Unconditional cash transfers directly to the poor
GiveDirectly is a four year-old nonprofit with a novel idea about how to distribute assistance to those in need – give them the money directly and thus, the power of choice. This organization literally takes money from donors and gives it unconditionally to the poor in Kenya and Uganda via mobile banking, no strings attached. The basic theory is that the recipients know their needs better than anyone else does.
Founded by four Harvard and MIT – trained economists, GiveDirectly bypasses the step of funneling money through a network of charities that take a portion for operating costs and impose their rules and regulations, by giving money directly to researched recipients. Recipient households receive roughly $1,000 which is one year’s budget.
GiveDirectly’s staff locate extreme poor communities in Kenya and Uganda. The field staff then goes door-to-door to collect data on poverty and enroll recipients. They make sure the recipients are eligible and look for any irregularities. $1,000 is transferred to each household via electronic payment systems. They contact each recipient to verify receipt of funds, detect any issues and set up follow up.
GiveDirectly does extensive research and evaluation into the impact of this approach to giving. They hire third-party researchers, fully independent and separately funded, to measure the impacts of the cash transfers. GiveDirectly reports all results of the evaluations. To date, the results have shown ‘large, positive and sustainable impacts across a wide range of outcomes including assets, earnings, food security, mental health and domestic violence.’
“Impacts of GiveDirectly’s transfers, after a year:
34% increase in earnings
52% increase in assets
42% reduction in days
children go without food
0% effect on alcohol
or tobacco spend”
(Haushofer and Shapiro, 2013)
This type of philanthropy is apparently the rage in Silicon Valley. It’s called “effective altruism” and is “a philosophy and social movement that applies evidence and reason to determine the most effective ways to improve the world.” Wikipedia
GiveDirectly has low overhead and 90% of funds donated go directly to the recipients. GiveWell, a nonprofit that analyzes charities makes this appraisal of GiveDirectly:
“GiveDirectly is one of our top-rated charities and an organization that we feel offers donors an outstanding opportunity to accomplish good with their donations.”
Having spent a majority of my adult life in the non-profit world, I love this innovative approach, but I think the jury is out on whether it will succeed in the long run. It is the recipients’ lack of access to guidance, skills development and education that concerns me for the long term. Ginny agrees and says “I wish they had designed it with an evaluation of public health and safety outcomes in the entire community. Fewer deaths? Fewer arrests? Lower infant and child mortality? These are communities in which women have traditionally been disempowered and are beasts of burden. I have a preference for the charities which give to women and change their status in their marriages and in their communities.”
Ginny and I both love the ideal of giving directly and feel that GiveDirectly certainly deserves to be followed closely.