How to help the poor have more money? Well, give it to them

Laura Freschi on Aid Watch: (Thanks: Michael Kruse)

In 2007, people in the Western Province of Zambia lost their homes, their livestock and their crops when heavier-than-normal flash floods swept through their area. USAID’s office of disaster assistance stepped in with $280,000 worth of with seeds and fertilizer, training for farmers, and emergency relief supplies.

Two NGOs working in Zambia, Oxfam GB and Concern Worldwide, tried a different approach: they handed out envelopes stuffed with cash—from $25 to $50 per month per affected family, with no strings attached. Anevaluation found that common fears about cash transfers—that the cash infusion will cause inflation in the market, that the money will be squandered, or that men will take control of the money—were unrealized.

What did people buy with the money? . . . 

. . . Unconditional cash transfer programs can be fast and cost effective.  .  . 

. . .Cash transfers also acknowledge that poor people are capable of making good economic decisions without the help of outside experts armed with needs assessment checklists. . . 

. . .As Duflo and Banerjee document in their study on the economic lives of the poor, the rich often assume that poor people have few choices about where to spend their money. . . 

. . .Cash transfers have plenty of potential drawbacks, as these studies also point out. . . [Two studies by Innovations for Poverty Action and thePoverty Action Lab at MIT in Morocco and Indonesia (See also studies collected by the UK-based Overseas Development Institute).]

. . .This gives people who have lost their livelihoods, belongings or loved ones a new feeling of control over their lives, builds money-management skills, and restores to them their power to make economic decisions. If you were in their shoes, which would you prefer? . . 

In our personal experience, when we know the recipient is hard-working and and self-motivated, we always try to give them the cash directly. Even when we are only providing a scholarship and could more easily pay the school directly, we prefer to give our friends the cash in hand – giving them the dignity of paying their own bills. Occassionally, the funds don’t get used exactly the way we designated them, but our friends usually have a good reason, and we think they should have that prerogative – even if we wouldn’t quite agree.

A lot of times, we  try to include a little “bonus” and encourage them to spend on something they will enjoy. Don’t we do the same for ourselves when we can?

As the above article pointed out, giving cash directly:

  • It’s simply easier; they handle all the logistics of what to get, where to buy, at what price, etc.
  • It can be empowering (next few points).
  • It shows that you trust them and expect them to manage their own affairs. Expectations are key. (If they need advice on some aspect of the management, they’ll come ask for it. . . if you have that kind of relationship.)
  • It helps level the relational field; it puts us both on the same team. True, I have access to more resources (connections), but we are both about finding ways to solve their problems. I’ll try to do my part; they will do the rest. They reciprocate in other ways that enrich us  – relationship, knowledge in certain areas. 

The key here is  some kind of relationship and track record. For us, this means we have to be involved in peoples lives in ways that take us outside our own comfort zones. Usually these kinds of needs come up in the normal course of real-life conversation. We know that money isn’t the basis of the relationship because most of the time we talk about other things. If we dont’ know the person well, we try to find a trusted person who does know them well.

With some friends, if they even hint at a need, we try to give immediately – no questions asked. (We know they value our relationship too much to let money get in the way.) Others, we find any excuse we can to say, “Sorry, we can’t help you this time” – no matter how heartrending the story sounds. Reasons? We don’t know them well enough, they are showing signs of a “dependance mentality”, they have a poor track record of past financial choices, etc.

Like all of life, you win some; you lose some.

Sometimes in this context, as a “rich white person”, I know it’s better to give money through an intermediary (especially if it is a loan – microenterprise). Some individuals simply feel more accountable to a fellow Kenyan than they do to a mzungu, to whom money obviously means a lot less ;-).

This same dynamic can be true for my wealthier Kenyan friends. Last night, close friends were telling me how overwhelming the requests for money from relatives have become lately. My friends  believe deeply in social justice, but they are also wise to the ways of the world, so I am learning a lot just by watching how they negotiate these tricky situations – especially relationally. 

I don’t envy these friends; their social network is much more deeply embedded in areas of true poverty, and, unlike me, they have to make these tough decisions every day. They have all my respect; they’ve made some huge differences in a lot of people’s lives.

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2 thoughts on “How to help the poor have more money? Well, give it to them

  1. Very interesting. For the most part I obey our official policy against giving out cash, but perhaps some revisions are necessary? still for about 80 percent of our recipients I would still be reluctant to give cash, but the other 20? will have to think on this.

    • Ben says:

      It’s always tricky, and it takes a ton of wisdom and experience. You are a lot more in the mix than I am, and you have to protect yourself. Sometimes rules just help keep the boundaries clear and makes things simple.

      In some cases, not giving cash – even to someone you really trust – protects them from others who would put pressure on them. I’ve had friends ask me directly to just buy something for them so that their relatives won’t demand the cash.

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