Giving Cash with No Strings Attached

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No strings

August 18, 2013;New York Times Magazine


The latest buzz in philanthropy is about giving money directly to the people who need it on the assumption that they will, in fact, know how it will be best used. We’d like to use this newswire to elicit your opinion about this conversation, even though we all realize this isn’t exactly a new thought.

The question of whether money is more useful when given directly or given through an intermediary who controls what it is used for has long historical roots. In the past, such controls have been used to determine worthy and unworthy recipients. In fact, NPQ has covered the fact that, in some areas, it is literally illegal to give money directly to a panhandler. The implication in the current discussion is that the involvement of intermediaries in international aid is, in many cases, unnecessary, wasteful, and somewhat disrespectful.

According to the website of GiveDirectly, a NYC-based nonprofit, the organization’s values include this statement: “Empower the poor to set their own priorities.” Michael Faye, a GiveDirectly cofounder, stated in a recent New York Times Magazine article, “Our work is an attempt to test one of the simplest ideas in economics—that people know what they need, and if they have money, they can buy it.”

GiveDirectly currently gives $1000, or approximately a year’s income for a family in rural Kenya, to “the poorest people in the village.” (Kenya was chosen for two factors: It is a poor country and it has a well-developed cell phone system that allows for sending money, eliminating the need for bank accounts.) Typically, GiveDirectly representatives would come to a village and enroll those residents from that village “who are eligible” and then move on to another village. However, when David Kestenbaum covered this program on NPR’s This American Life in a segment entitled, “I Was Just Trying to Help,” it was revealed that in the beginning, there were villages that refused the money, assuming that there would be an unknown but required payback. The money also created some tensions between neighbors who received money and those that didn’t. GiveDirectly is now trying a different method: giving money to everyone in the chosen village. Many local charities in Kenya are skeptical, believing that “handouts don’t work,” but also open to seeing if this program works.

Researchers are studying and contrasting the spending habits between the villages that receive money and the villages that don’t. Some initial results show that children were more likely to stay in school in the cash program villages. One example of success is that many villagers used the money to replace their thatched roofs with metal ones. Thatch roofs need constant patching, while metal roofs last for 10 years, so the metal roof is a good investment.

The final segment of the This American Life story focuses on how Google gave $2.4 million to GiveDirectly. After a presentation that focused on data, charts, and numbers, rather than pictures of smiling children, Google gave GiveDirectly the money and told them, “You’re thinking too small. Go figure out how to give money to lots more poor people.”

NPQ has covered GiveDirectly before, particularly earlier this spring. Since then, another worry about all of this has arisen, in that it does not necessarily address the idea of collective action, although there are discussions of collective impact. As philanthropy feels the impact of many diverse and seemingly contradictory trends including crowdfunding and strategic philanthropy, where might this conversation bring us all?—Jeanne Allen

  • Kelly Kleiman

    I discuss this on The Nonprofiteer,, including a question about the intellectual vitality of a professional community which finds it hard to believe that money is the answer to poverty:

  • KAL

    Having given money to poor family members in developing countries on a regular basis I can truly say that it has not been spent efficiently and effectively. Not that it hasn’t been spent for good things such as car repairs, food, etc, but my father-in-law wasted so much money on trying to repair an old car that couldn’t be fixed when he also had a new car that we bought for him and could have sold the old car for parts. If we could have helped him with the decision, we would have recommended to sell the old car for parts and save part of the money for repairs of the new car. Instead, we are responsible for repairs for the new car and he still has the old car taking up space so he needs to park the new car in a lot because if he leaves it outside his house it will and has been vandalized/tires have been taken. So although it was spent on good things, it could have been spent more strategically in order to implement long-term change rather than just taking care of the daily needs. Its easy for us in the United states to think that there is no money to save, but its actually more about inefficient spending and lack of overall ability to plan than not having any access to funds. Poor families in most countries can afford to save something even if its just 1 cent. That shift in mentality is important. Additionally, I think each poor family is unique and has unique challenges. Understanding the families personal goals is most important. For one family it may be to have a roof over their head for another the priority may be that their children attend school. Goal planning, financial planning and career planning with poor families needs to be part of the picture because there is a need to educate and instill confidence that their goals are possible and that there is a means to achieve them. While it’s great that one family got their roof repaired which is important, the problem is, they now have a roof, but need more cash from a donor to tackle the next project rather than having a goal, plan and ability to start to tackle projects independently with assistance along the way until independence is achieved. So for example, if this same family has a list of what they want to accomplish, what they need money for, how much they need to save for each project, what different members of the family can do to either further educate themselves or work then this family can more efficiently use aids from funds until they can become independent but in a more advanced place.

