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GiveDirectly

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GiveDirectly
TypeAlleviating extreme poverty through cash transfers
United States IRS exemption status: 501(c)(3) under the name "GiveDirect Inc."[1]
Location
Area served
Kenya, Uganda
Key people
  • Paul Niehaus (CEO)
  • Rohit Wanchoo (CFO)
  • Michael Faye (Chairman of the Board)
  • Chris Hughes (Board Member)
[3]
Employees
3 (paid full-time executive staff) + 2 senior field officers + additional field staff in Kenya and Uganda
+ 5-10 (part-time + pro bono)[3]
Websitegivedirectly.org

GiveDirectly is a nonprofit organization currently operating in Kenya and Uganda that aims to help people living in extreme poverty by making unconditional cash transfers to them via mobile phone (through m-Pesa). It is the first charity dedicated exclusively to cash transfers. It claims that 90% of donor funds are utilized in the form of the actual cash transfers, with the remaining 10% split between fees for the transfers and recipient identification costs. This is far more efficient than other charities, according to the American Institute of Philanthropy.[4]

In August 2012, Chris Hughes, one of the co-founders of social network Facebook and (as of August 2012) the publisher and editor-in-chief of The New Republic, who had also worked for the 2008 Obama presidential campaign, joined the GiveDirectly board and published a personal message on the GiveDirectly website lauding GiveDirectly's approach.[5]

In November 2012, charity evaluator GiveWell named GiveDirectly its #2 recommended charity for 2012 end-of-year giving.[6][7]

History

GiveDirectly was founded by a team led by Paul Niehaus, then in Cambridge, Massachusetts. Niehaus is now an Assistant Professor of Economics at the University of California, San Diego, in addition to being the unpaid CEO of GiveDirectly.

According to its website:[3]

GiveDirectly originated in Cambridge, MA in 2008 when its founders were completing advanced degrees in economic development at Harvard and MIT. Through their work the founders learned of the explosion of mobile banking in developing countries and realized that this would make it possible to send donations securely and very cheaply to the poor. Because existing non-profits were not taking advantage of the opportunity, they created GiveDirectly as a vehicle for transfering their own money.

Operations

GiveDirectly staffer enrolling a recipient in Kenya for cash transfers. Photo courtesy GiveWell.

Cash transfers

As of December 2012, GiveDirectly was operating unconditional cash transfers in selected areas of the Siaya District and Rarieda Constituency in Western Kenya. GiveDirectly lists the following four steps on its website to describe how their system works:[8]

  1. Donors donate to GiveDirectly through the webpage
  2. GiveDirectly locates poor households in Kenya using a combination of census data and on-the-ground investigations.
  3. Once recipients are registered, GiveDirectly transfers money to the recipient's cellphone using the m-Pesa system. Recipients who do not own cellphones are given SIM cards that they can use to retrieve the money by visiting a local m-Pesa agent.
  4. Recipients then use the money for their own goals. There are no conditions on how the recipients must spend the money.

In November 2013, GiveDirectly officially announced that it had begun operations in Uganda. This would be its second country of operation.[9]

Self-evaluation

GiveDirectly is partnering with Innovations for Poverty Action in a project funded by the National Institutes of Health in the United States to collect evidence on their operations that can be used to judge their effectiveness. The research team is led by Johannes Haushofer of the University of Zurich and the researchers include Jeremy Shapiro of Innovations for Poverty Action, formerly a member of the GiveDirectly board. It preregistered the study, identified what variables need to be measured, and specified their predictions, which can then be tested against the evidence.[10][11] The working paper was released in October 2013.[12] The following points were listed in the results summary of the report:

  • Transfers allow poor households to build assets
  • Transfers increase consumption
  • Transfers reduce hunger
  • Transfers do not increase spending on alcohol and tobacco
  • Transfers increase investment in and revenue from livestock and small businesses
  • Transfers increase psychological well-being of recipients and their families
  • Transfers affect many, but not all, indicators of poverty
  • Specific design features of cash transfer programs differentially affect impacts and imply policy trade-offs

Funding

GiveDirectly seeks funds from individual donors on its website. Additionally, it has received grants from a number of foundations.

