Turning Subsistence into Sustainable Businesses

September 07, 2022
  • Steps Forward 2022
  • Steps Forward Magazine

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Imagine this scene: Two women, Marlene and Katrina, sit in the kitchen of a single-story home in Honduras surrounded by palm trees and tropical foliage. They bend over the screen of a tablet computer to watch an instructional video. Several children gather around to catch glimpses of the entertainment. A curious husband also sits nearby, not wanting to be left out.

The video is a lesson in accounting, and combined with coaching from Katrina, it is teaching our fictional family basic skills for managing their finances. A few months from now, after many more sessions with her mentor, Marlene will present her ideas for a business she can start and run from her home, or maybe from a shop nearby. Katrina will help Marlene and her family begin their business and make sure they have the knowledge to grow it.

Through interactions like this one, social change enterprise Fundación Capital is challenging extreme poverty through entrepreneurship and putting hundreds of thousands of families on a pathway to economic self-reliance and resiliency. They use a programmatic method called Graduation, which over the course of 12 months or more of financial support, entrepreneurial mentoring, and life skills training prepares participants to “graduate” into a sustainable livelihood and conditions of improved well-being for their families.

The method was first pioneered in Bangladesh by the non-government development organization BRAC, and the layered and stepwise program is designed for people who own few or no productive assets, but who do have a willingness to apply their skills to work and earn.


“Poverty is multidimensional – it’s not only a matter of resources or knowledge or access to capital. It’s all of it. Any approach to eradicate poverty must be equally multidimensional,” says Carolina de Miranda, Social and Livelihood Promotion Director at Fundación Capital. Fundación’s Graduation-style programs target a variety of barriers to income generation and saving, relying on input from the participants along the way.

“Only they have the ideas of what will get them out of this situation. We listen and help them make those ideas reality,” de Miranda explains.

Graduation engagement begins with the payment of small cash stipends to participants to allow them to take care of the family’s daily needs, freeing up time and attention to spend learning and building a future. Partnering with the public sector is critical for catalyzing systemic changes. As much as possible, Fundación works with national and local governments to leverage safety net programs to connect people to funds already allocated for them.

Each participant is then matched with a coach to walk alongside the family through the entire program journey acting as a mentor and case manager. Coaches accompany the participant as they develop a plan for an income-generating activity and offer life skills training and financial education in line with that activity. When families are ready to invest in assets to start or improve a business, Fundación Capital delivers seed funding to kickstart the operation, often transferring flexible cash rather than an in-kind transfer.

“We pursue cash transfer whenever we can because it gives autonomy to the family to buy what they need,” said de Miranda. “If you were to only transfer livestock in-kind, for example, sometimes the family doesn’t want to have livestock, has never worked with chickens or goats before, and doesn’t have the experience to do that. When you transfer cash, they can choose how they want to invest and what activity they want to start or improve what they may already have.”

“In the traditional international development world, there is a belief that poor people cannot make good decisions,” notes Fundación Capital CEO Yves Moury. “Our Graduation programs all over the world are showing that people will invest well when the funds are paired with the right training that prepares them to protect and grow their assets.”


Learning to steward assets is a major innovation of the Graduation model. From the beginning, coaches share financial literacy and life skills lessons, including hands-on training about entrepreneurship, building up savings, managing a relationship with a financial institution or community savings group, and tracking household and business monies separately.

“We work with many people in the Graduation program and other initiatives who have not had a formal education, and literacy levels vary widely across the various countries we work in. So, we needed to be creative about how we train participants,” said de Miranda.

That’s where Fundación’s expertise in information and communication technologies has been transformational. They developed a tablet app called AppTitude to present lessons as videos or cartoons, allowing anyone to learn regardless of reading or writing ability. Over 16 modules, learners follow the story of a rural family facing new challenges and overcoming difficulties to gradually change their lives. The characters share experiences and give out tips on how to create and run a small family business. To reinforce lessons, videos from real-life microentrepreneurs’ are included, encouraging peer-to-peer learning. The simple and fun format means that other members of the family—children included—can benefit also from the contents of the training program.

“…Opening a bank account for someone is not sufficient. Obtaining a microloan for someone is not sufficient. We have to support these families on how to use financial resources for their own benefit.”


Digital tools also facilitate a cost-effective, agile scaling up of entrepreneurship and financial education. “We have adapted our digital solutions so that people can access from their own devices, allowing us to reach more people,” adds de Miranda, “The results of programs using AppTitutude have met or exceeded those of a traditional, paper-only approach. When you pull out a tablet, everyone gathers around.”


