in the needs assessment. There
is a mutual understanding among NGOs that they will not work in the same villages or
on some occasions even districts.

5.4.2.3. Self-assessment

CCF-India conducts an internal capacity assessment of its partners on an annual basis.

This simple rating process, which places the NGOs into A, B and C category, is an
important step to having the partners become part of a network with common
performance standards. The rating considers interest/management commitment,
infrastructure like computer equipment and technical staff. The rating tool gives CCF-
India an idea of the interventions they need to undertake to move each partner to the

54
 next level. While the assessment was developed to evaluate the NGO’s capacity to
implement the new MIS, it is proving to have much broader utility.

SHGs are rated every six months by their support NGO. The first round of reviews
has now been done to understand the capacity building needs of the SHGs for savings,
credit and microfinance. This review was done by an external consultant who is now
training the LEEP technical specialists to conduct subsequent reviews.

What have been lessons learned from such exercises?

Different partners need different capacity building. When working with 74 partners, it
is difficult to correctly interpret the capacity of each. Communications and national
office intent can easily be misunderstood. For example, when technical trainings were
offered, like accounting, it was not always the case that the right person was sent.
Specific instructions as to who to send are now provided. LEEP has also learned the
importance of verifying information provided. Recent MIS training required that the
trainee physically bring his/her central processing unit (CPU) to the training and that is
where the software was installed. Enforcement of this requirement revealed that,
contrary to written reports, there were problems with the NGO having a designated
CPU for MIS.

5.4.3. Product/Service design

5.4.3.1. Product/service design process

The goal of LEEP is to move the poor from BPL to APL. That is the standard that is
to be achieved. Why LEEP works with the poor is precisely because it wants to
change their capacity to meet family needs through improved income. The selection
of the name LEEP (Livelihood Economic Enhancement of Poor) was deliberately
chosen to describe what was important. Microfinance just happened to be a critical
component of the livelihood intervention. With the decision made to implement
LEEP, CCF-India knew that they needed solid activities that could deliver the
economic enhancement promise.

Organization of such a large number of communities is where the self-managed SHGs

came into the design. The savings and credit operation was used to instill the concepts
of financial discipline. The SHG also provided a forum to provide information and
organize the community. For LEEP, the focus is not microfinance, but loan
management.

5.4.3.2. New versus modified products/services for very poor clients

The LEEP program was new for CCF-India and its partners, in that grant transfers had
been the norm of the past. LEEP was the 2001 resign of the CCF-India’s livelihood
approach. The key factor of the new program was the potential of an activity to give
desired income level, along with the capacity of the poor to undertake the activity.

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 The list of priority activities was largely based on what had worked well for other
organizations, like Basix. The list of priority activities is still evolving.

What were the cost trade-offs?

LEEP takes the position that it is not sufficient to look at cost alone, but that
expenditures must be considered in the context of the benefits that will result. A
program may be costly, but the benefits may be commensurate. As the CCF-India
Microfinance Manager put it “What is point of reducing the cost if the benefit is trivial
in terms of improving the poverty status of the very poor?” The right investment level
is crucial for achieving a specific level of income. CCF-India emphasises that “the
target families of its LEEP program will not suffer because of under-investment.” .
Analyzing achievements within the livelihood sector in India; CCF-India decided to
strive for achieving at least 33% Return over Investment (RoI)8 during the first year
with a LEEP client. In other words, CCF is willing to invest Rs.45000 per family in
order to achieve Rs.15000 annual income by the end of the first year.

It may also be noted that, the sponsorship funds received for the target families is in
the range of Rs.7000 per family per year, out of which about 30-40% is normally
allocated by partners for LEEP, e.g. about Rs.2500 per year. With such low level of
available funds it is not possible to think of investment level of Rs.45000 per family.
As CCF-India is committed to achieving Rs.24000 total annual income per family, it
meant that fewer people could initially be served. The decision was made that it was
more important for each NGO to move 1,000 people APL and move twice as many
half-way to that goal. As a result of this decision, only a percent of poor families in a
target community are now covered.

5.4.3.2. Risk assessment and product design

The LEEP design attempted to control the factors that contributed to profitability.
Even so, there are many things that can go wrong. Climate is an example of a factor
over which the program has no control. Therefore, non-irrigated agriculture was not
selecting as a priority activity.

To make the larger loans affordable to the poor, and to allow the loan repayment to
match the gestation period of the activity, repayment periods for as long as 3 years are
sometimes offered to a first-time client.