Foundation funding

Grantmaker Date of announcement Amount of grant (in USD) More information
Lampert Family Foundation[13] July 2011 100,000
Good Ventures[13][14] August 6, 2012 100,000 This grant was announced as part of a collection of grants to charities identified as "stand-out charities" by charity evaluator GiveWell. Good Ventures granted only $50,000 USD to other charities identified by GiveWell as standouts. The reason for the higher grant allocation to GiveDirectly was that Good Ventures staff felt that cash transfers were a particularly promising form of intervention and were also impressed with the GiveDirectly team.[14]
Google as part of the Global Impact Awards Program[13][15][16] December 4, 2012 2,400,000 90% of the award ($2.21M) is for direct cash grants to the poor. The remaining amount, $190,000, is for the costs of setting up operations in another country.
Good Ventures[17] December 28, 2012 500,000 This was part of grants that Good Ventures made to all of GiveWell's top-rated charities. GiveDirectly was #2 on GiveWell's list at the time. The top charity, Against Malaria Foundation, got $1.25 million, while the #3 charity, Schistosomiasis Control Initiative, got $250,000.

Individual funding

As a result of being recommended as the #2 charity by charity evaluator GiveWell for the giving season in 2012, GiveDirectly received about $1,329,539 (USD) in 2012 via GiveWell. This includes two grants by Good Ventures of $100,000 and $500,000 made in 2012. The remaining donations total $729,539 (USD) and came mostly from individual donors.[18]

GiveWell review

May 2013 review update

In June 2013, GiveWell published an updated review of GiveDirectly (prepared based on GiveDirectly's status as of May 2013).[19] According to the update:

  • As of May 2013, GiveDirectly had $3 million (USD) in funds available.
  • GiveDirectly intended to use $1 million (USD) to set up operations in a second country (other than Kenya, its sole country of operation until that time) and had started transferring money for that purpose. (The second country turned out to be Uganda, and the announcement was officially made in November 2013[9]).
  • GiveDirectly intended to use $2 million (USD) for additional cash transfers in Kenya.
  • GiveDirectly indicated that it had the capacity to use $10 million (USD) in 2013.
  • GiveDirectly had distributed approximately $616,000 in cash transfers in 2013.
  • GiveDirectly had shared some data collected from its cash transfer recipients on the effects of the cash transfers.

November 2012 review and recommendation

Staff from GiveWell (left), GiveDirectly (middle), and Good Ventures (right), on a field trip to one of the villages with recipients of GiveDirectly's cash transfer program in Kenya.

In November 2012, charity evaluator GiveWell published its latest official review of GiveDirectly.[20] Based on this review, GiveWell ranked GiveDirectly as its #2 recommended charity for 2012 end-of-year giving. GiveWell recommended a 7:2:1 split for donors between its top three charities (Against Malaria Foundation, GiveDirectly, and Schistosomiasis Control Initiative).[6][7]

GiveWell staff member testing the m-Pesa system used by GiveDirectly for cash transfers to recipients by enrolling in m-Pesa at the shop of a local m-Pesa agent.

According to the review:

  • GiveDirectly's cash transfer model differs from the cash transfers used by governments in other parts of the world in one important respect—GiveDirectly gives large, one-off grants rather than small income supplements over many years:

One way of putting the difference (which has been reflected in GiveDirectly's communications with us) is that government programs aim for "income transfers" (small supplements to income over many years) whereas GiveDirectly aims for "wealth transfers" (large, one-off transfers that hopefully give people more flexibility to make large purchases and investments).

  • The average household size for GiveDirectly cash transfer recipient households is 4.7, but household size varies considerably. The amount of the grant is independent of the household size.
  • The grants seem to be reaching recipients, and there is no evidence of corruption or inefficiency in the process.
  • Recipients report spending these in a variety of ways, mostly on home improvement (such as buying iron sheets for their roofs to protect their homes from rain).
  • There are some cases of discord created between recipients and non-recipients.
  • Evidence regarding the broader impact of the grants is still indecisive.

Response to the GiveWell review

On December 28, 2012, the philanthropic foundation Good Ventures announced a grant of $500,000 to GiveDirectly, largely on the strength of GiveWell's recommendation (but based also on additional investigation). This was part of a collection of grants to GiveWell's top-rated charities. The top charity, Against Malaria Foundation, received $1.25 million, and the #3 charity, Schistosomiasis Control Initiative, received $250,000.[17]

Charity evaluator and effective giving advocate Giving What We Can published a blog post critiquing GiveWell's recommendation of GiveDirectly.[21] The blog post included both general concerns about the effectiveness of cash transfers compared to the best possible interventions, and specific concerns about the methodology of GiveWell's evaluation and recommendation of GiveDirectly.

Earlier reviews

In April 2012, GiveWell published its first official review of GiveDirectly.[22] Their overall conclusion regarding cost-effectiveness at the time was: "While we have not articulated the full case for this, our intuition is that our top-rated health charities accomplish more good per dollar spent."

