How is the transfer made?
We send transfers using cutting-edge electronic payments services.
In Kenya, we use M-Pesa, a mobile money transfer service
operated by Safaricom, which is a Kenyan mobile telephone
operator managed by Vodafone Group Plc.
In Uganda, we use MTN's Mobile Money system and Ezee
Money. MTN is the leading telecommunications company in
Uganda. EzeeMoney is a multi-national company offering
mobile financial services to individuals and businesses.
There are four steps linking your donation to a household:
- You make a donation to GiveDirectly, which is deposited in our US bank
- These funds are then sent to GiveDirectly's
overseas bank account via wire transfer. This account is
linked with our account at the electronic payment
- From that account, GiveDirectly sends electronic
money to households whom our field team has
enrolled in the program.
- Recipients receive text messages informing them of
the transfers. They can then exchange their "mobile
money" for cash anywhere via the payment
provider's agent network.
Agents are often local shopkeepers, but others are petrol
stations, supermarkets, courier companies, cyber cafes,
retail outlets, and even banks. An important feature of this
system is that individuals can receive transfers even if they
do not own a phone themselves; the agent simply loads the
recipient's SIM card into one of their own phones.
How much does the transfer cost?
There are two costs of sending money to enrolled
households: foreign exchange costs and electronic
payment tariffs. Our costs of exchanging dollars for Kenyan
and Ugandan shillings in FY13 averaged 1.8% and 0.9%,
respectively. Total M-Pesa, MTN, and EzeeMoney tariffs
amount to 1.6%, 1.7%, and 1.7% of the amount transferred,
respectively. See our financials page
information on our cost structure.
How much time does it take to collect the transfer?
Withdrawing money from an electronic account is fast and
simple; the whole process takes less than a minute. The
major time cost involved in collecting a transfer is reaching
an agent. To minimize this cost we take into account the
presence of a mobile money agent in selecting villages to
work in. To date, mean self-reported round-trip travel time
for our recipients is 51 minutes and the mean monetary cost
of these trips is $2.07.
How does GiveDirectly prevent corruption in making transfers?
We use a rigorous audit process. 100% of the households we enroll are audited
by a second field team that operates completely independently from the
team responsible for enrollment. Senior staff audit a smaller proportion of
recipients. We also call our recipients after sending them money to learn more
about their experiences. To date, 1% of recipients called report paying a bribe
to a village official, and less than 1% report paying a bribe to a mobile money
How much do recipients get?
We send each recipient household a total of $1,000 over one to two years, or $200 per household member for the average household. Our analysis suggests that this amount is fair, well-understood, and potentially transformative.
- Fair. We set transfer sizes by calculating how much the average recipient household would need to invest in order to raise its income to the level of its least-well-off but ineligible neighbors.
- Well-understood. Our transfer policy is also in line with other long-term cash transfer programs that have a substantial track record and have been extensively researched.
- Potentially transformative. Invested at a 25% rate of return, our transfers are enough to permanently increase the annual consumption of the average recipient by $0.14 per day, a 22% increase over estimated baseline consumption. To get a sense of what this means in the real world, here are examples of things our transfers could cover:
- 5.5 years of secondary schooling
- 5.2 years of basic food requirements for one adult
- 1.2 acres of land
- Tin roofs for 4 houses
Do recipients know what to expect?
Yes; we tell recipients what they should expect to receive and when during the enrollment process.
We are currently experimenting with different payment schedules, including monthly payments and larger one-time
transfers, as part of our ongoing evaluation. We will collect information on how each form of transfer is used and
which form recipients prefer, which will give us better perspective on what payment schedule to use. In all cases,
whether monthly or single transfers, recipients are told upfront when they should expect transfers.
How do you decide whom to help?
GiveDirectly uses objective criteria to determine which households are
eligible for transfers. Our standard approach is to target households which do
not have permanent (cement or iron) walls, floors, or roofs in their houses. We
use these particular criteria because they are highly correlated with extreme
poverty in survey data and because they are transparent and easy to verify.
This makes it straightforward to explain to a community why some households
will receive transfers and others will not. In fact, community focus groups
have independently recommended the same criteria to us. It also enables us to
hold our field teams accountable to an objective standard.
In 2013 we experimented with a new approach where we select extremely poor
villages and enroll approximately 90% of households in the village (excluding
only those living in the best homes). We are collecting data to understand
whether this approach increases the community's perception of fairness and
whether we should continue to use this approach going forward.
Does GiveDirectly exclude people who don't have cell phones?
No. In Kenya, we give households that do not own phones a SIM
card to register, which is enough to collect payments. In Uganda,
households can use EzeeMoney's services completely independently
of a mobile phone. In both cases we also give households the option
of purchasing a phone from us at bulk rates in order to make
Can I choose to whom I send my money?
No. Because we are a charitable organization and not a money delivery service, we do not let donors choose a specific recipient. This helps ensure an equitable distribution of money throughout communities of need. In the future we may provide an option to give to particular groups, such as households affected by malaria.
Do you give money to men, women, or both?
We give money to both men and women. IPA's evaluation of our work included an
experimental comparison of transfers to men and women and found that they used
money differently but responsible in both cases. Given these data we now allow
households to choose which member to enroll based on convenience or preference.
