And now to the main assumption we'd like to tackle today – Giving directly to those living in poverty is ineffective.
It's a common notion – everywhere from the streets of Chicago to far away countries classified as developing. And it's an adage as old as colonialization (and just as troubling) – that those living in poverty are not as capable of making economically sound decisions. And therefore, giving funds directly to them is ineffective.
In order to make real progress, we're reevaluating our preconceptions.
Today, cash counts for less than 10 percent of humanitarian aid.1 And this means that it's the providers of aid who decide what poor people need most. A non-profit organization we partner with is questioning whether this approach really helps lift people out of poverty for good.
GiveDirectly has explored sending money (usually instalments totaling ~USD 1,000 – approximately a year of income) directly to people living in extreme poverty. They send the money unconditionally, then record the results.
GiveDirectly's fundamental premise is quite simple – that people living in poverty know their own needs better than anyone else. And when given cash transfers, they can, and do, change their futures positively.