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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.
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. The initiative launched in November 2017 and is set to run for 12 years.
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 synthesis of material which does not verifiably mention or relate to the main topic. (March 2017) (Learn how and when to remove this template message)
GiveDirectly claims that 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.
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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 as well as foundations. In 2015, the organization received a $25 million donation from Good Ventures, a private foundation started by Facebook co-founder Dustin Moskovitz and his wife, former Wall Street Journal writer Cari Tuna.
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.
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Published: November 2016
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