Population migration for daily wage earners was and remains a major risk.

8
Annual Return over Investment (RoI) indicates the net return as a percentage of
investment made. 100% RoI indicates that the net return/profit is Rs.100 per year from an
investment of Rs.100

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 5.4.3.1. Prototype development and testing

The LEEP design emerged from some 55 years of CCF-India’s experience. In 2002,
an external evaluation of its livelihood programs was conducted. Senior management
was so impressed with the resulting analysis and options for the future that resulted,
that they ultimately hired one of the evaluation’s authors to design and eventually
implement LEEP. The LEEP business emphasis was a radical departure from the
existing grant based program, and getting NGO partners to accept the new approach
was a challenge.

5.4.4. Pilot testing

The pilot testing was more a trial period of full implementation, than a sub-set of districts
or communities. The new design was initiated with 69 partners over a 6-month period,
which happened to coincide with the remainder of the budget cycle. The logic was to see
how things were progressing in the implementation of the new strategy before the next
12-month cycle was approved.

5.4.5. Rollout

Implementation over the first six months went well, and some participants even realized
Rs. 18000 in earnings. What was dramatic is that during that brief period 56 technical
experts were hired by the NGOs, and were already demonstrating the difference that
could make in comparison to past livelihood activities. A few select activities emerged
as high impact ones. For example, the simple act of motorizing small fishing boats in one
sea-side community resulted in Rs. 25000 earnings per borrower in six months. While it
was not replicable to all areas and had limitations in its ability to achieve high scale, the
quick income earning generated a lot of excitement. Everyone within the CCF-India
NGO network was talking about this example of success. It served to inspire the
remaining NGOs to embrace the LEEP design.

Overtime, dairy emerged as the slow, but consistent activity. It was the consistent
earning flow that ultimately made it the most preferred activity.

5.4.5. Product/Service review and assessment

At the end of the first year, CCF’s Asia MED Advisor conducted an assessment of
LEEP’s performance. The findings supported the assessment that the program was
moving CCF-India in the right direction. The weak link is that consolidated data is not
yet available at the national level to provide summary statistics. The NGO staffs are
involved in data collection on a regular basis, which will ultimately be fed into a custom
designed computer package.

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5.4.6. The Product Development Cost

5.4.6.1. Total cost

A minimum investment of Rs. 45000 is budgeted for each LEEP participant. Given
overall budget constraints, the number of LEEP participants is currently limited to an
average of 1,000 participants per NGO partner, or 70,000 participants. While more
could be reached with a lower investment, it would not be possible to ensure that a
participating family had the resources to lift themselves APL. Within LEEP, quality
of outcome is given priority over magnitude of outreach.

5.4.6.2. How were they funded?

All LEEP funding, including loan capital, comes from CCF sponsorship funds. Once
LEEP-India becomes registered, it will begin to access borrowed capital. Technical
assistance costs will always be provided by the NGO and will always be financed
through a subsidy from CCF-India.

5.4.6.3. Outsourcing during the development process

All of the design work for LEEP was conducted by CCF staff. This was necessary
because it was important to develop a program that fit CCF’s child sponsorship model.

5.4.7. Feedback loop

Perhaps the most important system for information flow is the monthly statement of
earnings and expenses. This allows the NGO to quickly see if the results of the
intervention are being achieved. Within the next year, the network-wide MIS will be
fully operational, providing consolidated income data at the national level.

5.5. Implementation Process

5.5.1. Process

As described elsewhere in the case study, districts are first targeted by CCF-India
based on need. Within each district, a local NGO is identified, and all implement the
same LEEP program model.
5.5.2. Logistics

The poor communities that CCF serves tend to be rural and remote. An advantage of
the partnership model is that the NGOs have a strong presence in the selected district.
Each implementing NGO has almost daily contact with its program communities.
Something that has made LEEP so successful is the support and mentoring it gives its
clients. Not only does decentralization provide access, it relieves the program of
hiring and managing the LEEP staff, which currently number about 160. Rather than
managing staff and resources, CCF-India holds partners accountable for results.

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 LEEP benefits from the monitoring systems used by CCF to maintain a high level of
accountability for its sponsorship activities. Each NGO partner and thereby each
community falls under the oversight of a CCF-India Area Manager.

5.5.3. Information System

Data on income, which is the most important measure of performance, is recorded in a

daily journal by the client. A written statement of monthly expenses and income is
prepared with the assistance of the NGO staff. The NGOs are at various stages of
entering this data into the new MIS. Currently the income data is used by the
Technical Expert to track the success of individual program participants. Once
consolidated, LEEP national staff will be able to analyze income performance across
priority activities.

