Good news Friday presents… A NEW WAY OF GIVING!

Article Analysis Kenny, C. (2015, September 25). Give Poor People Cash: There’s a simple way to reform welfare – send money to those who need it, without conditions. The Atlantic. Retrieved from https://www.theatlantic.com/international/archive/2 015/09/welfare-reform-direct-cash-poor/407236/

Traditional ways of giving are complex Donors give to international NGOs NGOs manage $$$, fundraise, and implement programs through partner organizations abroad which have their own (usually hidden) costs. In this model, it is hard for donors to tell how their money will be used, what this will cost, and whether there is any evidence that it works.

A simpler way to give Send money to those who need it, without conditions Money goes straight from donors to the poor. Sent through mobile transfers which have become drastically cheaper.

DISCUSSION: Why do people GIVE TO CHARITIES and ORGANIZATIONS that help people in need rather than GIVE TO THE PEOPLE in need directly? Why don’t people give to poor people directly?

Where is this direct giving taking place?

ARGUMENTS FOR direct giving… Evidence shows how this can have a powerful effects on their lives. Examples from around the world suggest there giving directly to the poor can help lift people up and out of poverty: Give poor people cash without conditions attached, and it turns out they use it to buy goods and services that improve their lives and increase their future earnings potential. Complex systems of welfare support are expensive to run: E.g. The Indian government, has estimated that 2/5 of the kerosene involved in its subsidy scheme (used by poor families as a fuel) goes missing before it is distributed and only half of what is left flows to the poorest families (therefore 1.5/5 reaches those in need). In Mexico, where food subsidies were replaced by cash transfers to families in need because giving food costs more in delivery than distributing cash. It was found, that at less cost to the government, cash programs led to the same health outcomes as food- based programs, but also provided additional resources for recipients to spend on schooling, medicine, and transport.

Case study: GiveDirectly A charity that transfers cash from rich people in the West directly to poor people in Africa using mobile-phone payments. E.g. In Kenya, one-off, unconditional payments were given to families that ranged from $404 to $1,520. $400 was more than twice the average local monthly household spending. In relative terms, it would be the equivalent of handing approximately $12,000 to a household in the Canada. As long as 14 months after the transfer, survey evidence suggested that households were still spending more on food, health, and education than non-recipients. One reason why is that they had invested in physical goods (e.g. metal roofs to replace straw shelters and in livestock to provide milk and meat. That translated into rising incomes from farming and enterprises in the short term, and—thanks to higher spending on nutrition, health care, and education—the hope for greater earnings potential in the long term as well.