Making Better Investments at the Base of the Pyramid

Reprint: R0905J

Though they have feel-good stories and data on milestones, most ventures that serve the world’s poor don’t have a systematic way to gauge how well they’re achieving their goals. To address that need, London, the director of the University of Michigan’s Base of the Pyramid Initiative, has devised a new tool.

London’s Base of the Pyramid Impact Assessment Framework explores how ventures influence the well-being of local buyers, sellers, and communities. It guides managers through a detailed look at an organization’s effects on those constituencies in three areas: economics, capabilities, and relationships. The framework examines negative as well as positive effects—for instance, whether activities that increase the income of the poor also prompt them to mistreat arable land. It helps managers focus success measures on the most likely high-magnitude outcomes.

VisionSpring, which trains rural women to provide affordable eye care in India, knew it had improved the economic fortunes of its microentrepreneurs. After applying the framework, however, the venture had an appreciation of its impact on some of its buyers: artisans whose eyesight had deteriorated with age. The nonprofit’s glasses boosted the artisans’ productivity, income, and dignity. VisionSpring also uncovered negative effects—strife and jealousy in families that weren’t used to women’s working outside the home. The organization helped ease those tensions by encouraging the women’s spouses to become involved in product distribution, thus improving their relationships and reducing the risk that sellers might quit.

The more holistic, fact-based view provided by London’s framework has helped VisionSpring make better decisions about how to enhance positive effects, mitigate negative ones, and demonstrate clear value to potential funders and partners.