6. Results
6.1. Method of measuring results

6.1.1. Type of data

Data on client income that is generated from the LEEP supported business is the primary
measure of effectiveness or results. This relates back to the objective of LEEP to lift
poor families above the poverty line. With respect to performance efficiency, data on
loan disbursements and repayments are tracked.

Impact is reviewed in the context of family wellbeing, using CCF’s Annual Impact
Monitoring and Evaluation System (AIMES). The consolidated data that results from
AIMES is provided as Appendix 3. AIMES is a requirement of all CCF sponsorship
programs around the world, and uses 11 indicators to measure the wellbeing of a CCF
sponsored family, e.g. 1. age and gender data of family members; 2. deaths, by cause and
age category; 3. immunization rates; 4. nutritional status of children; 5. family status
regarding income, water, housing, etc.; 6. child access to education; 7. adult literacy; 8.
ECD participation; 9. school enrollment of children; 10. 15-20 aged higher education;
and 11. highest level of education achieved by 20 year olds.

6.1.2. Data analysis and use

At the NGO level, client business income is monitored on an on-going basis, and lack of
profitability triggers follow-up by technical expert. The fact that all are doing the same
enterprise makes variance analysis quite effective in identifying problem cases. Once the
new MIS is in place, analysis of consolidated income data will be used by CCF-India’s
national office for strategic implementation decisions like selection of priority business
activities. Changes in overall LEEP design originate at the CCF-India national office.

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AIMES data is collected annually, and there is an historical data base, so progress of
supported families can be monitored. AIMES data is used more for strategic planning
purposes. For example, a failure to improve family well-being in a particular area would
indicate a change in type of program interventions is required. To date, CCF-India is
pleased with the improved income results LEEP is delivering.

6.2. Impact

6.2.1. Poverty Impact

Unfortunately, consolidated data on movement of LEEP clients above the poverty is not
available. All income information is currently at the NGO level, and even there it is often
in the client level data sheets. That being said, the NGO technical expert reviews all
client data monthly, and knows those clients that are not progressing as expected. Impact
is quite quick under LEEP. It is expected that all clients will be earning Rs. 24000 from
LEEP alone within five years of beginning operation – placing them above the India
poverty line of Rs. 18000. Anecdotal evidence is suggesting the pace is typically faster,
with most participants earning at least Rs. 15000 within 12 months. The income stream
is fast. In the most popular activity, dairy, mothers begin to see income and therefore
impact immediately.

CCF-India and its partner NGOs spend considerable effort in encouraging clients to
direct increased income toward child wellbeing. Child education was clearly the number
one change identified by clients that were interviewed for this case study.

6.2.2. Client satisfaction and feedback

Both NGO staff and clients interviewed indicated a high level of satisfaction with LEEP.
Most often mentioned was their access to technical expertise. Clients clearly felt they
were not alone. At the end of the day, the fact that the program was resulting in money
was what was most valued.

As part of the case study, three of the 69 current LEEP implementers were visited, e.g.
Rass Balaji Bala Vikas in Chittoor District of Andha Pradesh; Disha in Firozabad
District of Uttar Pradesh; and Akhil Bhartiya Gramin Uthan Samiti (AGBUS) in Alwar
District of Rajisthan. In total, 60 clients were interviewed, mostly as part of a SHG
meeting. Clients expressed a high level of satisfaction with LEEP, and appreciated the
frequency of technical assistance visits.

Individual Client Interviews:

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Gyan Singh
Dangahari village, Alwar District, Rajasthan
LEEP Partner: ABGUS

The most visible result of Gyan’s participation in LEEP was the money to improve her
home. As she stood in front of her home, workers were putting on a new door and
installing windows – the final stages of a major renovation. This accomplishment was
source of great pride for both Gyan and her husband Raj Kuma. The source of the
income to finance this home improvement was a dairy cow. Unfortunately, the cow had
suddenly died the day before we arrived, but Gyan was not concerned. The ABGUS
technical expert had visited her on the day of the death, accompanied by the insurance
examiner. The claim had already been allowed, and Gyan was making plans to purchase
a replacement cow the following week.

