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IDEAS

Just give poor people money

The Nobel-winning World Food Program is one of many agencies increasingly handing out cash rather than goods. But the international aid system still isn’t putting this powerful idea to its full potential.

Heavy rains mixed with garbage swamped the Kibera slum in Kenya in March.
Heavy rains mixed with garbage swamped the Kibera slum in Kenya in March.Brian Inganga/Associated Press

When the United Nations World Food Program won the Nobel Peace Prize on Oct. 9, newspapers and television programs around the world illustrated their stories with quintessential images of food aid: Huge sacks of rice or flour, stacked high in a field tent or moving, bag by bag, atop someone’s head.

These days, those sacks are almost quaint. Last year, nearly 40 percent of World Food Program assistance wasn’t food at all. It was cold, hard cash.

In 2019, the WFP handed out more than $1.2 billion in cash and more than $860 million in vouchers to nearly 30 million people in 64 countries. And while the WFP is the biggest humanitarian player to use cash handouts, it’s hardly an outlier. What was once a fringe idea has moved to the humanitarian mainstream. Cash or vouchers now account for about one-fifth of all humanitarian aid.

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A decade of data shows that giving people cash instead of food or other in-kind aid empowers recipients, is harder to steal, and pumps money into local economies. In some settings, recipients’ assets, nutrition, and even survival outcomes increase. “There are lots of good reasons to deploy humanitarian cash transfers,” says Kenn Crossley, WFP’s global cash transfers coordinator, “but at the bottom line, cash can empower people to address their own priorities.”

In the last three years, humanitarian organizations have doubled their cash and voucher programs, giving out $5.6 billion last year, according to an annual survey by the Cash Learning Partnership, or CaLP, a network of 90 humanitarian groups around the world. “Fifteen years ago, we were five organizations trying this weird new thing: What if we just gave cash to people?” says Sophie Tholstrup, policy coordinator with CaLP.

What became apparent is that the recipients would prioritize their needs and spend money in ways that set themselves up for the long term. In the Democratic Republic of Congo, Tholstrup says, families might skip a meal in order to send a child to school. “It’s a terrible choice to have to be making, but families were able to choose, and it struck me that that’s where the decision-making power should be,” she says.

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Cash is also less prone to diversion or outright corruption. Cash distributions are often digital, and deposits are more discreet and more difficult for middlemen to steal. You can’t hold a village’s worth of mobile money deposits hostage at a rebel checkpoint. But even inside humanitarian aid groups, that part of the story hasn’t taken hold yet. More than one-third of the humanitarians CaLP surveyed last year think the risk of fraud or corruption is still too high, despite growing evidence to the contrary, Tholstrup says.

Indeed, irrational feelings about cash may have been the biggest obstacle to getting it in people’s hands. For decades, the assumption has been that poor people will make poor financial decisions. GiveDirectly, a pioneer in giving cash to impoverished families in East Africa, encounters the assumption so often that it keeps a disclaimer near the top of its “about” page: “No, people don’t just blow it on booze.”

In fact, a 2018 US Agency of International Development study of cash giving in nutrition programs in Rwanda, conducted in partnership with GiveDirectly and other assistance groups, found that households that got cash instead of standard aid packages saved 60 percent more, consumed 32 percent more, and expanded productive assets like livestock by 76 percent more. Cash recipients' diets improved, and so did their children’s height, weight, and chances of survival.

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“Cash has been robustly evaluated over 200 times at this point,” says Michael Faye, co-founder and president of GiveDirectly. “I think we often end up holding the poor, the recipients of aid, to a higher bar than we hold ourselves to, and that shows up when you hear the question, ‘Why cash?’ I think we should start with recipient empowerment and choice and ask, ‘Why not cash?’”

When the coronavirus pandemic hit, GiveDirectly expanded its efforts to collect individual and corporate donations and distribute them to people in need in places such as Rwanda, Uganda, Liberia, Malawi, and Kenya — lower-income countries where the economic fallout of the pandemic hits especially hard.

In Kenya, that money has made a big difference. GiveDirectly partnered with Shining Hope for Communities (SHOFCO), a community-based organization that works in 11 low-income neighborhoods. GiveDirectly provided cash — $30 once a month for three months — and SHOFCO identified families most in need. Nearly 35,000 families got a total of more than $2.4 million.

In the places SHOFCO works, which residents nonjudgmentally refer to as slums, even a small sum goes a long way. Kenya’s slums are also the economic engines of the country. They’re the places rural people settle when they look for low-wage work as minibus conductors, baggage handlers, newspaper hawkers, or busboys. Since the beginning of the pandemic, more than 90 percent of those workers have lost some of or all of their income. A mere $30 a month can keep the rent paid or an extended family fed.

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That, in turn, keeps a community alive. Every unrestricted dollar of direct giving creates $2 of value in local economies, according to several studies. There’s no comparable multiplier effect from handouts of food or other goods.

For Kennedy Odede, who grew up in Kibera, Kenya’s biggest slum, this is not just an abstraction. “I love numbers,” he says, “but I also believe the data you see with your eyes.” He’s seen people use cash grants to buy flour and onions and tomato paste from local vendors, who are often also their neighbors. Those vendors, in turn, feed and clothe families, including ones well beyond the edges of Kibera. “When there’s no money in the slum, there’s no money in the village,” Odede says.

SHOFCO is well known globally, thanks in part to Odede’s bestselling memoir, “Find Me Unafraid,” which he wrote with his partner, Jessica Posner. His renown and track record have helped him access more funding than many community-based organizations, and in the pandemic, Odede and his team have put those resources into overdrive. SHOFCO has given away more than 11 million gallons of water and nearly half a million bars of soap. It’s screened 1.8 million people for COVID symptoms at its community clinics and in door-to-door campaigns. It has set up 342 handwashing stations, which have been used more than 44 million times.

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And yet, when donors call on Odede, even with his track record, they aren’t offering to write him checks. Instead, they offer Odede more things — more hand sanitizer, more masks, more soap. Those things won’t go very far without manpower, which costs money. “We can’t just work on an itemized list of supplies,” he says. “This coronavirus is a war. And you’ll make sure I have hand sanitizer, but you don’t care if we have soldiers.”

The humanitarian cash “revolution” still has an Achilles heel. Although cash or vouchers now account for nearly 20 percent of the $29 billion given out in humanitarian aid each year, only one dollar out of a thousand is given to community-based organizations like SHOFCO. Outfits like GiveDirectly, which work with groups like SHOFCO to reach the right people, are small players. Many large donors are still withholding trust and money from local leaders and organizations that can identify and help the people who are most in need.

“At the moment,” says Tholstrup of the Cash Learning Partnership, “we’re still clinging to the way we used to do business.”

This article was updated on Oct. 18 to delete an incorrect quote from GiveDirectly’s website.

Jina Moore, a journalist based in East Africa, has written about health, human rights, and politics from more than 30 countries. Follow her on Twitter @itsjina.