The note looks at the role the Regional Initiatives Fund Project had in Bulgaria, which tested the social fund approach, as an institutional mechanisms to help the country protect incomes of the poor during the transition period. Its micro-projects component funded both, social infrastructure, and innovative micro-projects. The latter, the most innovative, explored different approaches to employment generation, aiming to create longer-term jobs, and, foster the reintegration of disadvantaged groups, back into society. Opportunities for income generation were established by enabling the development of a business environment, which would provide business services such as, training, advice, and marketing techniques. The project targeted ethnic minorities, socially marginal women, vulnerable youth, and disabled unemployed people as beneficiaries. Lessons outline the need to focus on a limited number of clearly defined, and easily monitored types of micro-projects for a successful outcome, and include as well, the need for community participation in the selection, and implementation process, embedded in the project cycle. Furthermore, project proposals should undergo a sustainability analysis, and specific measures to ensure satisfactory project results.