Conventional approaches to poverty assessment are dominated by narrow measures of current household income, expenditure and consumption. These methodologies fail to capture more complex, multi- dimensional and dynamic realities of chronic poverty, such as asset erosion and livelihood vulnerability. This paper proposes an alternative measure of severe poverty or destitution, defined in terms of subsistence needs, livelihood resources and dependence on transfers. Fieldwork from northern Ethiopia confirms the resonance of this holistic approach with local perceptions. Destitute households in Wollo face constrained access to land, labour, livestock, social networks and transfers, and are more vulnerable to erratic weather and other shocks. The crisis of livelihoods affects whole communities: better-off households are no longer able to assist the poorest, and the majority of households are themselves at risk of destitution. This paper concludes that a broad range of policy interventions is needed to address both the household and community levels of chronic poverty.