The income received from the cow has become a major resource for the family, often
exceeding what Raj receives as a day labourer. Gyan mostly appreciated that the income
flow is steady, and the family can count on it as a base. Uses of the earned income that
she mentioned included enrolment of children in private school, covering costs of a
daughter’s wedding, and expenses related to a family member’s illness. Without the
dairy income and access to emergency loans through her SHG, Gyan said she would had
to go to the local money lender, who charges a monthly rate of Rp. 5 per 100 loaned, or a
60% interest rate per annum. This makes her 9% per annum LEEP loan and the 18%
SHG loan look attractive indeed.

Her 18 year-old son, Santosh, is becoming involved in dairy also. A neighbouring LEEP
producer watches as Santosh fills a test tube from the bucket of milk just collected. He is
making the first of two daily visits on his route of community households, testing,
weighing, and transporting the milk they want to sell. On the next visit, he pays them the
amount due. By providing this service, Santosh earns about Rs. 2000 per month in
income.

The second ABGUS client visited in a neighbouring village is still struggling, but said
that at least now she has hope. Her husband, who used to be a daily agriculture labour,
has slowly become blind. Jaituni is now the primary wage earner for a family that
includes 6 girls and 2 boys. Her daily income journal shows that she averages Rp. 150
per day from her dairy enterprise. She recalled how frightened she was when she took her
first loan of Rp. 22850 ($540) to buy her first milk buffalo five months ago. It seemed so
large, and she wondered how she could ever manage such a risk. What gave her
confidence was the support she receives from the technical experience, who visits her 6 –
8 times a month.

LEEP Partner: DISHA

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Firozabad is famous for producing bangles, and almost all living in the city are in some
way related to that industry. DISHA is one of the few urban projects for LEEP.
Members of two SHGs had gathered to describe their experience, and demonstrate their
competency in doing a finishing step known as joining. With LEEP’s support, women
were able to open a small operation in their home. Before, they were employees working
for piece-mill sub-contractors. A main priority of LEEP was to reduce health and safety
dangers, remove children from production labour and give the women the capital they
needed to buy the equipment needed for joining. Monitoring school enrolment is the
principal way DISHA determines if children are being exploited. Tear’s came to one
woman’s eyes when she described how she could now afford to send her daughter to a
private school. Another woman said rather than being an employee, she now employed
two women who used her equipment during off-periods. She had dreams of soon
expanding her operation.

6.3. Cost Effectiveness and Sustainability

6.3.1. Scale and replicability

6.3.1.1. Strategy for scale?

LEEP was designed with the intent to provide a means for all families living in CCF
supported communities to move themselves above the poverty line (APL). Since its
launch in 2002, LEEP has exclusively used child sponsorship resources mobilized by
CCF-India. The implication of this strategy is that the number of participants, now
close 79,000, has been limited by that resource’s availability (loan reflows plus new
sponsorship money). Loan capital is one of the large budget items in LEEP. In 2008,
LEEP-India will become a registered MFI, opening up the possibility for use of
external funds. (Note: For a variety of policy issues, CCF, Inc. limits that extent to
which programs still under its umbrella can incur a debt obligation.) Today, each
partner is expected to have about 1,000 LEEP participants on average. Until now,
limiting the scale of operation has not necessarily been negative. It allowed LEEP to
stabilize operations and get systems in place. LEEP now knows its model works, and
is ready to expand.

LEEP plans on taking a step-by-step approach to its growth. First LEEP will expand
in the communities where the NGO partners are already working, moving beyond
sponsorship families. This strategy will use the CCF project infrastructure to its
maximum capacity. In the longer-term, LEEP will move on to new communities
selected in conjunction with CCF-India’s partner NGOs, and the process will continue
to repeat itself in the poorest districts. For financial services, clients will be served by
LEEP-India, with technical assistance provided by the NGO. As clients mature
through three plus loan cycles, their need for technical support decreases, and/or the
specific services they need will be purchased. The technical experts will begin to
charge a fee for service for graduated clients.

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 Today there are close 70,000 clients. Assuming that enrolled families are about 20%
of the community’s population, the anticipated LEEP client base over the next 3 years
would be 300,000. 100 per cent of all entering borrowers are poor, as defined as being
BPL. Of these, it is estimated that one-third of new clients are very poor. This pattern
is expected to continue to repeat itself for the foreseeable future.

The finance activities of LEEP-India will be sustained with interest income. Funding
for the growth strategy described above is assured, thanks to the predictable resources
available through sponsorship funds.

6.3.1.2. Replicability of program or service

LEEP is certainly replicable within India, and that is the plan. Replicability in other
CCF countries remains to be determined. The new programming model of CCF that is
being piloted, e.g. Bright Futures, makes communities responsible for program
decisions. How the LEEP approach may apply in this new program paradigm remains
to be determined.

