One of the challenges faced by the microfinance sector is whether and how to reach the very poor. While microfinance institutions have had great success at reaching poor and low-income households, anecdotal evidence suggests that outreach to the very poor is much less successful. The very poor suffer from greater instability, a less developed skill set, fewer social and institutional connections, and fewer economic opportunities, relative to households among the "better off" poor. These circumstances suggest that the poorest of the poor may need additional support and preparation to participate successfully in regular microfinance programs.

In partnership with Plan Honduras and ODEF, IPA in Honduras is evaluating the impact of Targeting the Ultra Poor (TUP), a project intended to provide the ultra poor with the support necessary to access financial services. The program combines an intensive period of training, financial education and saving with an asset transfer, all with the intention that participants will eventually graduate into a standard microfinance program. The study seeks to examine the impact of grant/asset transfer and subsequent enterprise development on social and economic outcomes. 

The study will evaluate the impact of the intervention on 40 rural villages in the Honduran department of Lempira in comparison with 40 control villages.  Within each participating village, 20 households will partake in the program while another 20 households will be monitored as a control group to measure any spillover effect. 

Does enterprise development combined with access to training provide the ultra poor with tools necessary to climb up to the next rung in the ladder? How does the income generating activity of the TUP program impact the school attendance of children, health and food security, income and household assets? Will TUP participants be ready to "graduate" to traditional microfinance services after this program?