Cash transfers are one of the most thoroughly evaluated types of humanitarian aid that have been shown to effectively reach individuals and families in developing countries and can be provided with accountability. This form of aid has proven effective in reducing suffering by increasing limited household budgets and providing for basic needs.

According to a report by the Center for Global Development (CGD), cash transfers may come in the form of “an envelope of cash, a plastic card, or an electronic money transfer to a mobile phone, with which [recipients] can buy food, pay rent and purchase what they need locally.”

This report also suggests that these transfers should be complemented by services such as immunization and sanitation, where cash transfers may not be sufficient.

Other benefits through transfers include the transparency provided. They allow precise measurement of how much aid is arriving to the desired target population.

Receivers are granted the benefit of being able to choose what the aid is spent on. This decision making process further empowers communities and allows them to receive what they really need.

Despite the benefits, the CGD states that cash transfers are still often overlooked in favor of other forms of assistance. Today, cash payments make up only six percent of aid. Evidence from global crises, in Ethiopia, for instance, has proven that “cash was more effective than food aid by 25-30 percent,” says the CGD.

There are also challenges in the distribution of cash transfers. According to the World Bank, one challenge is ensuring that cash directly reaches needy recipients, avoiding corrupt processes and opportunistic elites.

Overall, cash transfers are practical. They can also reduce administration and operating costs. Respected nonprofits such as Give Well assert that unconditional cash transfers help the poor begin to create a better life on their own terms.

Giving the impoverished the freedom to utilize cash payments means they have the ability to meet individual needs and accelerate progress in their developing countries.

– Mayra Vega

Sources: Center For Global Development, World Bank, The New York Times
Photo: Flickr