What are essential factors for replication?

1. A non-financial service lead approach to MED, ensuring appropriate technical

assistance capacity precedes and then continues to accompany microfinance. It is
the existence of technical support that makes LEEP successful.
2. A stable source of subsidy funding, like child sponsorship, given that the technical
assistance services provided to clients does not have a cost recovery aspect during
the first several years.
3. LEEP is part of an integrated program approach, where participants benefit from a
range of services provided by the partner NGO. To achieve changes in child well-
being, CCF-India found multi-sectoral interventions were needed. This finding
may also be true to achieve any change beyond increased income.

6.3.2. Financial and operational self-sufficiency (if applicable)

CCF-India recognizes a lack of entrepreneurship and risk taking ability among the
poorest in a community. CCF-India also found that better results have been achieved in
the livelihood sector when there is a time bound intervention, where the poor are not
dependent on the promoting agency forever. To that end, CCF-India uses 5-7 years as
the period within which a new family should not be dependent on CCF-India partners.
While CCF-India works with the partners for a much longer period of time, it requires
that they develop a sustainability time frame or exit strategy for the TA when entering a
new area. LEEP-India will continue to provide financial services on a cost recovery
basis.

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6.3.2.1. Financial expense ratio

As part of the overall child sponsorship program, financial expenses are not tracked
specifically for LEEP

6.3.2.2. Operational expense ratio

As part of the overall child sponsorship program, operational expenses are not tracked
specifically for LEEP.

6.3.2.3. Cost per client

LEEP’s current annual budget is about Rs.10 crores, out of which the annual overhead
expense for running the LEEP program is about Rs.1.9 crores. This serves a total of
70,000 LEEP clients. Hence the overhead cost per client is Rs.271, which is equivalent
to US $6.

6.3.2.4. Clients per staff member

Each LEEP NGO partner serves about 1,000 clients, with one technical expert, one
SHG coordinator and one LEEP accountant. Supporting assistance with clients is
provided by NGO staff working with the same families. Given this structure, the
average number of clients per staff member is about 333.

6.3.2.5. Average loan balance per borrower

The above loan disbursed is Rs. 29000. Consolidated outstanding loan balance data is
not available.

6.3.2.6. Average savings balance per saver

Savings are held at the SHG level. Consolidated data is not available.

6.3.2.7. Portfolio at risk

Portfolio performance data is maintained at the project level, and is not consolidated at
the national level. By June 2008, the MIS should be fully operational.

6.3.2.8. Tailoring of product/service

Products were tailored to the poorest community members. Cost and efficiency design
decisions were made based on how to best use available resources to move the largest
number of families APL.

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6.3.3. Cost-effectiveness of non-financial services?

Non-financial services include:

• Technical advisory services for production. Each NGO has a technical expert for
the core activity. The expert is responsible for maintaining contact with each of
the 1,000 individuals in the NGO’s area of coverage. Because the NGO works
with a limited number of communities, participants are clustered – making home
visits easy.

• Input supply services. The NGO play a role in reducing the cost or improving the
quality of key inputs. For example, some NGOs have feed mills that sell a quality
blend at cost to participants. Farmers are also taught to produce azolla as a low-
cost feed alternative.

• Marketing assistance. Even before a core activity is selected, the market has been
identified. Knowing the specifics of the market is essential to accurate income
projections.

The cost of providing non-financial service is the cost of the technical specialist in the
project and the cost of training programs conducted. This cost at each project level comes
to about Rs.200,000, which serves about 1000 clients. Hence the non-financial service
cost per client is about Rs.200 (US $4.50)

6.3.4. Strategies to cover/reduce costs

LEEP is based on the belief that cost must be evaluated in the context of the benefit that it
generates. For example, the provision of technical assistance is the largest cost, but it
also is the element that LEEP has determined is key to success. What LEEP does to
control that cost is to limit the number of core activities an NGO undertakes, most often
to one per project. Not only does this reduce staff costs, but by increasing the scale of an
activity one can introduce supporting activities like feed milling, etc.

7. Conclusions

After 3 years of implementation experience, CCF-India is confident that it has a viable

strategy for not just improving family income, but for lifting families above the poverty
line. LEEP has accepted the challenge of offering a livelihood intervention that predicts
a minimum level of income that will result. Of course, results are based on participants
following the program guidelines and accepting technical advice. To be cost effective,
LEEP offers a participant only one or two livelihood alternatives. Even when this may

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not be a first choice of employment options, what is ultimately attractive is the
“guaranteed” income that will result.

