California-based charity GiveDirectly is using mobile money technology to transfer unconditional cash directly from donors to some of the poorest people in Kenya and Uganda. The process is quite simple: donors donate to GiveDirectly on their webpage; GiveDirectly locates poor households in Kenya and Uganda, registers recipients and transfers the cash to them through an electronic payment provider; recipients retrieve the money by visiting a local agent and then use the cash as they choose.
Unconditional cash transfer programs are often met with criticism because they are not seen as a long-term solution and are not as donor-friendly as structured development programs, since they will not necessarily achieve the specific impacts that donors desire. However, GiveDirectly’s work is based on the principal that the transfer recipients are more aware of what they need than international donors are. A 2011 review by the UK Department for International Development (DFID) says cash transfers are actually “one of the more thoroughly research forms of development intervention.”
Development programs often focus on the delivery of goods and services or on the provision of capital to poor households that is tied to certain conditions. These types of programs may be successful in achieving their intended goals, but they do not necessarily meet the most pressing needs of the individual. GiveDirectly’s unconditional cash transfers give money directly to the poor, allowing them to choose how it should be spent.
Through GiveDirectly’s model, 90% of donations go directly to recipients in Kenya, 87% in Uganda. In both countries transfer fees amount to 3% of donations, and enrollment and follow-up costs are 7% and 10%, respectively. GiveDirectly is unique in its ability to deliver such a high percentage of donor dollars directly to the beneficiaries. While many non-profit organizations claim that 90% of every dollar donated is spent on program activities, in reality, program activities include staff salaries, expensive consultants, field operations and local partners with their own administrative costs. GiveDirectly is very open about their expenditure. On their website you can find a detailed breakdown of their transfer costs for donations, as well as for their set-up and marketing costs, which are not supported by public donations.
GiveDirectly has a careful selection process for their recipients. They target the poorest villages in the regions with the highest level of poverty, and then use locally collected data as well as satellite imagery in order to identify the poorest households, namely those living in homes made of mud and grass. They collect mobile numbers for these families, providing a SIM and mobile when required. Once enrollment is complete, GiveDirectly holds a meeting with the community in order to explain how the program works.
GiveDirectly audits every single recipient, and the findings have been encouraging. GiveDirectly collaborated with Innovations for Poverty Action to conduct a randomized controlled trial on GiveDirectly’s work in Kenya. The study found that the transfers did not affect the level of crime and conflict and did not cause inflation of local prices. In fact, they found that rates of domestic violence against women not only fell in households that were transfer recipients, but in their neighbours’ households as well. Other positive findings include a 58% increase in assets, primarily through investment in livestock and home improvements; increase in business and agricultural income resulting in a 28% annual rate of return on transfers; increased expenditure in every category except for tobacco, alcohol and gambling; a 42% reduction in the number of days that children were going without food; and improvements in mental health due to large reductions in stress and depression.
The reduction in stress is partially linked to the unconditional nature of the transfer, which respects the recipient’s ability to know their own needs and the needs of their family the best, and to respond to their most pressing needs without limitation. Respect is one of GiveDirectly’s core values, and their standard of “empower[ing] the poor to set their own priorities” enables the transfer recipients to be dignified in their receipt of charity.
Many of the traditional charities have taken to using unconditional cash transfers in the last decade, including Oxfam and the British Red Cross. These organizations recognize the importance of flexibility for the recipients – who’s needs vary greatly from one household to the next. However, where GiveDirectly differs is in their ability to deliver such a high percentage of the donor’s dollar directly to the recipient. Paul Niehaus, co-founder of GiveDirectly, says they are ” the most stripped down, simplified model of giving help to poor people.”
GiveDirectly began work in Kenya in 2011, where money is transferred using the m-Pesa system, and expanded to Uganda in 2013, where they use Ezee Money and MTN Mobile Money. GiveWell recommended GiveDirectly as their second ranked charity in 2012, and kept them on their unranked list of the top three charities in 2013.
All contributions to GiveDirectly in December 2013 and January 2014 were matched by philanthropic foundation Good Ventures, generating a total of over $10 million dollars in those two months alone.
Read GiveWell’s full review of GiveDirectly here.