Dughia village is idyllic, but the lives of many of the women who spend their days among its mango orchards, duck ponds and brilliant green paddy fields are anything but. For them, the beauty of the village has been a backdrop to decades of suffering.

They fight back tears to explain how they are lucky to eat once a day and cannot even afford blouses to wear under their tattered saris. All are illiterate, and several have been parted from their children – who have died, gone to faraway cities or been taken in by other families when the cost of raising them at home proved too much.

“I don’t want to think about my life. It’s a very hard story – even listening to it will make you cry,” says Lalita, who spent 16 years separated from her children, doing back-breaking manual labour to pay off £400 in loans. “My husband got sick, and when he died I was drowning in debt, so I went away to look for work.” Although she travelled barely 100km, wages were so meagre she couldn’t afford to return home for more than a decade, and when she did her son and daughter were strangers.

Yet, says aid worker Sagarika Indu, in two years’ time the ageing widow and a handful of other women gathered around her, also living without hope or self-confidence, will probably be secure. They will have modest savings, valuable assets in the form of a cow and some chickens, and be respected by fellow villagers, perhaps courted by the relatives who once cast them aside as paupers.

Indu is confident about this extraordinary transformation because she will be its agent, as head of a rigorously tested project that she has personally seen change thousands of lives. “In Bangladesh we reach 90,000 families a year,” she says of the scheme, which was created more than a decade ago by huge national aid organisation Brac, Indu’s employer. It has also now been exported to 10 other countries.

It is often described as a “poverty graduation” scheme, because it offers not just a financial lifeline out of destitution, but education in the confidence and skills to maintain newfound prosperity, from basic literacy to animal care.

After two years, the “graduates” can support themselves and their families without further aid, and the team that assisted them can move on to helping others. In Bangladesh alone more than 1.7m households have been transformed.

Supporting people to move out of extreme poverty long-term, rather than just providing food, medicine or cash as temporary relief, is a notoriously stubborn challenge, so the “poverty graduation” model has been analysed extensively by academics from the London School of Economics, Yale and other leading universities. They have confirmed that a one-off intervention can permanently end the most crippling destitution, with benefits that multiply over time – making it a kind of holy grail of aid projects.

“The [Targeting Ultra Poverty, or TUP] programme sets beneficiaries on a sustainable path out of poverty,” say the authors of the LSE report, which included seven-year follow-up checks on women once enrolled in the programme. They looked at projects around the world to evaluate whether the model thrived beyond Bangladesh, where Brac can tap into a strong network of services and staff to support the scheme, and found it was still effective in most places.

Charities and governments are often now as keen as bankers to see “return on investment”, although their goal is better lives rather than more profits, and so they are inspired by the experience of women like Rezia Begum, whose village is a short drive from Dughia. The 35-year-old mother of six lost her parents at eight, and went hungry and homeless for nearly two decades, until she enrolled in the “poverty graduation” programme.

“I would see people feeding their children bananas, good food, but never taste it. They would just shout at me to stop staring,” she remembers.

Married by the Karli village community at around 13 to stop her “floating around”, she hoped that would bring an end to destitution – but her husband was equally poor. “I was half naked when Brac arrived, I didn’t even have clothes. I would beg people for cast-off saris,” she remembers.

Today she is relaxed and confident, an owner of land and livestock. All her younger children are in school, her elder son is married, and she is a dispenser of charity rather than a recipient. “People invite me to their weddings so I can give gifts,” she says.

Women move possessions from their homes, under threat of flooding, in Kalashuna village, Gaibandha district, September 2014. Photograph: Allison Joyce/Getty Images

The other five women who graduated with her, and are gathered a decade later on a village porch, have also been transformed. Not all have done as well as Begum, but they are independent and financially confident.

Bangladesh has a track record of producing radical ideas to tackle poverty. Its Grameen Bank invented and pioneered micro-credit loans to give the poorest people in society the chance to transform their lives by borrowing money.

The team at Brac, who have seen the experience of Karli village repeated tens of thousands of times, believe the “poverty graduation” model is one of the most important innovations since then, rigorously tested and tackling one of the most stubborn problems in development.

“It seems to be a good answer to the problem of the ultra-poor,” says Brac’s vice-chair, Mushtaque Chowdhury. A professor at Columbia University’s school of public health, he pioneered the in-house research and evaluation team that allowed Brac to tweak initial versions of the programme and provide the first rigorous evaluations of its success.

He believes the model will be key to the goal of ending the most extreme deprivation within a decade. “I know no other programme that has been followed up for so long, no other trajectory so consistent – not only providing income and occupational changes, but also other benefits, in terms of nutrition and a wider sustained impact, particularly on children.”

Despite the rollout around the world, from Latin America to Africa, and the academic confirmation that the model works, it has not met with universal acclaim, partly because it is relatively expensive. It provides women with livestock and gives intensive support on caring for themselves, their families and their animals. The regular meetings with a mentor over two years, and the initial gift, together cost hundreds of dollars per family.

The Copenhagen Consensus Center thinktank put “graduation” schemes halfway down a list of poverty-reduction projects ranked by their value for money, after commissioning research on the most cost-effective ways to end poverty from Brac itself.

Near the top of the list was digital access, shifting to e-procurement and digitising land records, to cut down on corruption, which should bring more than $600 (£470) in rewards for each $1 (80p) spent. By comparison, the graduation model offers a $2 return for each one paid out, the economists decided.

But supporters of the programme point out that those returns are virtually guaranteed. By contrast, the possible benefits of putting more government functions online were extrapolated from a tiny local project.

“[The graduation model] comes out comparatively badly, with returns of two to one – but at least the benefits are certain. For other projects the evidence is weaker,” the Economist magazine conceded.

Supporters of the project also point out that it is unusual because of the people it targets, the most deprived and very hardest to reach, whose lives are often too precarious to take advantage of opportunities opened up by mainstream aid projects in areas such as education and healthcare.

“There is a growing realisation that the poorest may be being bypassed both by economic growth and by current anti-poverty programmes,” found the LSE report, published in July.

Children cannot learn if they are not in school; public hospitals only help those able to reach a doctor or who know that care will be free. Even microfinance projects that have made loans available to millions are out of reach for the very poorest.

“They focused on the economic return, not the confidence improved, the social acceptance, the knowledge improved,” says Indu. The economists also missed how even marginal economic improvement in dollar terms can completely transform the life of the poorest. “Most couldn’t eat more than once a day. Now they eat at least two meals, and better food,” she says.

The graduation project works because it tackles poverty and social confidence at the same time. Women get an asset – some form of livestock – but also have demands placed on them, and regular mentoring on everything from basic literacy and caring for their animals to visiting government clinics and how to get a micro-loan.

Their children must go to school, they must save, even if it is just a few pennies a month, and they must set aside time to look after their animals, in return for a tiny stipend to cover basic food costs.

A community council helps to rate the village families and choose the most destitute, to avoid corruption and resentment, and protects them as the project gets under way.

“It has actually helped the whole village – every single child here now goes to school,” says Nasammat Salema Khatun, a local politician who organised the selection. “Ten years ago only perhaps 20 of 100 children in Karli were at school, and the scenario was even worse for the girls.”

She had to broker some disputes, but most neighbours were happy to see people who had gone hungry able to feed themselves. The biggest problem was a husband with a gambling problem who stole his own family’s cow, hiding it in the house of a conniving neighbour in the middle of the night. He planned to sell it once the search had died down, but the committee found the animal.

“We brought the cow and the husband here, and said to him: ‘If this cow is not safe, we will call [the] police and arrest you as a thief’,” Khatun says with a grin. “That lesson helped.”