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Unconditional cash transfer (UCT) programs are
philanthropic Philanthropy is a form of altruism that consists of "private initiatives, for the public good, focusing on quality of life". Philanthropy contrasts with business initiatives, which are private initiatives for private good, focusing on material ...
programs aim to reduce poverty by providing financial welfare without any conditions upon the receivers' actions. This differentiates them from conditional cash transfers where the government (or a charity) only transfers the money to persons who meet certain criteria. Unconditional cash transfers have developed on the premise that giving cash to citizens allows them to have autonomy over their own lives.


Types

Unconditional cash transfers could vary in a number of ways: * They could be one-off or recurring: One-off unconditional cash transfers involve either a literal one-time transfer or a transfer over a short period of time, intended to provide people money that they could use for long-term expenses. On the other hand, continuing or recurring cash transfers offer a small sum of money periodically, enabling people to save at a greater rate, or to spend more. Generally, unconditional cash transfers are more likely to be one-off than recurring. * They could be
means-tested A means test is a determination of whether an individual or family is eligible for government assistance or welfare, based upon whether the individual or family possesses the means to do without that help. Canada In Canada, means tests are use ...
at the individual/household level or given to all individuals/households in a given area. * They could be means-tested at the level of villages or applied to all villages in a given district or region. * The grant could be made at the individual or household level, and its size could be fixed or variable based on the household size.


Programs and organizations involved


GiveDirectly

The largest organization exclusively devoted to cash transfers is
GiveDirectly GiveDirectly is a nonprofit organization operating in East Africa that helps families living in extreme poverty by making unconditional cash transfers to them via mobile phone. GiveDirectly transfers funds primarily to people in Kenya, Uganda, ...
. GiveDirectly was founded by economics graduate students in
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, with two main inspirations: the growing evidence that cash transfers could work, and the growth of cheap and reliable money transfer technology. GiveDirectly's operations were initially limited to
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, where the m-Pesa money transfer system is well-established. In November 2013, the organization expanded to
Uganda }), is a landlocked country in East Africa. The country is bordered to the east by Kenya, to the north by South Sudan, to the west by the Democratic Republic of the Congo, to the south-west by Rwanda, and to the south by Tanzania. The souther ...
. Charity evaluator
GiveWell GiveWell is an American non-profit charity assessment and effective altruism-focused organization. GiveWell focuses primarily on the cost-effectiveness of the organizations that it evaluates, rather than traditional metrics such as the percenta ...
first noticed GiveDirectly in July 2011, named it as a standout charity in November 2011, and gave it top charity status starting November 2012. GiveDirectly has been a GiveWell top charity in the years 2012, 2013, 2014, and 2015. Largely as a result of GiveWell's recommendation,
Good Ventures Good Ventures is a private foundation and philanthropic organization in San Francisco, and the fifth largest foundation in Silicon Valley. It was co-founded by Cari Tuna, a former '' Wall Street Journal'' reporter, and her husband Dustin Moskovi ...
, the private foundation of
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co-founder
Dustin Moskovitz Dustin Aaron Moskovitz (; born May 22, 1984) is an American Internet entrepreneur who co-founded Facebook, Inc. (now known as Meta) with Mark Zuckerberg, Eduardo Saverin, Andrew McCollum and Chris Hughes. In 2008, he left Facebook to co-found A ...
and his wife
Cari Tuna Cari Tuna is an American nonprofit businessperson. Formerly a reporter for ''The Wall Street Journal'', she co-founded and works for the organizations Open Philanthropy and Good Ventures. Education and career Tuna was born in Minnesota. The e ...
, that works closely with GiveWell, has donated well over $40 million to GiveDirectly (in grant sizes of $7 million, $5 million, $25 million, and $9.8 million). An impact evaluation of GiveDirectly's cash transfer program was conducted in collaboration with GiveDirectly, with the working paper released in October 2013, later published in 2016 after peer review. The paper attracted commentary from
World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Interna ...
economist David McKenzie. He praised the robustness of the study's design and the clear disclosure of the study lead's conflict of interest, but raised two concerns: * The use of self-reporting made the results hard to interpret and rely on (this being a feature of any study that attempted to measure consumption). * The subdivision of the sample into so many different groups meant that there was less
statistical power In statistics, the power of a binary hypothesis test is the probability that the test correctly rejects the null hypothesis (H_0) when a specific alternative hypothesis (H_1) is true. It is commonly denoted by 1-\beta, and represents the chances ...
that could be used to clearly decide which group had better outcomes. Chris Blattman, a prominent blogger and academic in the area of development economics, with a particular focus on
randomized controlled trial A randomized controlled trial (or randomized control trial; RCT) is a form of scientific experiment used to control factors not under direct experimental control. Examples of RCTs are clinical trials that compare the effects of drugs, surgical te ...
s, also blogged the study. He expressed two main reservations: * The
observer-expectancy effect The observer-expectancy effect (also called the experimenter-expectancy effect, expectancy bias, observer effect, or experimenter effect) is a form of reactivity in which a researcher's cognitive bias causes them to subconsciously influence th ...
, where the people being asked questions may be subtly influenced in their answers by the experimenter's expectations. * The lack of clear positive effect on long-term outcomes, as well as the lack of increased spending on health and education. These concerns were in part addressed by other studies. A follow-up of the above study finds net positive spillovers at the community level from unconditional cash transfer