In November 2011, GiveWell identified GiveDirectly as one of six "standout organizations" in its list of top ranked charities, below the top-rated organizations Against Malaria Foundation and Schistosomiasis Control Initiative and alongside Nyaya Health, Small Enterprise Foundation, Pratham, KIPP (Houston branch), and Innovations for Poverty Action.[23] GiveWell continued to stand by this label for GiveDirectly after publication of the official review in April 2012.

Previously, GiveWell had called GiveDirectly a "charity to watch" and called GiveDirectly's approach "one of the most intuitive ways of helping" in a July 2011 blog post.[24]

Media and blog coverage

Media coverage

GiveDirectly was featured in a story on National Public Radio in August 2011;[25] in an article by Dana Goldstein in The Atlantic in December 2012;[26] in a Forbes Magazine article by Kerry Dolan in May 2013;[27] and in a New York Times article in August 2013.[28]

GiveDirectly founder Paul Niehaus was interviewed for a story on cash transfers on BBC's NewsHour in January 2012[29] and there was a follow-up blog post by interviewer Duncan Green on his Oxfam blog.[30]

In 2013, Planet Money reporters David Kestenbaum and Jacob Goldstein went to Kenya to see GiveDirectly in action. Their findings and other critical commentary on GiveDirectly were featured in a segment of an episode of This American Life in August 2013.[31] A follow-up was published in October 2013.[32]

An article in The Economist on cash transfers in October 2013 discussed GiveDirectly's work in Kenya.[33] An article in Digital Journal published at the same time also reviewed GiveDirectly's work.[34]

Blog coverage

GiveDirectly received positive mentions in a blog post by Alex Tabarrok for the Marginal Revolution economics blog[35] and in multiple blog posts by Matthew Yglesias for the Moneybox blog of Slate Magazine.[36][37]

It also received mentions in a blog post by Jacqueline Fuller for the Harvard Business Review blog,[38] in a blog post by Michael Clemens for the Center for Global Development,[39] in a blog post by Vishnu Sridharan for the New America Foundation,[40] and in a blog post by Brad Tuttle for the Moneyland blog of Time Magazine.[41]

