GiveDirectly

This is a Founders Pledge summary and interpretation of original research published by GiveWell, our research partner focused on global health and development. For GiveWell's full research see their review of GiveDirectly.

GiveDirectly makes cash transfers, via mobile-linked payment services, to people in low- and middle-income countries. It targets people in extremely low-income households and those impacted by humanitarian crises.

If you are interested in co-funding a portfolio of organizations like this one, please see our Global Health and Development Fund.

What problem are they trying to solve?

The World Bank estimates that 770 million people (almost 10% of the world’s population) live in extreme poverty (defined as less than $2.15 per day at purchasing power parity). ¹ Approximately half of those living in extreme poverty live in Sub-Saharan Africa.² People living in poverty face multiple challenges, including food insecurity and a lack of access to healthcare and safe water, and eradicating poverty is a global development priority.

What do they do?

GiveDirectly makes unconditional cash transfers (UCTs) to extremely low-income households. They also make transfers to people who have been affected by humanitarian crises, such as refugees. These cash transfers usually use mobile phone payment services, and GiveDirectly often supports the distribution of mobile phones to poor households. GiveDirectly's standard model involves grants of approximately $1,000 (USD) delivered over several months in two payments. Administrative costs are very low, and roughly 83% of every dollar donated goes directly to recipients.

GiveDirectly has operated since 2009, and is currently active in the Bahamas, the Democratic Republic of Congo (DRC), Kenya, Liberia, Malawi, Morocco, Rwanda, Togo, and the United States.

For further details regarding GiveDirectly’s unconditional cash transfers, including an outline of their typical process, see GiveWell’s review of GiveDirectly.

Why do we recommend them?

• This charity was recommended to us by GiveWell, our research partner for global health and development issues.
• Cash transfers are one of the best-studied development interventions, and have strong evidence of effectiveness in many different contexts.
• GiveDirectly can use substantial additional funding productively, and has a strong track record of ensuring that a high proportion of funds raised are transferred directly to recipients.
• GiveWell reports that GiveDirectly stands out for its consistently clear and transparent communications.

Unconditional Cash Transfers

A 2013 randomized controlled trial estimating the effects of transferring money to households living in poverty in Kenya found that, in the short-term, the transfers increased consumption and the value of assets, such as savings and housing.³ The study found that recipients overwhelmingly used the transfers to purchase necessities. The program also improved food security and psychological well-being.

A 2018 follow-up to this RCT found that recipients of UCTs benefited from sustained long-term increases in assets. Three years after cash transfer, recipients had 40% more assets than those in control households, suggesting a strong, positive, long-term impact. Similarly, a 2018 study in Zambia found that UCT programs had, “strong protective and productive effects.” The programs studied generated large income multipliers, averaging 1.67 across the programs.⁴

Lastly, some may worry that UCT recipients increase spending on harmful products, GiveWell reported⁵ that of three randomized controlled trials of cash transfers in multiple countries, none found large increases in consumption of alcohol or tobacco. Further, a study by the World Bank reviewed, "19 studies with quantitative evidence on the impact of cash transfers on temptation goods [primarily alcohol and tobacco], as well as 11 studies that surveyed the number of respondents who reported they used transfers for temptation goods". They concluded that, "Almost without exception, studies find either no significant impact or a significant negative impact of transfers on temptation goods."⁶

Cost-effectiveness

From 2009-2018, cash grants made up 83% of GiveDirectly’s expenses.⁷ This means that it is reasonable to expect that for every $1 donated, $0.83 reaches a recipient in extreme poverty. Unconditional cash transfers seem particularly likely to be effective in a range of contexts because recipients are able to spend the money on whatever is most valuable to them in their unique circumstances.

Experimentation and role in field

GiveDirectly has played a leading role in increasing awareness of and conducting research into UCTs.⁸ They seek to grow the evidence base for cash transfers, improve recipients’ returns and welfare, and to develop the capabilities needed to implement programs at scale and in different contexts.⁹

Commitment to impact evaluation and transparency

GiveWell also highlighted GiveDirectly as a particularly transparent organization dedicated to improving the effectiveness of their program.¹⁰

Why do we trust this organization?

This charity was recommended to us by GiveWell, our research partner for global health and development issues. GiveWell is a nonprofit dedicated to finding outstanding giving opportunities and publishing the full details of their analysis to help donors decide where to give.

Unlike charity evaluators that focus solely on assessing administrative or fundraising costs, GiveWell conducts in-depth research aiming to determine how much good a given program accomplishes, per dollar spent, in terms of lives saved or lives improved. Rather than try to rate as many charities as possible, they focus on the few charities that stand out according to a specific set of criteria, in order to find and confidently recommend high-impact giving opportunities. GiveDirectly was one of GiveWell's top charities for many years, and, while it is no longer one of their top charities, they retain a very positive view of this program (see here for more info).

What would they do with more funding?

Spending opportunities

As of April 2020, GiveDirectly had identified opportunities to spend over $550 million over the next three years.¹¹ This includes, in order of priority:

• ~$150 million to maintain its rolling cash transfer programs in DRC, Kenya, Liberia, Malawi, Rwanda, and Uganda in 2021-23.
• ~$360 million scale-up its rolling cash transfer programs in the above countries in 2021-23.
• ~$75 million to establish cash transfer programs in new countries in 2021-23 or to respond to humanitarian crises.

