A nonprofit that gives cash directly to Kenya’s poorest people is getting major support from Google and Facebook.
GiveDirectly, a wealth transfer service, identifies poor households in Kenya, funnels donations to those in need via cell phone and lets them do whatever they please with the funds. The initiative, which was founded in 2008, got $2.4 million from Google in December and Facebook co-founder Chris Hughes, who serves as a board member, is currently working on recruiting other deep-pocketed donors, according to Forbes.
“Instead of building hospitals, why don’t we just give poor people money? Research shows it’s effective,” Hughes said to a group of bigwigs at an event in San Francisco earlier this month, according to Forbes.
Recipients of GiveDirectly donors are simply tasked with spending money on what is “most important to them.” Many have reported using the cash to buy food, livestock and land, invest in their homes and pay for school, according to the organization’s website.
And GiveDirectly has seen some concrete successes. Over the course of one month alone last year, 34 percent fewer households sent their children to bed without eating for an entire day, according to GiveDirectly.
Hughes, who also founded Jumo -- a social network for nonprofits that he sold to GOOD in 2011 –- said in a statement that he appreciates the transparency of GiveDirectly. Hughes noted last year that it’s difficult for donors to evaluate how nonprofits are making a difference on the ground and that organizations often are unable to scale their approach to make a significant impact.
“Cash transfers to households are not a panacea -- they don't build roads, write constitutions, or stabilize markets,” he said in a statement. “But they do provide a critical boost to the poorest of the poor and are an important development strategy.”
A paper published in April about a Ugandan aid program supports Hughes’ theory that giving money directly to struggling people can be a judicious investment.
Of 12,000 applicants, the Ugandan government in 2008 gave randomly selected individuals a year’s worth of income in one lump sum. The average recipient worked less than 10 hours a week and earned less than $1 a day.
Three researchers analyzed the success of those who were given grants and found that most invested the money in vocations and earnings rose by at least 40 percent. After four years, they were 65 percent more likely to have a skilled trade and much higher business capital stocks.
“The Ugandan experiment suggests a simpler answer. Maybe there’s just no feasible way for subsistence farmers and casual laborers in rural Africa to get loans at reasonable interest rates,” Matthew Yglesias wrote in a Slate piece about direct cash donations. “When young people get money for free, they’re able to put it to such good use that it’d be well worth their while to pay interest in order to get their hands on it. But there’s no Ugandan equivalent of federally subsidized student loans for youth to jump-start their tailoring careers.”