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|Type||Alleviating extreme poverty through cash transfers
United States IRS exemption status: 501(c)(3) under the name "GiveDirectly, Inc."
|Kenya, Uganda, Rwanda|
|15 paid domestic and senior field staff; additional paid field staff in Kenya, Uganda, and Rwanda
GiveDirectly is a nonprofit organization operating in East Africa that helps families living in extreme poverty by making unconditional cash transfers to them via mobile phone. GiveDirectly transfers funds to people in Kenya, Uganda, and Rwanda.
- 1 History
- 2 Operations
- 3 Evidence of impact
- 4 Funding
- 5 Reception
- 6 See also
- 7 References
- 8 External links
GiveDirectly originated as a giving circle started by Paul Niehaus, Michael Faye, Rohit Wanchoo, and Jeremy Shapiro, students at MIT and Harvard, based on their research into philanthropy. In 2012 they formalized their operation into GiveDirectly.
In December 2012, GiveDirectly received a $2.4M Global Impact Award from Google. In June 2014, the founders of GiveDirectly announced plans to create a for-profit technology company, Segovia, aimed at improving the efficiency of cash transfer distributions in the developing world. In August 2015, GiveDirectly received a $25M grant from Good Ventures.
In April 2016, GiveDirectly announced a $30M initiative to test universal basic income in order to "try to permanently end extreme poverty across dozens of villages and thousands of people in Kenya by guaranteeing them an ongoing income high enough to meet their basic needs" and, if it works, pave the way for implementation in other regions.
GiveDirectly distributes cash transfers to extremely poor families in East Africa using end-to-end electronic monitoring and payment technology. Their process follows four steps:
- Targeting: First, GiveDirectly locates poor villages using publicly available census data. Then, GiveDirectly sends field staff door-to-door to collect data and enroll recipients.
- Auditing: GiveDirectly uses independent checks to verify that recipients are eligible and did not pay bribes, including physical back-checks, image verification, and data consistency checks.
- Transferring: Recipients are then given a mobile phone. Roughly $1,000 USD is transferred to recipients using electronic mobile payment systems, in about three payments. Typically, recipients receive an SMS alert and then collect cash from a mobile money agent in their village or nearest town.
- Follow-up: Lastly, the charity calls each recipient to verify receipt of funds, flag issues, and assess customer service.
The average recipient family lives on $0.65 per day, making the $1,000 they receive more than one year's budget for a typical household.
Basic income experiment
Working in rural Kenya, it plans to conduct a randomized control trial comparing 4 groups of villages:
- Long-term basic income: 40 villages with recipients receiving roughly $0.75 (nominal) per adult per day, delivered monthly for 12 years
- Short-term basic income: 80 villages with recipients receiving the same monthly amount, but only for 2 years
- Lump sum payments: 80 villages with recipients receiving a lump sum payment equivalent to the total value of payments of the short-term stream
- Control group: 100 villages not receiving cash transfers
More than 26,000 people will receive some type of cash transfer, with more than 6,000 receiving a long-term basic income.
Evidence of impact
This section possibly contains previously unpublished synthesis of published material that conveys ideas not attributable to the original sources. (March 2017) (Learn how and when to remove this template message)
Cash transfers like those from GiveDirectly have arguably the strongest existing evidence base among anti-poverty tools,[non-primary source needed] with dozens of evaluations of cash transfer programs in Africa, Asia, and Latin America including both unconditional and conditional cash transfers. In a report on over 150 cash transfer studies, the think-tank ODI wrote: "the evidence reflects how powerful a policy instrument cash transfers can be, and highlights the range of potential benefits for beneficiaries." An MIT study of six randomized controlled trials (RCTs) shows that the poor do not stop working when they receive cash. A meta-study by economists at the World Bank and Stanford, aggregating dozens of cash transfer RCTs, found that the poor do not spend more on alcohol or tobacco, in fact, they spend less.
This section relies too much on references to primary sources. (March 2017) (Learn how and when to remove this template message)
In 2016, GiveDirectly partnered with Innovations for Poverty Action on a self-evaluation project funded by the National Institute of Health to collect evidence on their operations that could be used to judge their effectiveness. The research was led by Johannes Haushofer of Princeton University and Jeremy Shapiro, a development economist, co-founder of GiveDirectly, and a member of the GiveDirectly board until 2012. GiveDirectly preregistered the study, identified what variables need to be measured, and specified their predictions, which could then be tested against the evidence. The working paper was released in October 2013 and showed that the impact per $1,000 distributed included encouraging increases in earnings (+$270), assets (+$430), and nutrition spend (+$330). There was a 0% impact on alcohol and tobacco spending.
