ROI | Livelihood Impact

HOW WE THINK OF ROI

Our approach to ROI

The Livelihood Impact Fund prioritizes cost-effectiveness in funding decisions. We look for organizations where every $1 spent results in at least $5 in additional income for participants over five years - what we refer to as a 5x ROI (return on investment).

Across our portfolio, we assess ROI by comparing participants’ income gains to program costs per beneficiary, focusing on practical tracking rather than rigid evaluations. You can learn more about our approach below, what we look at when we talk about income increases, cost per beneficiary and how we calibrate our expectations based on partners' growth stages, team capacity and systems.

Why ROI?

Our resources are finite. ROI guides us on where our limited resources can have the biggest impact on reducing poverty. The counterfactual to our giving is cash transfers. We know that they are effective, easy to implement at scale, and give ultimate agency. So, we are optimizing for ROI, looking for models that significantly outperform cash transfers.

Why Income?

We know that poverty is multidimensional. Those experiencing it feel its impacts in many areas of their lives simultaneously.

However, we want to remain data-driven in our decision-making, and have chosen to focus on income as the most straightforward, practical and measurable indicator of improved livelihoods.

Why 5x?

At its simplest, the alternative to running the Livelihood Impact Fund model is direct giving—unconditional cash transfers to people living in poverty. This approach typically yields a 1x return: for every $1 spent, recipients gain roughly $1 in income.

Given the costs associated with running a foundation, we want to aim higher and seek to fund interventions with the ambition and potential to deliver 5x or more—creating meaningful, lasting income gains at scale.

Why 5 years?

There are many pathways to the income gains we want to see. Some farmers can see improvements in their productivity in a season, while some entrepreneurs might take time to find their feet - and their customers. This is why we look at ROI across multiple years.

How we calculate ROI

Download our one pager on how we calculate ROI

We don’t expect all partners to have the same depth or quality of income data—our approach flexes based on each organization’s stage, team capacity, and data availability.
For earlier-stage organizations in our Lab portfolio for example, many partners may only have 1–2 years of post-program data, and in some cases, no baseline income data at all. In these cases, we’re comfortable making informed assumptions based on anecdotal insights.
When outcomes vary widely, we take a conservative approach—trimming outliers beyond 3 standard deviations from the mean. We then calculate both the median and mean income gains, and report the standard deviation to reflect the range of results.

When assessing program costs, we focus on the philanthropic subsidy—for nonprofits, this includes their full budget, while for hybrid or for-profit models, we separate out grants from investments in our calculation.
We measure cost per direct beneficiary only, as indirect beneficiaries typically experience different—and often lower—income impacts.
In addition to cost and reach, we consider leadership strength, growth potential, financial discipline, and qualitative insights into a partner’s impact.

Feel free to use this simplified version of our ROI Calculator to assess whether your intervention might be a fit for the Livelihood Impact Fund.

ROI Estimator

Aligning Our Data Expectations to Organizations' Maturity

We know what best practice looks like. But we also know that best practice is not possible for most organizations - particularly the early-stage partners in our Lab. We calibrate our expectations based on our prospective partners’ growth stage and hold different standards on income data for our two primary portfolios:

Impact Lab

Second Stage Funding

Our typical commitment: $150k/year for 3 years

Income outcome data

Baseline data preferred

Fund Portfolio

Growth / Mature Funding

Our typical commitment: $250-500k/year grants

Min. 2-4 studies from diff. geographies

Evidence vs. counterfactual preferred

Fund Portfolio

Big Bets / Scale Funding

Our typical commitment: $1M+ grants

Evidence vs. rigorous counterfactual

Evidence of durable income gains

What we look for in addition to ROI

Leadership
Growth potential
Program Model
Financial Accountability
Appropriate Systems