What Happens When You Give Money Directly to the Poor

We’ve talked about Give Directly, a charity that allows donors to give money directly to poor people, and Planet Money has an update on what happen when you give money to poor people in Kenya.

Some of the heads of other nonprofits working with poor people, like Carol Bellamy, the former head of Unicef, were initially skeptical that giving money directly to poor people would be effective or have a positive “return on investment.”

To gauge how much giving money directly to poor people actually helped, researchers went into villages where Give Directly gave money to the poor and interviewed each household for about six hours. The results:

• In general, those who were given money did not waste it on alcohol or tobacco (though one enterprising person bought alcohol and then sold it at a profit).
• Much of the money was spent on children’s education, health care, and to buy more and better food.
• Violence dropped, and so did hunger.
• Some people used the money to start small businesses, and incomes went up by an average of 38 percent.

Bellamy, upon hearing about some of the outcomes, admitted that this was positive and encouraging. Of course, the reason why Give Directly chose Kenya was because the government and environment are relatively stable there—giving money to poor people in places where the government is nonfunctional, where the hospitals are inadequate, and the roads need fixing wouldn’t be as effective. You can’t spend money on better health care if there are no roads to get to a health clinic, and the health clinic can’t provide you with the services you need. But still, the findings show that giving money directly to the poor combined with the work others are doing to provide adequate health care and infrastructure, is pretty promising.

Photo: Matt Rudge

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