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.