When envisioning an image of impoverished people receiving cash from strangers passing by, the infamous picture of a homeless man with a sign saying “Needs money for booze and drugs” often comes to mind. While many people hold these negative assumptions of the extremely poor, this stereotype does not hold true in Africa. The charity GiveDirectly has been distributing money to “the poorest people they can find” in Africa, without conditions on how the recipients must spend the cash.
GiveDirectly finds the people it deems extremely poor by collecting images via satellite to determine who is surviving without basic necessities, such as those who are living in a house made of thatch instead of tin, and then transfers money to the person or family through a bank account linked mobile phone. The family then has access to $1,000 dollars to spend however they choose.
Intuition may warn organizations against such a strategy; however, a study by charity researchers reports that families spent the money responsibly. Rather than spend the money on alcohol and gambling, as many suspected, the impoverished people bought more nutritious and abundant amounts of food and invested in their children’s educations. Other families used the money to purchase livestock or start a new business.
Despite these positive consequences, the study also showed that health and education did not necessarily improve. Families were buying better foods, but still became sick as often as other people who didn’t receive the money. The researchers discovered this same trend with education; parents spent more money on schooling, but attendance rates for their children remained unaffected. These findings may lead to the conclusion that cash may not benefit poor families in the long term.
One of the founders of GiveDirectly, Paul Niehaus, does not agree. He points to a community in Uganda with many families who received cash from the foundation. In that area, the poverty level decreased and maintained that decrease for years. Although the absolute monetary benefits of giving no-strings-attached cash to poor families may require many more years of studying, one benefit of GiveDirectly is clear: positive mental health.
Families who received the money were less depressed and experienced less anxiety about finances. Although this may seem like an obvious result, researchers were surprised at the substantial improvements in mental health. Given the numerous perceptions of poor people and the notorious “booze and drugs” sign, many people may be astonished that any positive effects result from GiveDirectly at all. While this aid charity may or not be the best method to provide aid to the world’s poor, the fact remains that, given the opportunity, most impoverished people will try to improve their lives.