The United States Agency for International Development (USAID)-funded Early Grade Reading Assessment (EGRA) program is an oral assessment designed to measure the most basic foundation skills for literacy acquisition in the early grades. EGRA's purpose is to document student performance on early grade reading skills in order to inform ministries and donors regarding system needs for improving instruction. In response to the findings, needs, and interest generated in reading and literacy issues by the EGRA program detailed in this report, USAID, under Educational Quality Improvement Program 1 (EQUIP1), commissioned the International Reading Association in cooperation with the American Institutes for Research to create a toolkit for education stakeholders to use to improve early grade reading and literacy indicators and programs in developing countries. This paper is intended for national policymakers and global education project developers and implementers as a guide to incorporating reading and literacy into new projects and developing effective early grades reading programs. It describes a principled approach to observing core dimensions of effective early grades reading programs, including active teaching and learning in supportive learning environments. Strategies and tools are provided to record evidence of first principles at work in local communities, schools, and classrooms. Appended are: (1) Conditions for Learning and Teaching; (2) Foundations of Early Grades Reading; (3) First Principles Self-Review Tool; and (4) Resources for Literacy Programs in Multilingual Environments. A glossary is included. (Contains 2 figures and 24 footnotes.)