What if we could give directly to the poor and let them decide what they most need to spend the money on? GiveDirectly does just that. It is the only nonprofit that gives cash transfer directly to the poor.

The New York-based nonprofit was created in 2008 by President and Co-founder, Paul Niehaus with the belief that people should spend their money how they wish. Niehaus says, “no one person has the same goal or aspiration.”

How does it work? People donate money through the organization’s website and extremely poor people in Kenya and Uganda receive cash transfer through their mobile phones. The recipient does not even need a mobile phone, just a SIM card so that they can use it on someone else’s mobile phone and receive the money.

The results of this method have been the distribution of $1,000, roughly a year’s income, to thousands of extremely poor families in Kenya and Uganda. GiveDirectly’s method not only cuts costs but also gets rid of opportunities for corruption by eliminating the middleman.

GiveDirectly is leading the way in transparency and data-driven decision making by streaming in realtime, key performance metrics on its website. The organization has also done randomized controlled trials on their programs, just like pharmaceutical companies to evaluate drugs. These tests are not usually done by charities because of their cost, difficulty and time consumption, despite being the best method for determining if programs are actually working.

The results of GiveDirectly’s methodology speak for themselves. After one year of receiving transfers, families had increased their earnings by 34 percent and increase their assets by 52 percent. There was also a decrease in those going to bed hungry by 36 percent and a decrease in the number of days kids went without food by 42 percent.

People improved their living situations by investing in their homes, their livelihoods and their savings, not on more alcohol or tobacco.

As a result, more organizations are following suit. The U.N.’s World Food Program with annual funding of $4 billion was only spending $10 million of it on cash and voucher programs, in 2009. In 2014, the cash and voucher programs expense increased to $1.25 billion across 87 programs in 56 countries.

GiveDirectly can serve as a test lab for the improvement of large institutional cash programs. It is running tests that will give the recipients more control of when they receive their money and another test on possible suggestions of how recipients can best spend their money. It is also giving advice on using cash relief after natural disasters.

As a result of its incredible effectiveness, GiveDirectly is receiving a major donation from Facebook co-founder, Dustin Moskovitz and his wife Cari Tuna. They are donating a bulk of their wealth, $25 million through their foundation Good Ventures, which is more than GiveDirectly’s 2014 budget.

Moskovitz and Tuna want to do the most good possible and have supported exhaustive research to conclude which organizations are the most effective and cost-efficient. Tuna believes if GiveDirectly could have some influence on changing institutional spending from not so cost-effective programs to cash transfers, it would be a great feat.

– Paula Acevedo

Sources: GiveDirectly, Huffington Post, Reason.com

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