GiveDirectly: What happens when we just give money to the poor?

When you first hear from an organization that’s asking for money to fight poverty, how do you respond? If you’re like me, it’s usually with a healthy dose of skepticism: how would my money be used?

Would it go to financing the nonprofit’s advertising costs, or administrative costs, or maybe even… to financing staff birthday parties?

The fact that there’s been some buzz recently about GiveDirectly—an organization that distributes donors’ cash gifts directly to people in need—is evidence that these questions have indeed been on a lot of people’s minds.

GiveDirectly’s answer is unusual: just give the money to people in need, and trust them to do something worthwhile with it.

GiveD

A Kenyan recipient of a GiveDirectly donation
(photo via GiveDirectly.org)

To be fair, the idea isn’t really new—governments and NGOs have been distributing money directly for years. What is new is that the development of phone-based banking has made it possible to send money from anywhere instantly and with fewer middlemen—a concept that could be attractive to donors who dislike the overhead of more traditional organizations.

GiveDirectly, founded in 2008 and recently featured on NPR, finds people living in extreme poverty in Kenya, and sends them the equivalent of up to 1,000 USD by phone. The recipients can spend the money however they like—no prescriptions, no strings attached.

How is this laissez-faire approach going over in the new era of accountability? First of all, it’s not quite as hands-off as it sounds. GiveDirectly has conducted follow-up interviews with some of its donation recipients to find out how they used the money.

Many said they used it for one-time items that would contribute to their future economic well-being, like money-saving home improvements or business startup costs. So there is some continuing relationship, and some results are being measured.

But effectiveness is as important to donors as accountability, if not more. GiveDirectly’s website cites nearly thirty academic studies on the effectiveness of direct giving which help to dash a common suspicion about the model: namely, that people will spend the cash on frivolous or even harmful things like alcohol or drugs.

These studies found no evidence of that.

Even so, not everyone is sold. Aside from potential misuse of the money, some fear that giving cash introduces a risk of dependency that doesn’t exist with other kinds of development assistance, like infrastructure improvements.

However, proponents of direct giving could argue in return that giving money is at least better than giving material goods, as the local economy is stimulated when people have more cash to spend (when goods are given, local merchants don’t stand to profit).

There’s another, less obvious benefit to going the direct-giving route: discovering how people choose to help themselves, given the resources, can provide great data to help NGOs better understand how to meet their community’s unique needs—instead of imposing what they or their or donors might think is needed—and to refocus their efforts in that direction.

For example, GiveDirectly’s data show that a vast majority of recipients spent the money they received on a new, durable metal roof to replace their old grass roof. They’ll save on maintenance costs for years, allowing them to put more money toward educating their families, starting or growing businesses, and general well-being.

Larger NGOs could now enter the picture to help many more people by replacing many more roofs. It’s possible to arrive at the same conclusion through surveys, analysis, or other means, but there’s an attractive elegance to inviting people to literally show potential supporters what kind of help they could really use.

What do you think of GiveDirectly’s approach? Do you believe the direct giving model could—or should—work on a larger scale? Share your thoughts in the comments.

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Comments (4)


  1. Emilie Ross writes:
    September 11, 2013 at 8:53 pm

    I heard about this on NPR a couple of days ago. Seems really intriguing. I mean, they want to empower people…this is one way to do it!


  2. Hannah writes:
    September 16, 2013 at 4:48 pm

    I love this idea. Or, at least, I’m intrigued by it, and want to follow the story of this model. This aligns with my worldview in that I don’t think of money as something that’s “mine” to give to someone else. Instead, I’ve often thought of money as a man-made tool that is meant to somehow represent some random distribution of the world’s resources, but those resources belong to all of us (and to future generations). So, rather than “give and take,” it feels more like “sharing.”

    Maybe that’s simplistic, but that’s how I tend to see things.


  3. Victoria writes:
    January 8, 2014 at 3:40 pm

    Elena, Coincido con algunos comentarios que leí. Me parece sumamente válido averiguar a qué organización le donaremos nuestro dinero, es decir, si es profesional y seria, si trabaja con el público y la temática que me preocupa, entre otros.
    Sin embargo, hacer una beneficencia directa para evitar esto, puede ser perjudicial y poco beneficioso en el largo plazo para el beneficiario.
    Los donantes debemos asesorarnos para confiar en la organización, y las organizaciones debemos ser los más transparentes posibles para generar esa confianza.

    Saludos y muy feliz 2014! Victoria


  4. Nick Hamilton writes:
    January 27, 2014 at 1:23 pm

    I like this idea as well. But how about this… to stimulate economic growth and the local economy, why not just “top up” the wages of a large group of those who are employed, in the public and private sectors. This could work better than spending money on ill advised programs of all sorts. This would work well for those as long as they are not working in the informal economy. Also it would not create so much of the dependency problems that may or may not be an actual problem, according to these studies.


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