Cash for the poor – neglected questions in the debate

The new nonprofit GiveDirectly has made a splash in the debate about how to help the poor – by simply giving cash with no conditions, they’ve thrown a gauntlet to traditional nonprofits. As proof that cash is the way of the future, many point to government programs in Mexico and Brazil, which have been great tools against poverty. The debate has been raging, and I find myself agreeing with both proponents and detractors on various levels. BUT.

What’s bothering me are two simple distinctions that I don’t see being made in this discussion. Two differences between the GiveDirectly model and the Mexico & Brazil CCT model. And neither begins with “C”.

First is the question: how are these gifts structured? GiveDirectly gives unconditional cash transfers, but from what I can tell they give one-time gifts. (Maybe I’m missing something obvious, but I haven’t found anything online and the reporters who’ve gone to Kenya to investigate have implied that it’s a one-time gift, and it sounds like GiveDirectly has no plans to maintain a relationship with the people who’ve already received their $1000. But the thing is with a one-time gift, people can’t plan for it. It’s like winning the lottery – great if you invest it wisely, but unpredictable and not promoting equitable opportunities. Looking at GiveDirectly’s model from the perspective of the people who receive the money, it’s random luck. Progressa (Mexico) and Bolsa Familia (Brazil) are government-run programs that give repeated, reliable and predictable gifts. This allows a family to include this in their regular planning.

Second is the question: who’s doing the giving? GiveDirectly is a foreign nonprofit, reliant on feelings of altruism (or guilt) of well-off people in wealthy countries, and of course on its own marketing. Because of this, it suffers from the same problem as the development world in general: that the people paying for the services are not part of the same society as the ones receiving them. The government-run programs, in theory at least, work within the bounds of the social contract. True, it assumes some degree of democratic process and true, those governments may be benefiting from aid as well. Ultimately, positive change must involve a relationship between a government and a citizenry – and not between a nonprofit and its individual donors – to be sustainable. Unlike many other nonprofits, GiveDirectly does nothing to promote the government-citizenry relationship.

Development should promote dignity and respect of people living in poverty. One-time gifts do not do this, because they aren’t predictable and don’t promote more equitable opportunities. Nor does development work that doesn’t reinforce local social contracts.

I’m not saying that GiveDirectly is bad – no doubt many of the families have better lives because of it. But the success of Progressa & Bolsa Familia doesn’t mean that every nonprofit should jump into cash transfers. If the folks at GiveDirectly think that they’ve got the best possible model, or that if their evaluation shows a positive impact then it’s proved that they do… well, you know the one about clubs and t-shirts.


About developingnathan
I am a reflective person. I am an introvert, a friend, a brother and a son. I appreciate a well-crafted glass of beer, piece of music and turn of phrase. I am a professional of international development, a good pianist and a Green Bay Packers fan.

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