Another study finds beneficial effects of unconditional cash transfer programs not only in self-reported outcomes, but also in health outcomes like body weight and biomas


The CALP Network

The CALP Network (CALP) global network of organisations engaged in policy, practice and research in humanitarian cash and voucher assistance (CVA) and financial assistance more broadly. Members currently include local and international non-governmental organisations, United Nations agencies, the Red Cross/Crescent Movement, donors, specialist social innovation, technology and financial services companies, researchers and academics, and individual practitioners. Their website includes a number of studies on unconditional cash transfers, with a particular focus on cash transfers made in the aftermath of natural disasters. Salient examples include: *
UNICEF UNICEF (), originally called the United Nations International Children's Emergency Fund in full, now officially United Nations Children's Fund, is an agency of the United Nations responsible for providing humanitarian and developmental aid to c ...
's Alternative Responses for Communities in Crisis Programme, the largest humanitarian multi-purpose unconditional cash transfer partnership in the
Democratic Republic of the Congo The Democratic Republic of the Congo (french: République démocratique du Congo (RDC), colloquially "La RDC" ), informally Congo-Kinshasa, DR Congo, the DRC, the DROC, or the Congo, and formerly and also colloquially Zaire, is a country in ...
. * Unconditional cash transfers to reduce food insecurity for displaced households and to assist with repatriation in
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and Laguna in the
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, in the aftermath of
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. The Electronic Cash Transfer Learning Action Network (ELAN) within CaLP has also worked with Mercy Corps, and Humanitarian Policy Group (HPG) on case studies for humanitarian electronic transfer projects in Ethiopia, Zimbabwe, and Bangladesh. These case studies Examine the extent to which: * recipients used digital financial services (e.g. money transfers, savings, credit, purchases) through mobile money; * the factors that affected recipients' uptake of these financial services; and * considerations for future humanitarian programs aiming to increase the use of digital financial services among recipients.


