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This post is excerpted and adapted from Shrewd Samaritan: Faith, Economics, and the Road to Loving our Global Neighbor (2019) by Bruce Wydick, available from HarperCollins/Thomas Nelson.
Providing direct cash transfers to impoverished communities, both domestically and overseas, has become one of the fastest-growing innovations in addressing poverty. But while cash transfers are increasingly popular, they remain controversial. The legacy of welfare programs in the U.S. and Europe have led many to question whether giving people cash makes them lazy, or even facilitates drug and alcohol use. Many donors wonder whether cash transfers simply solve a short-term problem at the expense of an intervention with long-term impacts. And even if cash does work, the question remains when it is appropriate relative to “in-kind” donations, services, and interventions such as food, clean water provision, farm-animal donation, child sponsorship, or a host of other types of programs.
Fortunately, in the last several years a tremendous amount of exciting research in development economics has investigated the effect of direct cash transfers as a means of addressing poverty that has brought scientific rigor to many of these important questions.
First, and most importantly, the evidence points to many large and statistically significant and impacts from cash transfers to impoverished families overseas. This include both conditional cash transfers (where cash is often given to mothers conditional upon enrollment of children in school and/or regular health check-ups) and unconditional cash transfers (where cash is given with no strings attached).
In general, we need to learn to trust those in poverty with most of these consumption vs. investment decisions. Cash delegates this agency and authority to them and away from patronizing benefactors. In our giving, we need to be not only Good Samaritans, but ShrewdSamaritans, who understand both the benefits and limitations of cash.
Read the full article about when to give cash by Bruce Wydick at The Center for Effective Philanthropy.