Room for funding

GiveWell believes that GiveDirectly could use more funding than it expects to receive to support its cash transfer programs.¹² They note that this is a particularly rough estimate compared to their estimates for other top charities. This estimate is based on:

• Available funding: In April 2020, GiveDirectly held $126 million in funding, specifically for its cash transfer programs. All of this funding has been assigned to support future activities, primarily cash transfers to be made through GiveDirectly’s standard program.
• Expected funding: GiveWell projected that GiveDirectly will receive a further $150-200 million to support its work over the next three years (2021-2023).
• Spending opportunities: GiveDirectly has identified that, over the next three years, they will have opportunities to spend over $550 million without significantly compromising their cost-effectiveness.

To summarize, GiveWell estimates that, over the next three years (2021-2023), GiveDirectly could use more than $350 million beyond the funding that they are expected to receive.¹³ This would be used both to maintain and to expand their cash transfer programs.

What are the major open questions?

There are some concerns about the impact of cash transfers on non-recipients. For example, while cash transfers may benefit non-recipients by stimulating the local economy, they could conceivably harm them by increasing prices. GiveWell has received full results from GiveDirectly's general equilibrium study, which were published in November 2019, but has not yet reviewed these results in depth.¹⁴

Moreover, GiveDirectly are currently conducting research to determine whether, as awareness of their program grows, recipients are increasingly likely to be the victims of crime. So far, there is little evidence that this is a major concern.¹⁵

Message from the organization

Among their organizational values, GiveDirectly state that, “We reason from first principles, grounding our decisions in objective claims about the world, rather than hard-to-disprove assertions or hierarchy. We aim to brainstorm inclusively and respectfully, but critically self-vet ideas we put forward, so as to ensure productive and prudent decision making.”¹⁶

More resources

• GiveWell write up on GiveDirectly
• GiveWell review of the evidence for Cash Transfers
• Founder Pledge report on Cash Transfers
• Give Directly’s website

Disclaimer: We do not have a reciprocal relationship with any charity, and recommendations are subject to change based on our ongoing research.

Notes

1. World Bank. (2021). Poverty. worldbank.org. Retrieved February 12, 2021, from https://data.worldbank.org/indicator/SI.POV.DDAY?end=2018&start=1967&view=chart ↩

2. World Bank. (2021). DataBank World Development Indicators. worldbank.org. Retrieved February 12, 2021, from https://databank.worldbank.org/reports.aspx?source=2&series=SI.POV.DDAY&country= ↩

3. “We find statistically and economically meaningful impacts of cash transfers across the majority of outcomes measured by our indices, including assets, consumption, food security, revenue from self-employment, and psychological well-being.” Haushofer, J., & Shapiro, J. (2013). Household Response to Income Changes: Evidence from an Unconditional Cash Transfer Program in Kenya. GiveWell. https://files.givewell.org/files/DWDA%202009/Interventions/Cash%20Transfers/haushofer_shapiro_uct_2013.11.16.pdf ↩

4. Handa, S., Natali, L., Seidenfeld, D., Tembo, G., & Davis, B. (2018). Can unconditional cash transfers raise long-term living standards? Evidence from Zambia. Journal of Development Economics, 133, 42-65. https://www.sciencedirect.com/science/article/pii/S0304387818300105 ↩

5. GiveWell. Cash Transfers: Alcohol and Tobacco. givewell.org. Retrieved February 12, 2021, from https://www.givewell.org/international/technical/programs/cash-transfers#Alcoholandtobacco ↩

6. Evans, D., & Popova, A. (2014). Cash Transfers and Temptation Goods. World Bank Africa Region. http://documents1.worldbank.org/curated/en/617631468001808739/pdf/WPS6886.pdf ↩

7. GiveWell. (2018). GiveWell's analysis of GiveDirectly financial summary through February 2018. givewell.org. Retrieved February 12, 2021, from https://docs.google.com/spreadsheets/d/1L03SQuAeRRfjyuxy20QIJByOx6PEzyJ-x4edz2fSiQ4/edit#gid=537899494 ↩

8. GiveWell. (2020). Give Directly Report: Evaluation and experimentation. givewell.org. Retrieved February 12, 2021, from https://www.givewell.org/charities/give-directly#Evaluation_and_experimentation ↩

9. GiveDirectly. (2014, July). GiveDirectly. givewell.org. Retrieved February 12, 2021, from https://files.givewell.org/files/DWDA%202009/GiveDirectly/20140723_GW%20GD%20quarterly%20update.pdf ↩

10. GiveWell. (2020, November). Qualitative Assessments of Top Charities. givewell.org. Retrieved February 12, 2021, from https://www.givewell.org/charities/top-charities/2020/qualitative-assessments ↩

11. GiveWell. (2020). Give Directly Report: Is there room for more funding?. Givewell.org. Retrieved February 12, 2021, from https://www.givewell.org/charities/give-directly#Roomformorefunding ↩

12. GiveWell. (2020). Give Directly Report: Is there room for more funding?. givewell.org. Retrieved February 12, 2021, from https://www.givewell.org/charities/give-directly#Roomformorefunding ↩

13. GiveWell note that these are rough calculations. ↩

14. GiveWell. (2018, December). Spillover Effects of GiveDirectly's Cash Transfers Program. givewell.org. Retrieved February 12, 2021, from https://www.givewell.org/international/technical/programs/cash-transfers/spillovers ↩

15. GiveWell (Ed.). (2016). Paul Niehaus and Ian Bassin, conversation with Givewell, September 15 2016. ↩

16. Give Directly. (2021). GiveDirectly Values. Givedirectly.org. Retrieved February 18, 2021, from https://www.givedirectly.org/give-directly-values/ ↩