Other programs

A blog post by Vishnu Prasad for the Institute for Financial Management and Research summarized existing research on unconditional cash transfers, citing studies around the following programs: * South African Old Age Pension Scheme, a means-tested unconditional cash transfer scheme in
South Africa South Africa, officially the Republic of South Africa (RSA), is the Southern Africa, southernmost country in Africa. It is bounded to the south by of coastline that stretch along the Atlantic Ocean, South Atlantic and Indian Oceans; to the ...
to women over the age of 60 and men over the age of 65. * ''Bono de Desarollo Humano'', an unconditional cash transfer scheme in
Ecuador Ecuador ( ; ; Quechua: ''Ikwayur''; Shuar: ''Ecuador'' or ''Ekuatur''), officially the Republic of Ecuador ( es, República del Ecuador, which literally translates as "Republic of the Equator"; Quechua: ''Ikwadur Ripuwlika''; Shuar: ''Ekua ...
* South Africa's mean, unconditional child grant


Reception


Use as a benchmark

Jeremy Shapiro, a GiveDirectly co-founder and the person who published GiveDirectly's impact evaluation, has argued for using cash transfers (and more specifically, unconditional cash transfers) as a benchmark against which other development interventions should be evaluated, due to the simplicity and scalability of cash transfers. Others who have also endorsed the idea of using cash transfers as a benchmark, citing GiveDirectly, include
Innovations for Poverty Action Innovations for Poverty Action (IPA) is an American non-profit research and policy organization founded in 2002 by economist Dean Karlan. Since its foundation, IPA has worked with over 400 leading academics to conduct over 600 evaluations in 51 co ...
and
GiveWell GiveWell is an American non-profit charity assessment and effective altruism-focused organization. GiveWell focuses primarily on the cost-effectiveness of the organizations that it evaluates, rather than traditional metrics such as the percenta ...
.


Media discussion

Since 2012, there have been a number of media pieces discussing cash transfers, generally in the context of reporting on GiveDirectly. This includes coverage in the ''
New York Times ''The New York Times'' (''the Times'', ''NYT'', or the Gray Lady) is a daily newspaper based in New York City with a worldwide readership reported in 2020 to comprise a declining 840,000 paid print subscribers, and a growing 6 million paid ...
'', ''
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'', the ''
Freakonomics ''Freakonomics: A Rogue Economist Explores the Hidden Side of Everything'' is the debut non-fiction book by University of Chicago economist Steven Levitt and ''New York Times'' journalist Stephen J. Dubner. Published on April 12, 2005, by Willi ...
'' radio podcast, and ''
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''.


Evaluations of intervention impact

A team of the Cochrane Collaboration including researchers from Cornell University, Harvard University, and the Universities of Bremen and Otago conducted the first comprehensive systematic review of the health impact of unconditional cash transfers. The review of 21 studies, including 16 randomized controlled trials, found that unconditional cash transfers may not improve health services use. However, they lead to a large, clinically meaningful reduction in the likelihood of being sick by an estimated 27%. Unconditional cash transfers may also improve food security and dietary diversity. Children in recipient families may be more likely to attend school, and the cash transfers may increase money spent on health care. An update of this landmark review in 2022 confirmed these findings based on a grown body of evidence and additionally found sufficient evidence that unconditional cash transfers may also reduce the likelihood of living in extreme poverty.


See also

*
Cash transfers A cash transfer is a direct transfer payment of money to an eligible person. Cash transfers are either unconditional cash transfers or conditional cash transfers. They may be provided by organisations funded by private donors, or a local or re ...
(
Transfer payment In macroeconomics and finance, a transfer payment (also called a government transfer or simply transfer) is a redistribution of income and wealth by means of the government making a payment, without goods or services being received in return. T ...
s) *
GiveDirectly GiveDirectly is a nonprofit organization operating in East Africa that helps families living in extreme poverty by making unconditional cash transfers to them via mobile phone. GiveDirectly transfers funds primarily to people in Kenya, Uganda, ...
*
Unconditional basic income Universal basic income (UBI) is a social welfare proposal in which all citizens of a given population regularly receive an unconditional transfer payment, that is, without a means test or need to work. It would be received independently of an ...
, which is universally given to every member regardless of their wealth. * Unconditional versus conditional cash transfers


References

{{reflist Welfare economics Economic development programs Social programs Welfare reform