7.1 Challenges & Pitfalls

One of the biggest challenges faced by LEEP is managing 74 NGO partners. While
CCF-India may be a predominant stakeholder/donor for them, each have their own
interests and priorities. Getting partners to accept the concept of transitioning from a
grant based livelihood approach to having beneficiaries become loan clients was not easy.
What was the convincing argument at the end was: 1) loans provide an opportunity to
eventually serve more by use of the reflows, and 2) income results were quantified and
time-specific. In practice, a few of the more receptive NGOs were first to embrace the
new, somewhat radical, approach. As the program began to produce the anticipated
results, other NGOs became willing to enter into discussions, especially when it was clear
that LEEP was the only type of livelihood activity that would be financed by CCF-India.
If another approach was desired, alterative funding would have to be identified. CCF-
India is always aware that while it has immense influence, the NGOs are ultimately
independent. CCF-India believes it has no alternative to the partnership model. India is a
vast country, requiring close 220 technical staffs plus assistance from multi-sector staffs
to implement LEEP. CCF-India admits NGO staffs are not always at desired the
professional level at the onset. The decision was made to value the NGO’s community
knowledge and access, and to then build needed technical capacity.

While it has largely benefited from its identification with CCF-India, the closeness has
presented challenges in enforcing repayment discipline. Timely repayment remains a
work in progress, in that the NGO partners tend to focus on the intent of the client to
eventually repay.

A challenge currently being addressed is the need for a consolidated MIS. Presently, all
program data is at the project or NGO level. A software program called SAFALFIN3 is
being introduced, and is expected to be fully operational by June 08.

A potential pitfall that must be avoided if a limited number of activities are to be

supported is the selection of the correct business activity in the first place. Before you
direct your portfolio into one core activity, there needs to be research that supports its
market viability. Secondly, there must be a willingness to react quickly if assumptions
are wrong. The lack of portfolio diversification must be explicitly addressed in the risk
analysis.

7.2 Lessons Learned

Its history of working with very poor families has convinced CCF-India that a strategy
that contributes to poverty reduction is not sufficient. Rather, it opted for a strategy that
resulted in the poor being lifted above the poverty line. This implied that a significant
investment needed to be made in each family. The trade-off is whether a large number of

66
family’s economic situation is improved, or a smaller number of families are taken out of
poverty on a sustainable basis. LEEP has opted for the later.

One of the lessons learned from CCF-India’s 55 plus years of work in livelihood
enhancement, it that effective poverty outreach requires an integrated package of non-
financial and financial services. The poorer the target group, the more true this statement
is. LEEP considers itself to be a technical assistance led program, under which
microfinance ultimately has a role. Not only is the technical expertise required, giving
the inexperienced entrepreneur a step-by-step guide to success, but the psychological
support has proven to be equally important, e.g. convincing vulnerable individuals that
they have the power to succeed. Extreme poverty reduces risk tolerance. Many of the
women interviewed for this case study spontaneously commented that without the earlier
technical preparation, they could not envision taking such a large loan.

LEEP has been able to keep its costs low by building upon the existing service delivery
structure of its NGO partners. As participants of an integrated program, there is frequent
contact with numerous NGO staffs, which are trained to be proficient at specific
livelihood related tasks. There is more than cost efficiency that comes from this
approach. A lesson learned is that the other services a family receives come into the
cost/benefit analysis associated with fulfilling responsibilities, including loan repayment.
In the case of LEEP, clients value the overall relationship with the NGO to the extent that
they are not willing to be denied accesses as a result of non-performance under LEEP. In
the words of one NGO LEEP Director, “We know these people and their living situation.
We are likely to know if they are misrepresenting themselves. If they don’t tell us what
is really happening with their livelihood activity, they know that their neighbor will.”

More than any other factor, what is seen as defining LEEP’s success is the commitment
of CCF-India and its NGO partners to helping the most vulnerable members of a
community. A pro-poor ethos is evident at all levels of the organizations and in printed
material. The very poor are not a segmented group for LEEP, they define the portfolio.
While it is the parents that participate in livelihood activities, the voices behind all
program interventions are those of deprived, vulnerable, marginalized and excluded
children. A child wellbeing focus has served to keep the desired livelihood outcomes on
track, e.g. providing economic security through a stable source of family income so that
child needs can be met.

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APPENDIX 1: Map of CCF-India’s Program Area

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APPENDIX 2: AIMES Summary Statistic

69