Tag Archives: non-profits

Fed up with non-profits, Facebook Cofounder Chris Hughes And Google Are Giving Cash Directly To The Poor

Having seen mismanagement and corruption in some non-profits, I agree with their approach

Paul Niehaus, an assistant professor of economics at UC San Diego and a board member of GiveDirect, came up with the idea of transferring money to poor people’s cell phones back in 2008. He was working with the Indian government to limit corruption and saw how the government there transferred money to people’s phones. “I realized I could do that myself,” Niehaus told me. He told the gathering in San Francisco that most of the money that’s donated to help poor people goes to international development organizations, not poor people directly. GiveDirectly’s giving has had “big impacts on nutrition, education, land and livestock” and “hasn’t been shown to increase how much people drink,” Niehaus emphasized. “A typical poor person is poor not because he is irresponsible, but because he was born in Africa.”

GiveDirectly finds poor households – typically people who live in mud huts with thatched roofs – and uses a system called M-Pesa, run by Vodafone , to transfer money to their cell phones. Transaction fees eat up a mere 3 cents per donated dollar. Niehaus says plenty of recipients use the money to upgrade their homes by adding a metal roof.

Which is why I like to give money through Kiva.

Slate’s Matthew Yglesias says much the same thing in Slate

Poverty is, fundamentally, a lack of money. So doesn’t it make sense that simply delivering cash to poor people can be an effective strategy for alleviating it?

Transferring money to poor Americans has been a much bigger success than most of us realize. When it comes to the global poor—the hundreds of millions of slum-dwellers and subsistence farmers who still populate the world—one might be more skeptical. Perhaps the problems facing these unfortunates are simply too profound and too complex to be addressed by anything other than complicated development schemes. Well, perhaps.

But there’s striking new evidence that helping the truly poor really is as simple as handing them money. Money with no strings attached not only directly raises the living standards of those who receive it, but it also increases hours worked and labor productivity, seemingly laying the groundwork for growth to come.