GiveDirectly collects donations from private donors on its website and has received grants from a number of foundations. The organization's most significant funding partner has been Good Ventures, a private foundation started by Facebook co-founder Dustin Moskovitz and his wife, former Wall Street Journal writer Cari Tuna. Good Ventures works in close collaboration with charity evaluator GiveWell and most of its grants to GiveDirectly were recommended by GiveWell.
Reception by development economists
After the release of GiveDirectly's impact self-evaluation in October 2013, World Bank economist David McKenzie praised the robustness of the study's design and the clear disclosure of the study lead's conflict of interest, but raised two concerns:
- The use of self-reporting made the results hard to interpret and rely on (this being a feature of any study that attempted to measure consumption).
- The subdivision of the sample into so many different groups meant that there was less statistical power that could be used to clearly decide which group had better outcomes.
- The observer-expectancy effect, where the people being asked questions may be subtly influenced in their answers by the experimenter's expectations.
- The lack of clear positive effect on long-term outcomes, as well as the lack of increased spending on health and education.
Impact on setting cash transfers as a benchmark
Jeremy Shapiro, a GiveDirectly co-founder and the person who published GiveDirectly's impact evaluation, has argued for using cash transfers (and more specifically, unconditional cash transfers) as a benchmark against which other development interventions should be evaluated, due to the simplicity and scalability of cash transfers.
- GiveDirectly was featured in a story on National Public Radio in August 2011; in an article by Dana Goldstein in The Atlantic in December 2012; in a Forbes magazine article by Kerry Dolan in May 2013; and in a New York Times article in August 2013.
- GiveDirectly co-founder Paul Niehaus was interviewed for a story on cash transfers on BBC's NewsHour in January 2012 and there was a follow-up blog post by interviewer Duncan Green on his Oxfam blog.
- 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. A follow-up was published in October 2013.
- An article in The Economist on cash transfers in October 2013 discussed GiveDirectly's work in Kenya. An article in Digital Journal published at the same time also reviewed GiveDirectly's work.
- In November 2013, a Freakonomics radio podcast between Stephen J. Dubner, Dean Karlan, and Richard Thaler about fighting poverty with evidence discussed GiveDirectly.
- Julia Kurnia, director of the direct person-to-person microfinance lending platform Zidisha wrote an op-ed in the Huffington Post in January 2014 criticizing GiveDirectly’s direct cash transfer approach on the grounds that it encourages a dependence mentality.
- In January 2014, an article in The Independent discussed GiveDirectly and what other charities thought of their cash transfer approach. The author concluded: "While Niehaus acknowledges cash transfers "won't change everything", he says he would like them to be seen as a "benchmark for development activity" everywhere. Let's hope that ambition is realised."
- In February 2014, Fast Company listed GiveDirectly as fourth on its list of the world's ten most innovative companies in finance, below Nice Systems, Square, and Bitcoin.
- On March 11, 2014, Kevin Starr and Laura Hattendorf of the Mulago Foundation wrote a lengthy article in the Stanford Social Innovation Review skeptical of GiveDirectly's accomplishment so far, saying that the evidence so far was underwhelming, though there might still be bigger gains a few years down the line. They contrasted GiveDirectly with other charities that they felt delivered more bang for the buck: VisionSpring, KickStart, and Proximity Designs. Holden Karnofsky of GiveWell wrote a lengthy response countering that GiveDirectly's impact had been more rigorously established, and that Starr and Hattendorf were using flawed metrics to judge impact. The GiveDirectly board independently published a response on the GiveDirectly blog. Chris Blattman, an economist with experience in randomized controlled trials as well as knowledge of cash transfers, also responded to Starr and Hattendorf's post on SSIR.
- On June 4, 2015, Nico Pitney covered GiveDirectly favorably in an in-depth article for the Huffington Post.
- GiveDirectly received positive mentions in a blog post by Alex Tabarrok for the Marginal Revolution economics blog and in multiple blog posts by Matthew Yglesias for the Moneybox blog of Slate Magazine.
- It also received mentions in a blog post by Jacquelline Fuller for the Harvard Business Review blog, in a blog post by Michael Clemens for the Center for Global Development, in a blog post by Vishnu Sridharan for the New America Foundation, and in a blog post by Brad Tuttle for the Moneyland blog of Time magazine.
- In September 2015, Rosa Brooks wrote in favor of cash transfers in Foreign Policy, citing GiveDirectly’s model.
- In May 2016, after GiveDirectly announced their basic income experiment, Reuters wrote about the upcoming trial.
- In May 2016, The New Republic covered the use of cash transfers in international aid, featuring GiveDirectly.
- In November 2016, NPR covered Effective Altruism and featured GiveDirectly’s Ian Bassin in the context of holiday charitable giving.
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Published: November 2016
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