year 2, week 48: this week i'm gonna... give cash to the poor
A Kenyan village. Young guys in dusty polo shirts, new moms holding their babies, and grandmas in bright head wraps have all gathered in a clearing for one of the village meetings when something remarkable happens. Practically every person's cellphone starts dinging.
Denis Otieno is a father of four in his late 30s. He holds up his phone to show his friends: "I got it!" he exults.
Otieno is receiving text alerts from a charity called GiveDirectly. In 2016, GiveDirectly announced that it will give every adult in this impoverished village in Kenya an extra $22 each month for the next 12 years -- with no strings attached. The money is wired to bank accounts linked to each villager's phone. The alert is the signal that the latest payment has posted. Everyone starts cheering. Some of the younger women break into song.
Today, practically all aid is given as "in-kind" donations - for example, food, an asset like a cow, job training, or schoolbooks. And this means that, in effect, it's the providers of aid (governments, donor organizations, even private individuals donating to a charity) who decide what the underprivileged need most. But what if you just gave people cash with no strings attached? And let them decide how best to use it?
GiveDirectly aims to reshape international giving by making direct transfers to the poor. Founded by four grad students in economics, they have been advocating for and providing direct cash aid since 2009, and have given $65 million to people across Kenya, Rwanda, and Uganda.
The GiveDirectly model first locates extremely poor communities in Kenya and Uganda using publicly available data. Then, they send field staff door-to-door to digitally collect data on poverty and enroll recipients. A set of independent checks is used to verify that recipients are eligible and did not pay bribes.
Once enrolled, households receive roughly $1,000, or approximately one year's budget. Using electronic payment systems, recipients typically receive a text alert and then collect cash from a mobile money agent in their village or nearest town. GiveDirectly then connects with each recipient to verify receipt of funds and address any issues.
To learn more about GiveDirectly, please watch the video below:
GiveDirectly believes they can change the lives of the extreme poor by giving them a guaranteed "basic income" that they can count on for years. They have chosen to set the payment at $22 because in Kenya, this is the food poverty line, or the amount of money it would take to afford a basic basket of food for one person.
The combined $44 a month Otieno and his wife have been getting from GiveDirectly is boosting their income by as much as 50%. Before the payments started, there were many days each month when Otieno couldn't afford to buy his children breakfast or lunch. Sometimes there wasn't even dinner, apart from what Otieno calls "porridge" - water mixed with flour and sugar, "just to fill the stomach."
With the extra money from GiveDirectly, Otieno can now guarantee his family solid food for both lunch and dinner. And for breakfast, they're getting milk from several goats -- the family used to own just two, but they have been able to purchase three more. They hope to breed them and then sell the offspring, and maybe even upgrade to a cow in the future.
Longer term, Otieno has an even more ambitious plan: "I'm thinking of putting up a forest," he says. Specifically, a grove of eucalyptus and cypress trees, which are used as lumber in construction. Every month, Otieno has been setting aside $10 of the charity money to purchase saplings, and he and his family have been planting and tending them. They should be tall enough to sell in five years, and he plans to use the money to put all four of his children through high school. Each child has a different section of the grove to help him tend. "It's going to be like their bank account," he says, laughing.
Notes for this week:
- November 28th is #GivingTuesday!
- Our collective givetwig donation will sponsor a monthly payment for approximately 30 households.
- For more information on GiveDirectly, please check out their website.
this week i'm gonna donate to GiveDirectly.