  • Charlie Bernstein

    When I was a kid, there were certain iron-clad rules my parents made sure we never forgot:

    – Never cross a picket line.
    – Don’t talk with your mouth full.
    – No ethnic slurs, ever, period.
    – Hats off in the house.
    – Don’t respond to chain letters or pyramid schemes.

    Those still seem like pretty good rules (though I’ve amended #1 to only mean workers’ and community organizations’ picket lines – I’m fine crossing a picket line at an abortion clinic).

    And here’s one I added myself as a grown-up: Only give money to people who ask.

    The tell-all-your-friends emails I get from places like MoveOn are chain mail and pyramid schemes and go right in the trash. If people want money from me, they have to ask me directly. If it’s someone I know, a hand-written note on an appeal letter is fine. Or an appeal followed by a phone caller who doesn’t get my name or giving history wrong.

    A gang email isn’t. I don’t feel “engaged” when I get a gang email from a nonprofit saying: “To find the rally nearest you, click here.” I feel like a commodity. I don’t feel “empowered” when I get an online petition to sign. I feel like the Left has reduced me to a voter file.

    What I feel is sad that there are thousands of people out there who have the nerve to call themselves organizers who have never knocked on a door, had a face-to-face organizational meeting with a stranger, called a bunch of people to get them to a meeting, or in any way put themselves out there personally to build trust and create and explore new public relationships – people who hide behind avatars and false names and expect me to believe in them. What I feel is that this is the real zombie apocalypse – soul-deadening electronic media mixed with soul-deadening prescription mood drugs – exactly the dystopian soma-and-large-screen-TV-addled present Ray Bradbury predicted for us years ago in Farenheit 441.

    What I feel is that we need to resolve to figure out how take public life back from the cult of narcissism that has decreed that our personal narratives are more meaningful than our collective lives and responsibilities, that canned messaging is preferable to human discourse, that political expression is about what you wear and what you watch on TV, not about what you actually do during the day – a culture where irony and snark are acceptable substitutes for listening and compassion.

    What I feel is that I’m going to turn off this computer right now.

  • Dan Pearson

    I work for an international NGO called CFCA, and our program approach emphasizes more individualized and direct forms of support to the families we serve. We base our approach on our evaluation, our experience working directly with families and on the available research from other organizations. The discussion about conditional cash transfer programs like GiveDirectly would benefit greatly from more careful consideration of the available facts and less ideological bias.

    The expanding media coverage of GiveDirectly and other cash transfer programs (CCTs) is an important test of the international development community’s commitment to evidence-based programs. GiveDirectly has not been in operation long enough to adequately measure its impact, but there is a large and growing body of evidence that CCTs have had a significant positive impact on people living in poverty in Mexico, South America, Central America, Africa, and South Asia. International development organizations have committed themselves to supporting programs that have a proven impact, but that resolve is tested when programs with proven impact clashes with an ideology. Will we favor evidence, or will we protect a bias against ‘handouts’? How strong is our commitment to empowerment if we ignore the growing evidence that families living in poverty may be more capable than development institutions to direct the funding that is intended to improve their lives?

    Conditional cash transfer programs are not a development panacea, and they will not work for everyone. But the approach seems to be working for many families, and it deserves to be considered on its own merits. As the evidence of the impact of CCTs grows, the question is not so much ‘Do they make a difference?’ The question is becoming ‘Will the international development community allow its ideology to be impacted by evidence?’

  • Ann Rosenfield

    This article raises 2 related, but not identical questions. In crowdfunding, a donor gives straight to the recipient individual in response to a plea for direct help. This is the electronic equivalent of giving directly to a homeless person.

    The GiveDirectly model appears to be the standard charity model where the charity serves as an intermediary between the donor and the recipient. The difference appears to be that cash is the most effective way of solving poverty while other international charities do othere things to lift folks out of poverty. The solution may vary but the approach is actually identical.

    The important question underlying this is whether poverty is a simple problem or a complex one. I’m glad to hear GiveDirectly is looking at efficacy research. We’ll find out what the data tells us soon enough.

    In the meantime, the other issue this article raises is that the donor public is increasingly interested in solutions-focused work with much clearer outcomes. As one of my MBA classmates once said to me “if you charities are so good at what you do, why are people still homeless? That is a great question and is one we, as a sector, need to be better able to answer.

  • Joanne Oppelt

    Somewhere someone at Give Directly is making the decision of who gets and who doesn’t. There are criteria: you have to live in Kenya and you have to live in one of the selected villages. I don’t much difference between that and other selection criteria, other than Give Directly has fewer and simpler restrictions.