For example, a couple may decide to enroll whomever has an official ID needed
to open an electronic money account. Slightly more than half of recipients to
date are women.
Why do you operate in Kenya and Uganda?
Both Kenya and Uganda provide a unique opportunity to
reach large populations below the poverty line through
cheap, secure mobile payment systems. We began in
Kenya due to the robustness of the dominant mobile
banking provider, M-Pesa. Recognizing that Kenya is
unique in this regard, we expanded to Uganda to test our
platform in a less mature mobile money landscape.
How do recipients use the transfers?
An important feature of cash transfers is that households can use the money
for whatever is most important to them. IPA's evaluation of our transfers in
Kenya found increases in expenditure across all categories measured, including
food, medical and education expenses, durables, home improvement, and social
events. It also found large increases in income and in asset holdings, in
particular livestock, furniture, and iron roofs. Besides our own follow-up
interviews, there is a substantial body of research that documents the impacts
of cash transfers on low-income households. See our summary of the evidence on cash transfers for more
Do recipients spend a lot of the money on alcohol or tobacco?
IPA's evaluation of our work in Kenya found no increase in expenditure on
tobacco, alcohol, or gambling. This is consistent with a substantial body of
research on the effects of cash transfers (see our
for specific references),
which has found either no effect on the consumption of "temptation goods" like
alcohol and tobacco or an increase proportional to the increase on other
Why not put conditions on how people use the money or what they have to do to get it?
GiveDirectly intentionally provides unconditional, rather than conditional, cash transfers. We do this for three reasons. First, empowering the poor to make their own decisions advances our core value of respect. Second, it lets recipients purchase the things they need most, enhancing impact. Third, imposing conditions on the use of funds requires that costly monitoring and enforcement structures be put in place. One detailed estimate put the administrative costs of a conditional cash transfer scheme at 63% of the transfers made over the first three years of the program (Caldes & Maluccio 2005
Caldes, Natalia and John Maluccio. "The Costs of Conditional Cash Transfers." Journal of International Development 17 pp. 151-168, 2005.
Is giving cash sustainable?
Usually when the word "sustainable" is applied to charity, it means that a gift "keeps on giving" and that donors need not continue to make gifts to the same recipient. Since many GiveDirectly grant recipients use some or all of the money to invest in small enterprises, many of GiveDirectly's grants are "sustainable." Indeed, one study of unconditional cash transfers in Mexico found that that household incomes increased by between 1.5 and 2.6 times the amount of the transfers due to the returns from increased investment (Sadoulet et al 2001
), suggesting that cash transfers are more than sustainable. Beyond short run income changes, investments in adequate food, proper clothing, better health, or more education for children may be "sustainable" in the long run; even though it will require charity until that child is done with school, he or she will grow up much better off and needing much less assistance than his or her parents.
Not all recipients will invest the money, however, and it will be gone once it is spent. Donors who prefer to give a gift that is guaranteed to be sustainable in the sense that it will provide a steady income stream to the poor can do so simply; an easy option is for the donor to invest a gift themselves and donate the annual interest, effectively creating an endowment.
Sadoulet, Elisabeth and Alain de Janvry and Benjamin Davis. "Cash Transfer Programs with Income Multipliers: PROCAMPO in Mexico." World Development 29 (6) pp. 1043-1056, 2001.
Why not make micro-loans?
While we believe micro-loans may be helpful in lifting households out of poverty, there is currently no convincing evidence to support this claim
. In contrast, there is a wealth of evidence on the positive impacts of cash transfers
One potential reason for the lack of proven impact of micro-loans is the high rates of interest (up to even 100% per year) charged on micro-loans due to the costs of administering and monitoring many small loans (Fernando 2006). These high interest rates limit the benefit to the household of obtaining a sum of money to spend or invest. Also, the term structure of micro loans, which requires that borrowers begin making repayments as soon as one week later, may induce households to invest loans in activities that generate income relatively quickly, such as a small vending enterprise, rather than long-term investments, such as in their health or the education of children. Our goal is to provide the flexibility to make longer-term investments.
Finally, the poorest households often cannot afford high rates of interest and lenders will not give them loans. GiveDirectly seeks to fill this gap by providing assistance to those too poor to access microfinance.
Fernando, Nimal. "Understanding and Dealing with High Interest Rates on Microcredit." Asian Development Bank, May 2006.
Do transfers create conflict or tension between recipients and non-recipients?
We ask recipients this question in follow-up calls after they have received
transfers. To date, recipients report relatively low levels of tension related
to the transfers: 5% report arguments within their communities and 1% report
violence or crime.
Do transfers create conflict or tension within households?
On the contrary, IPA's evaluation of our work found
"suggestive evidence that cash transfers reduce domestic
violence and increase female empowerment in both
recipient households and other households in the same
village" [italics added].
This is consistent with what our recipients tell us when we call them to
follow up on transfers; to date 1% report tension within their household as a
These numbers are also in line with earlier studies
suggesting that conflict is driven primarily by economic
hardship, which necessitates hard choices: for example,
which child should be allowed to starve. As one woman put it, "there is no
peace in the family when there is no food to eat" (Slater
& Mphale 2008). Cash transfers help reduce this kind of tension.