The Charities Review Council couldn’t have brought in a more appropriate presenter than Michael Faye to speak at its recent conference on Disruptive Philanthropy. Michael is one of the founders of GiveDirectly, a private international development organization that gives cash to the poor in Kenya and Uganda via cell phone technology, no strings attached. As Michael observed, giving cash to poor people-what a crazy idea! This is in contrast to the usual method of aid being funneled through many layers of NGOs which may or may not end up being spent wisely or transparently. GiveDirectly does robust evaluations and has concluded that in fact its efforts are effective. Research showed:
- Assets increased by 58%, or $278, with investment concentrated in livestock, housing, and household durables.
- Business and agricultural income increased by 28% of the average grant size, implying a 28% annual rate of return, not including cost savings accruing from common durable goods investments such as metal roofs.
- Expenditure increased in nearly every category, but not on tobacco, alcohol, or gambling.
- Food security improved substantially. For example, children were 42% less likely to go entire days without eating.
- Mental health improved substantially as measured by standard scales, and there is some evidence that larger transfers lowered levels of the stress hormone cortisol.
- Domestic violence against women fell in both treated households and their near neighbors.
GiveDirectly is an example of the phenomenon of young wealthy (whose wealth often derives from careers in investment banking and technology), tech-savvy people who want to make positive change in the world. They want to put their dollars and energy (some, like Michael, are leading nonprofits, not just donating) into efforts that will make a difference and they expect to see proof (i.e., data) of that.
However, as Michael explained, the GiveDirectly approach does not translate easily to address poverty and social problems in the United States in part because domestic poverty has more complex causes and money goes further in undeveloped countries so it takes less to show results.
But wouldn’t it be great to be able to put that kind of talent and technology to work in the U.S. solving social and economic problems! Hopefully, the Disruptive Philanthropy event, and others like it, will help to explore ways to apply the lessons of GiveDirectly closer to home.