Helping the poor — without conditions

“The vast majority of America’s charitable dollars are donated to local religious and educational institutions” or to worthy causes, writes Dana Goldstein. But the most effective way to help the poor is to give them money to do with as they see fit, she writes in The Atlantic. In other words, don’t buy a Christmas goose for the Cratchits. Give them cash. (Was Bob Cratchit a spendthrift?)

In the Third World, at least half of government aid for the poor is lost to corruption and private philanthropy is “heavily skimmed” as well.  Micro-credit efforts don’t the very poor and “many recipients default on their loans, leaving them further in debt,” Goldstein writes.

Mexico and Brazil give “conditional cash transfers” to poor families who enroll their children in school or take them to the doctor, but that’s hard to do in very poor countries where there aren’t enough schools or doctors.

(Four economists gave) poor families in rural Kenya $1,000 over the course of 10 months, and let them do whatever they wanted with the money. They hoped the recipients would spend it on nutrition, health care, and education. But, theoretically, they could use it to purchase alcohol or drugs. The families would decide on their own.

Three years later, the four economists expanded their private effort into GiveDirectly, a charity that accepts online donations from the public, as well. Ninety-two cents of every dollar donated to GiveDirectly is transferred to poor households through M-PESA, a cell phone banking service with 11,000 agents working in Kenya.

. . . GiveDirectly recipients are spending their payments mostly on food and home improvements that can vastly improve quality of life, such as installing a weatherproof tin roof. Some families have invested in profit-bearing businesses, such as chicken-rearing, agriculture, or the vending of clothes, shoes, or charcoal.

Unconditional cash transfers aren’t popular with non-governmental organization staffers, says Paul Niehaus, one of GiveDirectly’s founders.  “If this works, what are we all here for? Why do we have jobs? There’s an industry that exists that tries to make decisions for poor people and determine what’s best for them.”

The very poor in rural Kenya are poor “because they were born in Africa,” says Niehaus. Abject poverty in the U.S. is  correlated with irresponsibility, addiction and illness. Most giving assumes there are deserving poor and undeserving poor, Goldstein writes on her blog.

Deserving poor people work, even if the wages they earn are less than the costs of child or health care. They endure cumbersome bureaucratic processes to seek child support from the absent fathers of their children, even if those fathers are in jail, drug addicted, or otherwise unable to provide for their kids. They open college savings accounts, even if they need 100 percent of their monthly income just to cover the costs of housing and food. They attend classes on why it’s important to get married.

Social welfare systems favor mothers of young children. There’s little help for childless adults without disabilities. Taxpayers aren’t willing to give no-strings cash to the poor.

 . . .  most of us assume poor people need to learn how to best help themselves. The radical premise of GiveDirectly is that poor people already know, much better than their governments or a charity director, what they need.

Even poor Americans think aid should go only to those who do their best to support themselves, reports Reuters in a look at poverty in Indiana.

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Comments

  1. My acronym LTEC comes from a slogan I made up,
    “Let them eat cash”,
    which is the point of this post.

  2. My family has often volunteered with a church-based program that hosts homeless families, feeds them, and provides transportation. Some families take advantage of every opportunity to get ahead, eating whatever is provided (volunteers cook at home and eat with the families, so it is ‘normal family food’), letting volunteers tutor their children or help with resumes, and saving their paychecks for first and last month deposits on apartments. Other families…walk away from the provided food to eat out, get manicures, and wander off, leaving their kids in the care of the volunteers (who are not supposed to act as sitters). Giving money to the first group would help them get ahead. Giving money to the second…would get them more meals out.

    • Lulu: For generations, private charities made those distinctions between those people motivated to help themselves (deserving of help) and those who were the author of their own misfortunes or were unwilling to help themselves (the undeserving). I saw that distinction at work during my small-town childhood. Most families didn’t have much money but had gardens, fished, hunted and foraged. The truly needy were helped privately (there was no welfare of any sort); they were the ones who cleaned the church or mowed the lawn and did minor repairs, helped the elderly or infirm with spring cleaning etc. The town drunk was on his own. Once the government got involved, that distinction was lost. We now have the multi-generational poor, with long lists of dysfunctional behaviors, habits and choices and little interest in changing any of the above. Daddy big-government is expected to take care of everything. It’s not an improvement. Poverty, in the sense of lack of money, is not a problem; the habits and behavior that create and perpetuate cultural poverty, is a big problem.

    • Let’s note up front that the proposal seems to be primarily directed at the developing world, as opposed to the developed / industrialized world, and that poverty can look quite different in that context. I’m not criticizing your church’s program here – just distinguishing it from what the proposal appears to be about.

      First, this type of idea is inherently at tension with the program you describe. Your church is not giving the families cash – anything but.

      Second, this type of proposal can work only if the recipient of the cash aid faces real consequences for their failure to be responsible. You don’t pay a utility bill? Sorry, no emergency money to keep you warm this winter. You didn’t save for clothes? For an appliance repair? Too bad – maybe you can pay out of next month’s check.

      The concept presupposes that some people will continue to make bad choices, but that on the whole the benefit to those who manage their money (and the reduced cost to society) outweighs the harm resulting from the minority who use their money inappropriately.

  3. Richard Aubrey says:

    Marvin Olasky writes on this subject. The stereotypical picture is of an urban charity a hundred plus years ago. A guy shows up looking for a meal. They say he can eat after he splits a cord of wood. If he does, he needed the meal. If not, he’s not hungry enough to justify the resources needed to feed him which could go, instead, to the deserving and the desperate.
    Even an amoeba can learn, if it runs into a sharp edge often enough. Our efforts at helping the helpless necessarily round off and pad the edges–metaphor alert!–and that includes consequences of irresponsible behavior.
    In addition to padding the edges, the irresponsible are taught how to blame others–”greedheads”–so there is little learning.

  4. That’s kind of sad though, if you give some poor people money they will abuse it by buying drugs and alcohol. If you give a charity money to help them, they will pay a ceo. I just think it really comes down to the best charities to help these people.