As a donor and activist, I have tried for years to find organizations helping the poorest of the poor with proven, scalable models, but have often been disappointed. There is perhaps no field more complex than international development: ethical quandaries test idealism; aid strategies are proclaimed silver bullets and are then undermined by scrutiny; problems like gender inequality, government corruption, and lack of infrastructure can seem insurmountable.
In some cases, organization that seem to be doing great work on the surface are not significantly rigorous in evaluating their work, making it hard to know if they are having an impact. In other cases, high-performing groups are not able to scale their work to make an impact at a sufficiently meaningful scale. They have important, meaningful programs, but are not necessarily able to bring about transformative change.
But in the last few months, I have found a rare exception - an organization that is highly rigorous in assessing the impact of its work and, if adequately supported, could reach enormous scale very quickly. Today I am honored to join the board of GiveDirectly and to devote $100,000 this year to its inspiring work.
GiveDirectly's work is stunningly simple: accept donations from everyday people; identify impoverished households in Kenya; and then transfer money to household members' cell phones via text message using the mobile phone payment system M-Pesa. The recipients can spend the money in any way they like. That's right - the recipients can spend the money for any good without any oversight. GiveDirectly monitors the ways families use transfers and the efficacy of their choices, but it does not constrain their activity or impose conditions.
Unconditional cash transfers are not a GiveDirectly innovation - governments and large NGOs like Oxfam have used them for years, usually opting for conditional transfers in which recipients must take specific actions in order to "earn" the money. But GiveDirectly - founded in 2008 by Paul Niehaus, Michael Faye, Rohit Wanchoo, and Jeremy Shapiro - is the first nonprofit to be solely dedicating to using unconditional cash transfers for individual donations.
Because there are no extraneous steps - a feat made possible by M-Pesa's groundbreaking technology - at least $0.90 of every dollar donated to GiveDirectly goes to a family in Kenya.
What do the recipients spend money on? Fortunately, there is a large body of scientific evidence that answers this question: cash transfers are considered "one of the more thoroughly researched forms of development intervention" according to the Department for International Development. The evidence shows lasting positive changes in many different contexts: HIV incidence fell by half in Malawi; rate of return in Sri Lanka was over 50 percent; child labor hours fell 52 percent in South Africa; and incidence of low birth fell by 15 percent in Uruguay. Contrary to common belief, these studies have not found disproportionate increases in spending on alcohol or tobacco; in fact several have found significant decreases.
But are GiveDirectly's transfers also making people's lives better? To answer this question, GiveDirectly is running a random-controlled trial (RCT) in the field - considered the "gold standard" of evaluation. As GiveDirectly does this over the course of 2012, preliminary findings suggest that these transfers are working. Transfers are significantly increasing household investment in a wide range of tangible assets including land, livestock, agricultural inputs, and housing. Transfers are also significantly increasing both the quantity and quality of nutrition: 34% fewer households sent their children to bed without eating for a whole day in the past month. All of the families who have received funds say the transfers improved their lives.
GiveDirectly works tirelessly to set a standard for transparency in the non-profit field. The group publicizes a detailed breakdown of its allocation of resources. The most recent calculations show that 2.9% of funds go towards identifying and enrolling impoverished households, 1.5% pay for M-Pesa money transfers, and 0.2% cover follow-up with recipients, leaving an estimated 93.6% for Kenyan families. The nonprofit's website also contains an explanation of the criteria used to select households for participation, and the rationale behind them. The independent, nonprofit evaluator GiveWell has selected GiveDirectly as a "standout" organization" for its rigor in assessing the effectiveness of its work.
One simple idea cannot untangle the web of challenges facing any nation in the developing world. Cash transfers to households are not a panacea - they don't build roads, write constitutions, or stabilize markets. But they do provide a critical boost to the poorest of the poor and are an important development strategy. As GiveDirectly's work continues to scale, unconditional cash transfers should become a benchmark to measure the effectiveness of other important aid programs in field like education, healthcare, and infrastructure development.
Please join me in supporting GiveDirectly's work and make a donation of $25 as a vote of support for the important work they do.
- Chris
