Why not just give the poor cash? Rather than funnel the funds through a development organization, why not give it directly to the poor themselves? GiveDirectly, a U.S. based nonprofit operating in Kenya, asked just that question and couldn’t come up with a reason why not. Solid evidence shows that rural and poor individuals use the money wisely. Many of the world’s poor are not irresponsible; they were born in circumstances that complicated their economic condition. Thus evidence shows when they are given money they use it in positive ways.
Google and Facebook reviewed the research backing GiveDirectly and decided the idea was worth taking a second look. Facebook co-founder Chris Hughes and a host of venture capitalists and tech entrepreneurs gathered over wine and conversation for an introduction to GiveDirectly. Hughes was frustrated with nonprofits after a venture of his failed to gain traction and found GiveDirectly excited him and got him interested again in humanitarian issues. Rather than funding major projects, GiveDirectly focuses on giving donated funds directly to poor individuals.
Research shows it can be effective and Hughes joined the board in addition to providing monetary support for the organization. Partnering with Hughes was Jacquelline Fuller, Director of Giving at Google. After an initial air of skepticism among Google superiors, Fuller was able to convince them that Google should support GiveDirectly. Hard data on how recipients used the cash to improve nutrition, health, and their children’s education worked to convince Google superiors of the positive effects GiveDirectly is having in Kenya. Google donated $2.5 million to the cause.
The idea for GiveDirectly came from Paul Niehaus, an assistant professor of economics at UC San Diego, who originally came up with the idea of transferring money to individual’s cell phones. In 2008, he was working with the government to reduce corruption and saw transferring money directly to cell phones as one way to do that. GiveDirectly has significant impacts on nutrition, education, land, and livestock.
The organization finds poor households, typically people who live in mud huts with thatched roofs, and transfer money to their phones using a system called M-Pesa. The transaction costs a mere 3 cents per donated dollar. Many of the recipients use the money to upgrade to metal roofs. GiveDirectly admits that giving cash is not the solution for ending poverty, but it does provide an ability to meet immediate needs and ensure money gets to the people who need it the most.
– Amanda Kloeppel