"GiveDirectly transfers about $1,000 to very poor families over the course a year. It makes no rules or even suggestions about how to use the cash.
Since launching in 2011, the group has distributed about $15 million to communities in Kenya and Uganda. These are not the poorest countries in the region. Rather, they are at the center of Africa's revolution in mobile banking, which is crucial to GiveDirectly's strategy. A person in sub-Saharan Africa is 60 times more likely to have a mobile financial account than a European.
Once GiveDirectly has selected a village based on publicly-available poverty data, it uses an ingeniously simple method to identify who will receive money: it enrolls households who live in homes built with thatched roofs and mud floors (as opposed to corrugated metal roofs or concrete floors). The use of organic materials is a reliable indicator of severe poverty -- easy for members of the community to understand, and for GiveDirectly's staff to audit, the group states.
The money is then delivered electronically. Recipients typically receive an SMS alert and then collect cash from a nearby mobile money agent. (If they are among a dwindling minority in Africa that doesn't have a mobile phone or SIM card, GiveDirectly helps them buy one using a portion of the cash transfer.)
Distributing the money electronically slashes costs and eliminates several prime opportunities for corruption (i.e., fewer middlemen to siphon off funds or ask for bribes). It is at the core of GiveDirectly's plans to scale its work to millions of poor people worldwide.
GiveDirectly is the first nonprofit to focus exclusively on cash transfers. It was founded by four graduate students at MIT and Harvard. Partly they were spurred by technological advances like mobile banking, which make distributing cash cheaper and more secure than ever. But in Cambridge, Massachusetts, they were also at the heart of a growing movement to put aid interventions to the test of actual science." (http://www.huffingtonpost.com/2015/06/04/givedirectly-cash-transfers_n_7339040.html)
"GiveDirectly had announced the first rigorous trial of its own program before the data were in, results be damned. Now the study was published and the conclusions were striking.
Investigators found that, one year after the transfer program, cash recipients had increased their earnings by 34 percent and their assets by 52 percent compared to people who didn't receive transfers (the new assets were most often livestock, household upgrades, and savings). Among cash recipients, the number of people who reported going to bed hungry dropped by 36 percent, and the number of days children went without food fell by 42 percent. Cash recipients had spent more on education, health, food, and social goods and activities (though after a year, health and education outcomes had not changed substantially). There was no increase in alcohol and tobacco spending." (http://www.huffingtonpost.com/2015/06/04/givedirectly-cash-transfers_n_7339040.html)
"A person whom Teresa had never met showed up at her home one day with a remarkable offer. Teresa and her family would receive what amounted to a year's income, in cash. Nothing was owed in return. She did not have to repay the money, and her family could spend it however they wished.
Teresa was at a loss. "We did not believe someone would give us that kind of money without having worked for it." But then the money came.
This scenario has played out thousands of times. The organization behind the money, GiveDirectly, is not broadly known. They have spent very little to market their work; their Facebook page has just over 7,000 likes.
Yet, dollar-for-dollar, analysts say GiveDirectly is among the most effective organizations in the world trying to eliminate extreme poverty. Some of its strongest champions are two of Facebook's co-founders. And in the spirit of Silicon Valley, GiveDirectly's work is data-driven and transparent in ways that are virtually unheard of in the aid world. For donors who want their giving based on evidence-backed results, few organizations compare." (http://www.huffingtonpost.com/2015/06/04/givedirectly-cash-transfers_n_7339040.html)
"Cash transfer programs have an extensive research record, including dozens of peer-reviewed studies spanning at least 13 countries in four continents. The UK's development agency calls cash transfers "one of the more thoroughly researched forms of development intervention"; a gold-standard charity evaluation group GiveWell (not affiliated with GiveDirectly) says transfers "have the strongest track record we've seen" for a non-health poverty program.
Longer-term research into anti-poverty interventions is rare, but it exists for cash transfers. A 2013 study in Uganda found that people who received cash enjoyed a 49 percent earnings boost after two years, and a 41 percent increase after four years, compared to people who hadn't gotten a transfer. Another study in Sri Lanka found rates of return averaging 80 percent after five years. In Uganda, not only were the cash recipients better off, but their number of hours worked and labor productivity actually increased.
Do many people just end up wasting their money on alcohol or smokes? Last year, the World Bank reviewed 19 studies of cash transfer programs and said the answer is no. “Almost without exception, studies find either no significant impact or a significant negative impact of transfers on expenditures on alcohol and tobacco," the report stated. "This result is consistent across the world."
Cash transfers aren't a silver bullet. One program gave $200 to at-risk Liberian men who were either homeless or who made their income from dealing drugs or stealing. The lead researcher, Chris Blattman, summarized the findings in an op-ed in The New York Times:
"Almost no men wasted [the money]. In the months after they got the cash, most dressed, ate and lived better. Unlike the Ugandans, however, whose new businesses kept growing, the Liberian men were back where they started a year later. Two hundred dollars was not enough to turn them into businessmen. But it brought them a better life for a while, which is the fundamental goal of any welfare program. We also tested a counseling program to reduce crime and violence. It worked a little on its own, but had the largest impact when combined with cash."
The positive impacts of cash transfers have been consistent and wide-ranging, from improved nutrition, healthier newborns and greater school participation to decreased HIV infection rates and psychological distress. As a result, according to a 2011 review by the UK’s development agency, global aid has undergone a “quiet revolution,” with developing countries launching transfer programs believed to reach between 750 million and one billion people." (http://www.huffingtonpost.com/2015/06/04/givedirectly-cash-transfers_n_7339040.html)