Give to the Poor----Directly (and don’t ask what they did with the money!)

October 31, 2014

 

I have joined some of my allies of social impact in various fields in becoming wonderfully attentive to the practice of direct cash transfers to individuals and families in poverty.  The last time when I was rather pensive of direct cash transfers was exchanging brief thoughts with my colleague Randy Osum at The Source.  For those receiving this blog out-of-town/state, on the coasts, down south or abroad here is some information about The Source (http://grsource.org/)

 

Back to direct cash transfers.  The philosophy and practice of transferring cash directly to those in poverty has been making its point and purpose almost exclusively in “developing countries” from what I have witnessed in my fledging observations.  NOTE:  As society has moved from the ‘First World/Third World’ terms it is my hope that we have a better and non-Westernized term other than “developing countries.”  For now......

 

Cash Transfers. Conditional Cash Transfers (CCT). Social Cash Transfers.  And the most disruptive in change and courage—Unconditional Cash Transfers.  There are slightly different practices in process and approach among these versions of cash transfers to those in poverty.  Nevertheless, it is the unified goal of donors/investors to give money to the poor directly while mostly or exclusively bypassing Non-Governmental Organizations (NGO’s) that would normally provide services to poor populations via receipt and administration of funds.

 

What the varying methods share in common is that they grant money to the poor through basic technologies (phones for the most part).  Those individual recipients will decide what they will do with the money.  In the example of CCT, a donor, charity or agency will transfer the money to people meeting certain criteria such as the need and stated uses of healthcare, enrolling children in school and other needs.

 

Unconditional Cash Transfers----which I am really finding interest in----is simply the same premise of giving direct cash transfers to the poor to reduce poverty but without any conditions on what the recipient must do with the money.  Reading several reviews of the book that I will soon have, “Just Give Money to the Poor,” cash transfers have been utilized effectively by those in poverty.  Many agree with authors Joseph Hanlon, Armando Barrientos and David Hulme that direct cash transfers to households have been central to some poverty reduction along with other factors, policies and programs.  The jury seems to give insight into its open deliberations.  The jury is not out but they are gravitating to the view that poor families have been very capable of using such money properly. 

 

GiveDirectly:

 

One person who would agree is Paul Niehaus, one of the founders of GiveDirectly.  He has given $40,000 of his own cash as well as time and talent to this organization. As their site

 

site shows at www.givedirectly.org they are a non-profit created by donors "focused exclusively on giving to the poorest possible households at the lowest possible cost."

 

GiveDirectly literally gives funds directly and unconditionally to poor villagers in Kenya through a technology called M-Pesa.  M-Pesa allows people to send and receive money via cell phones.  The added benefit is that it helps those who have no access to regular banks.  The money moves at a Matrix-like way around and through NGO administration, fees and bureaucratic trappings as 90% of each donated dollar reaches the recipient!

 

The philosophy, practice and process is not charitable because the transfers do not predetermine or presuppose the needs or uses.  With a great and fresh blast of empowerment it leaves such determinations up to the recipient.  You, me, Mr. Niehaus and other on-the-ground observers at areas in Kenya could guess what villagers would do with funds for purchases.  So far residents are making certain purchases for things like food, clothes, livestock and other provisions such as the aforementioned necessities at my introduction.  However, there is one study that I reviewed reporting how people are using the cash transfers for major infrastructure needs such as roof repair and other infrastructure type essentials.

 

My observations and thoughts:

 

I like this effort a lot and may start to learn about application upon completing the book.  The element of empowerment, self-governance and breaking down assumptions of what those in poverty can—and will—do with money is just too great to forget about.  It puts into practice what many of us know:  All poverty is not attributed to bad decisions or behavior.  Rather, the issue is often of scarcity in resources and money (I know those of affluence who make bad decisions with money). 

 

Second, the use of technology is exciting---phones in this case---to both deliver cash and address the systemic barrier that many people in developing countries face having no financial services institutions.  Lastly, I am intrigued with the trusting donors along with equipped recipients of the cash. Is the use making impact in systemic and structural poverty?  No, but researchers cite that there is repeated efficiency, change and day-to-day impact of cash transfers (both conditional and unconditional).  Funds given in large scale directly to those in poverty have been used by recipients in Central America, Mexico and areas in Africa for effective, reasonable and necessity-oriented uses such as sending kids to school, home repair, starting businesses and other uses. 

 

From what has been observed and reviewed I believe that I will read about how the transfers have not only yielded good use of funds but also made some short-term reductions in poverty.  I cannot wait to see if there is documented social/human development that recipients experience such as long-term use and administration/investment of money, sense of empowerment and other personal development measurements.

 

International---for how long?:

 

Why don’t we have such swashbuckling attempts of this type of practice here in the United States whether it is conditional or unconditional cash transfer?  Opportunity NYC: Family Rewards is the first noteworthy CCT from what I have reviewed. Would you not agree with me that a pilot (or two, three, four, five..) should and could be a focus in challenged cities and areas from Appalachia to Atlanta, and beyond? 

 

Without going into philosophical, political and power reasons (next time) as to why it is not a particular practice here, I would imagine that the founders and investors of direct cash transfers have eyes on developing countries because of the scale of poverty.  We know that in the context of extreme poverty, the most significant portions of the population living on less than $1 a day is most widespread in Sub-Saharan Africa and South Asia----making up 40 % of the population living on less than $365 amid a daily reality where food, shelter and other necessities are critical and scarce. Those donors put on the straight economics view as those types of circumstances are absolute poverty as opposed to relative poverty.  Better there than here for now is probably their view.

 

Interest continues:

 

As I take the small bit of free time of fall days amid a boring college football game or Saturday winter days reading the book, I will think about these questions and thoughts about cash transfers here:

 

 

1.  What are the standard social, participatory and financial needs/criteria to determine the recipient?  Whether it is conditional or unconditional transfer, what does fair targeting of a recipient or recipient areas look like? 

 

2.  How is standard quality control and effective use measured?  Site visits? Interviews with recipients? Or in the case of unconditional transfers would the donor/investor even have an expectation of seeing reports, measurements and evaluations that many of us in social impact work adhere to?

 

3.  Where do our policy-makers and businesses fit in regarding other actions that must be done in combatting inflation and poverty such as targeted efforts on wage increases and prices of goods that would maximize the dollar being transferred?

 

4.  What is the role (or no role) of banks and government to ensure that the transfers to those in poverty keeps to the outcome 90% of each donated dollar reaching the recipient?

 

 

Much to think about just as there has been much given away.  To those in poverty.  Directly.

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