For Fundación, achieving financial literacy is the first step to long-term, full economic participation.

“We are increasing the autonomy of people to help them manage and use money to benefit their family,” said de Miranda. “But we also know that opening a bank account for someone is not sufficient. Obtaining a microloan for someone is not sufficient. We have to support these families on how to use financial resources for their own benefit. What we don’t want to happen is that at the end of the Graduation program they are not aware of how best to use financial services and they end up with debt, for example.”

Since 2011, Fundación has developed and facilitated more than 10 Graduation programs in seven countries across Africa and Latin America, impacting more than 200,000 people. The results are highly encouraging, even at a time when the COVID-19 pandemic is re-arranging the economic landscape of the world.

In December 2019, Fundación concluded an 18-month program working with 840 families in Honduras, just a few months before most countries went into lockdown due to covid-19. When program runners we were able to return and measure the success, they anticipated the results might be less than hoped for, given the unprecedented disruption.

Fundación partnered with the Center for Economic Development Studies at Universidad de los Andes to conduct an impact evaluation through a randomized control trial (RCT) in spring 2021, a year later than the review would have taken place.

“The results were surprising because they revealed sustained increases in daily income for households, the value of their assets, and food security. The gains had not been erased as we feared they may have been. It shows how the Graduation model positively impacts resilience in families, giving them access to tools to reduce risks and negative impacts brought on by unforeseen emergencies,” said Moury.

The RCT results showed that Graduation program participants had slightly more than 75 percent increase in assets, such as large farm animals and nearly tripled the value of business goods compared to the control group. Moreover, results showed significant increases in current perception of well-being and hopeful expectations for five years in the future among participating households, compared to non-participants.

“Building a world without poverty where all people have access, opportunity, and capability to participate in a country’s economic life will require not only having access to economic resources but to a broader well-being,” said Moury.

“One of the cruelest aspects of poverty can be that people stop believing in themselves. We are excited to see that in addition to the economic objective of Graduation programs to increase income and savings, it also has positive effects in their sense of agency.”


As with any graduation, it is the beginning, not the end. A critical part of long-term success is graduates’ ability to integrate into the broader economy. Companies can turn to Fundación’s new livelihood graduates as a source of valuable goods and services.

“The private sector has an important role to play. When we talk about promoting sustainable livelihoods, part of this is linkages to markets.” said de Miranda. “For example, a smallholder is producing tomatoes. The markets should consider this smallholder a provider and invest in her or his production capacity. If she can only sell to her neighbors or to the small market in her village, you can reach limits to income very fast.”

“One of the cruelest aspects of poverty can be that people stop believing in themselves. We are excited to see [Graduation] also has positive effects in their sense of agency.”


“There are many different ways companies can be profitable while including the poor in their value chains, whether as consumers, providers, or distributors, and plenty of successful examples have been documented across sectors and countries,” said Moury. “But to do so, we must consider poor people as full economic citizens, with the same rights to participate in and benefit from local and global economies as any other citizen.”

Fundación has already had some success in this regard. In 2017, working with the national Paraguayan government’s Technical Secretariat for Planning (STP), they mentored 850 participating families in organizing local markets. A social trust fund was created to raise venture capital to finance cooperative production of chamomile for export.

The purchase of the final product was guaranteed at a fair price by a company with export quotas to
fill. Participants of the pilot who joined the trust fund received technical assistance, honorariums for their work and the required assets for planting and harvesting crops. Profits were distributed amongst investors and producers, and any losses were assumed solely by the investors.

“This was one of the first Graduation initiatives in the world to include a public-private partnership used by independent investors,” said Moury. “It’s a model that leverages the private sector to develop inclusive value chains and economic opportunities that lead to full economic citizenship.”

With data showing significant and sustained success, the Fundación team is bringing Graduation to new communities. They’re currently working in partnership with the national government of Mozambique to design and implement a program with 5,000 participants between 2022 and 2023.

“Graduation is not a silver bullet, but I would say it is a good first step,” said de Miranda. “It may sound cliché, but sometimes all the family needs is a big push to get the momentum they need to start along the path to a better future. We will continue to push!”


This article was published as part of Steps Forward, a publication exploring inclusive capitalism in action. Discover more stories of experience from CEOs in the 2022 edition magazine.

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About Members

Yves Moury is the Founder, President, and CEO of Fundación Capital, a nonprofit social enterprise working to improve the financial lives of people living in poverty around the world, partnering Read More

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