References

  1. ^ "GiveDirectly". GiveDirectly. Retrieved 2012-11-30.
  2. ^ "Contact". GiveDirectly. Retrieved 2012-11-30.
  3. ^ a b c "GiveDirectly team page".
  4. ^ "GiveDirectly Financials". Givedirectly.org. Retrieved 2011-12-01.
  5. ^ "a personal message from Chris Hughes". GiveDirectly. Retrieved 2012-08-19.
  6. ^ a b "Top charities". GiveWell. 2012-11-26. Retrieved 2012-11-26.
  7. ^ a b Karnofsky, Holden (2012-11-26). "Our Top Charities for the 2012 Giving Season". GiveWell. Retrieved 2012-11-26.
  8. ^ "How it works". GiveDirectly. Retrieved 2012-11-29.
  9. ^ a b Mukhopadhyaya, Piali (2013-11-20). "GiveDirectly is in Uganda!". GiveDirectly (blog). Retrieved 2013-11-21.
  10. ^ "Evidence page on GiveDirectly". GiveDirectly. Retrieved 2011-12-01.
  11. ^ Kenya (2011-05-18). "Innovations for Poverty Action page on the project with GiveDirectly". Innovations for Poverty Action. Retrieved 2011-12-01.
  12. ^ Haushofer, Jonathan; Shapiro, Jeremy (2013-10-24). "Policy Brief: Impacts of Unconditional Cash Transfers" (PDF). Retrieved 2013-10-26.
  13. ^ a b c "Give Directly blog". Give Directly.
  14. ^ a b "Grants to "standout" charities". Good Ventures. 2012-08-06.
  15. ^ "Introducing Google's Global Impact Awards". Google. 2012-12-04. Retrieved 2012-12-04.
  16. ^ Neumann, Amy (2012-12-04). "Global Impact Awards Give $23 Million to Charities to Spur Innovation, Help Girls and Minority Students". Huffington Post. Retrieved 2012-12-09. {{cite web}}: Italic or bold markup not allowed in: |publisher= (help)
  17. ^ a b Tuna, Cari (2012-12-28). "Giving Season Grants to GiveWell's Top Charities". Good Ventures. Retrieved 2012-12-28. {{cite web}}: Italic or bold markup not allowed in: |publisher= (help)
  18. ^ "GiveWell annual review for 2012: details on GiveWell's money moved and web traffic". GiveWell. 2013-03-12. Retrieved 2013-04-17. {{cite web}}: Italic or bold markup not allowed in: |publisher= (help)
  19. ^ "GiveDirectly update - May 2013". GiveWell. June 2013. Retrieved =2013-06-26. {{cite web}}: Check date values in: |accessdate= (help)CS1 maint: extra punctuation (link)
  20. ^ "GiveDirectly (official review)". GiveWell. Retrieved 2012-11-26.
  21. ^ Crouch, Will (2012-11-30). "GiveWell's Recommendation of GiveDirectly". Giving What We Can. Retrieved 2012-12-09.
  22. ^ "GiveDirectly (official review, April 2012)". GiveWell. Retrieved 2012-11-26.
  23. ^ "Top charities -- November 2011". GiveWell. Retrieved 2012-11-30.
  24. ^ Karnofsky, Holden (2011-07-21). "A charity to watch: GiveDirectly". GiveWell. Retrieved 2011-12-01.
  25. ^ Goldstein, Jacob (2011-08-02). "A Charity That Just Gives Money To Poor People". Npr.org. Retrieved 2011-12-01.
  26. ^ Goldstein, Dana (2012-12-21). "Can 4 Economists Build the Most Economically Efficient Charity Ever?". The Atlantic. Retrieved 2012-12-21. {{cite web}}: Italic or bold markup not allowed in: |publisher= (help)
  27. ^ Dolan, Kerry (2013-05-28). "Why Facebook Cofounder Chris Hughes And Google Are Giving Cash Directly To The Poorest". Forbes Magazine. Retrieved 2013-05-30. {{cite web}}: Italic or bold markup not allowed in: |publisher= (help)
  28. ^ Goldstein, Jacob (2013-08-13). "Is It Nuts to Give to the Poor Without Strings Attached?". New York Times. Retrieved 2013-08-13. {{cite web}}: Italic or bold markup not allowed in: |publisher= (help)
  29. ^ "MP3 of interview of Paul Niehaus on cash transfers". Oxfam blogs.
  30. ^ Green, Duncan (2012-01-04). "Why don't we just send aid money directly to poor people's cellphones?". From Poverty to Power (Oxfam Blogs Network). Retrieved 2012-11-30.
  31. ^ "503: I Was Just Trying To Help". This American Life. 2013-08-16. Retrieved 2013-08-19. {{cite web}}: Italic or bold markup not allowed in: |publisher= (help)
  32. ^ Kestenbaum, David (2013-10-25). "What Happens When You Just Give Money To Poor People?". National Public Radio. Retrieved 2013-10-26. {{cite web}}: Italic or bold markup not allowed in: |publisher= (help)
  33. ^ "Pennies from heaven: Giving money directly to poor people works surprisingly well. But it cannot deal with the deeper causes of poverty". The Economist. 2013-10-26. Retrieved 2013-10-26. {{cite web}}: Italic or bold markup not allowed in: |publisher= (help)
  34. ^ Houser, Nancy (2013-10-25). "GiveDirectly charity provides free cash to extreme poor in Kenya". Digital Journal. Retrieved 2013-10-26.
  35. ^ Tabarrok, Alex (2011-07-22). "Give Directly". Marginal Revolution (blog). Retrieved 2011-12-01.
  36. ^ Yglesias, Matthew (2012-12-25). "Fighting Poverty By Giving Poor People Money". Slate Magazine (Moneybox blog). Retrieved 2013-04-17. {{cite web}}: Italic or bold markup not allowed in: |publisher= (help)
  37. ^ Yglesias, Matthew (2013-05-29). "The Best and Simplest Way to Fight Global Poverty: Proof that giving cash to poor people, no strings attached, is an amazingly powerful tool for boosting incomes and promoting development". Slate Magazine (Moneybox blog). Retrieved 2013-11-21. {{cite web}}: Italic or bold markup not allowed in: |publisher= (help)
  38. ^ Fuller, Jacqueline (2013-03-28). "Want to Help People? Just Give Them Money". Harvard Business Review. Retrieved 2013-04-17. {{cite web}}: Italic or bold markup not allowed in: |publisher= (help)
  39. ^ Clemens, Michael (2011-09-30). "A New Kind of Overseas Charity Is Born". Global Development: Views from the Center. Retrieved 2011-12-01.
  40. ^ Sridharan, Vishnu (2012-01-12). "From your pocket to theirs: a new approach to charity". New America Foundation.
  41. ^ Tuttle, Brad (2011-08-03). "GiveDirectly: A Charity That Just Gives Money to Poor People, So They're Not So Poor". Moneyland, Time Magazine. Retrieved 2011-12-01.
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