A revolution in helping Africa's poor: Cash with no strings attached
The Washington Post highlights studies conducted by co-founder of the Abdul Latif Jameel Poverty Action Lab (J-PAL), Abhijit Banerjee, and his colleagues at MIT into the effectiveness of direct cash transfer programmes to alleviate poverty, such as those delivered by NGO GiveDirectly.
“Lump sums are the most efficient way to give cash, according to a study of GiveDirectly programmes released in December that compared the impact of three methods,” explains the article. “Two years in, recipients of the lump sum have spent more money on health care, and more of their children have scored better on school exams. The lump-sum recipients were also more likely to start a business and to make more money from their business."
CHAMBA, Malawi — The cyclone tore through Magret Frank’s village two years ago, ripping apart the thatched mud huts. She dragged her four children from their beds just before the roof beams collapsed, and their chickens and clothes were swept away into the howling night.
“I cried inside. But I am the mother — I have to be strong,” said Frank, who has had three homes that were destroyed by cyclones. “So I told them, as long as we have life, there is a new dawn.”
But now, like her neighbors, she is sleeping through storms in a new brick house with an iron roof. The constellation of new homes is the product of a pioneering program that is Africa’s largest cash giveaway as measured by amount per person. It is part of a project that aims to revolutionize the way that aid is given to the poor: in a lump sum of cash with no strings attached.
The program is run by GiveDirectly, an organization founded by graduates of MIT and Harvard who work with prominent economists to identify the most efficient ways to reduce poverty. Donors include Twitter co-founder Jack Dorsey, philanthropist MacKenzie Scott, Facebook co-founder Chris Hughes and the founders of the graphic design tool Canva.