Why Shouldn’t We GiveDirectly?
(PRISM Magazine, April 2014–click to read full article at PrismMagazine.org.) One of the most exciting new ways for people to give to the poor in developing countries is through transferring cash directly to them—yes, that’s right—simply giving money to the poor. The new nonprofit GiveDirectly collects funds from internet donors and then zaps them into the cellphone-based e-money accounts of rural East Africans. GiveDirectly was founded in 2008 by Paul Niehaus, an evangelical Christian and assistant professor in the economics department of the University of California at San Diego, with colleagues from his graduate school days at Harvard. GiveDirectly has taken the development world by storm and has been the subject of significant media attention for its novel approach to helping the poor lift themselves out of poverty. The GiveDirectly approach is novel for two reasons. First, it uses new technology creatively, operating through the M-Pesa system, the mobile-phone-based money transfer service for telecommunication firms Safaricom and Vodacom in Tanzania and Kenya. Many places in East Africa have leapfrogged our own paper currency system, where people now make purchases routinely through electronic transfers via their cellphones. GiveDirectly harnesses this new technology to provide help to the poor through a series of e-injections of cash into these phone-based bank accounts. Transfers typically peak at about $1,000 over the course of a year, when they terminate. GiveDirectly is also a novel approach because it begins with trusting the poor to spend donated money in the way they view as best for themselves. This contrasts with the traditional approach, which only trusts the poor with in-kind goods, such as an animal donation, a new stove, a microfinance loan, education, or even a “conditional” cash transfer in which the transfer is contingent upon a required behavior, such as keeping children in school. (Read more at PrismMagazine.org).