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"Direct cash transfers" have become a trendy topic in philanthropic circles recently. Yet the question of their effectiveness is not a new one: do I hand the $5 bill to the man on the street corner, or is the risk too big that my generosity will in fact “hurt” him?
A report from the Center for Global Development and the Overseas Development Institute in 2015 stated that “cash transfers are among the most well-researched and rigorously-evaluated humanitarian tools of the last decade,” naming them the “‘first best’ response to crises.” Providing funds directly to those in need had proven itself over decades to be the most effective way of meeting those needs.
To test if an organization is really helping out a particular person or group of people in the most efficient way, it is becoming easier for someone to simply give their own money directly and compare the results. The ease, Soskis writes, and the consequent trend, of people transferring cash to those in need directly, has provided a new “benchmark” for the effect of the money donated: the operation of big-name charities, which have for decades operated behind a necessary veil of trust, can now be compared to the effectiveness of a direct donation.
While modern technology in the charitable sphere is not without its shortcomings, it seems that this is a place where it actually provides a great advantage. For example, the service of GiveDirectly: anyone can get on the site and instantly donate, directly, to a person in need. That person can then post real-time updates of the ways in which that money is changing their lives.
Read the full article about the rise of direct transfers by Stacey Egger by Philanthropy Daily.