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Google Is Giving Millions in Cash Directly to the Poor

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Crossposted on Tikkun Daily

By David Harris-Gershon (@David_EHG)

The idea of giving cash directly to the poor, rather than donating to non-profits which provide services, is anathema to most Americans.

A principal reason for this is the way in which we as a society view panhandlers, who have unfortunately come to personify those who are in desperate and immediate need of financial assistance.

Not only has giving cash to those asking for it become frowned upon out of a fear that such money will be spent to support substance addictions, but the very act of panhandling has been criminalized across America. (Of 234 cities surveyed, the National Law Center on Homelessness & Poverty found 53 percent had criminalized public begging.)

Which is why, when Google’s Director of Giving, Jacquelline Fuller, told a superior that she wanted to funnel millions of dollars of cash directly into the hands of the world’s poorest people, he responded, “ You must be smoking crack.”

But this is precisely what GiveDirectly, a non-profit based in the U.S., has been doing for some time in Kenya: finding poor villagers and transferring donations directly to them via a cellphone. And the data shows that it’s working.

So much so that Google has donated $2.5 million, and Facebook Co-Founder, Chris Hughes, now sits on the board of GiveDirectly and has been aggressively pitching the idea of direct giving to venture capitalists and those with money to give.

The idea of directly donating cash electronically to the world’s poorest people has been around since at least 2008. Per Forbes:

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.

Now, giving cash cannot solve every problem. However, doing so directly can dramatically help the world’s poorest people, who routinely must weigh unspeakable financial choices: Shelter or clothes? Food or education for my children?

Direct giving, as a concept, is a burgeoning one – and one that research shows is working in sub-Saharan Africa.

Perhaps the idea of direct giving in the United States is one that should be receiving more public attention. And by direct giving, I don’t necessarily mean giving to panhandlers. I mean this: if there was a way, in the wake of Hurricane Sandy, to give direct donations to people left homeless rather than to the Red Cross, would you prefer the former?

If there was a reputable non-profit capable of identifying Americans in direct need of financial assistance, would you choose to give directly to them as opposed to a service organization?