Marinella Capriati

When we talk about charities, we often use numbers, since we want to give a concrete idea of how cost-effective a charity is (because our charities are some of the most cost-effective in the world!). On our website, for example, we say that it costs $3,500 to avert a child’s death through “interventions supported by AMF” and $1.26 to treat a child through “interventions supported by SCI”. But why use such convoluted language?

There is a reason why we don’t just say “AMF averts a death for $3,500” or “SCI treats a child for $1.26”, and that’s the fact that our charities are not the same as the interventions they’re part of. They’re actually often a part of a chain of actions which lead to, for example, one child being treated for schistosomiasis for every 

 spent along the way or one death being averted for every 

It’s important to say that we think that having charities work in this way (performing small tasks rather than the whole intervention) is often a good idea: it means that charities can easily plug gaps that can occur in large-scale interventions.

To demonstrate the difference between a charity and its related intervention, take the 

, one of Giving What We Can’s two Top Charities. The intervention AMF works on is bed net distribution: providing long-lasting insecticide-treated bed nets to people in developing countries to help fight malaria. Specifically, AMF buys nets, delivers them to local partners in those countries and supports the monitoring and evaluation that comes after the delivery of the nets, in order to make sure they’re being used correctly. There are parts of the overall bed net providing process that AMF does not do: it does not distribute the nets to individuals, and it does not conduct the surveys needed beforehand in order to tailor each net delivery to each region. That’s done (and paid for) by AMF’s local partners.

For another example, take Giving What We Can’s other Top Charity, the 

. It works on the overall intervention of providing de-worming treatments, and it does that very specifically by providing the technical support needed for the government distribution of the drugs needed. Pharmaceutical companies produce and donate those drugs; again, SCI is part of a chain.

Cost-effectiveness of the overall intervention

Since our charities only perform one link in an intervention’s chain, it makes sense to judge a charity’s cost-effectiveness on the effectiveness of the entire chain rather than the effectiveness of that particular charity on its own. After all, some small organisation performing admin for some intervention can be the most efficient in the world, but if the overall aim of the intervention is to shred money, we wouldn’t want you to give to that organisation!

What will happen if you donate $3,500 to AMF or $1.26 to SCI?

 that deworming treatments as an overall intervention (of which SCI is a part) cost $1.26 per child treated. But if you give $1.26 to SCI, that money on its own won’t treat a child: it’ll go towards the vital technical support needed to treat about 2 children. Other donors will add other necessary resources, and 

, you can expect to treat a child for $1.26.

 that the cost of averting a child’s death through bed net distribution as an overall intervention (of which AMF is a part) is $3,500. However, if you donate $3,500 to AMF, that won’t avert a death on its own. It will buy a load of bed nets. Other “non-private” donors to AMF (like Concern Universal or DFID) will then provide resources to deliver the bed nets to local partners (and provide support for the follow-up), and the local partners will do the rest. 

, you can expect to save one life for every $3,500 committed to bed net provision overall.

It would be so much easier if we could say that, by donating a certain amount of money to an effective charity, you’d be expected to avert a death! The more complicated truth is, for example, that if you give $3,500 to AMF, then you will buy 

 protecting around 2520 people and averting the deaths of 1.8 children (according to the 

Donations to our Top Charities are absolutely vital, though. Those nets need to get bought by AMF, and those governments need the support SCI provides. Without donations like yours, the necessary work of organisations like AMF and SCI cannot be done, the gaps which we know exist in the vital intervention processes which they support would not be filled, and the whole intervention wouldn’t work at all. So thanks!

How we talk about what donations will achieve

 a universal basic income intervention in Kenya: they’re planning to provide about 6,000 people with unconditional transfers for at least 10 years, transferring money to all residents of the villages which will be targeted by the intervention. This has received a lot of attention from the media, with the trial being mentioned, among others, on 

In this blog post I’ll try to give this news some context, by comparing this intervention with some alternatives. I will start by considering other types of transfers that can be made in the context of development interventions, looking at in-kind transfers and conditional cash transfer. Then I will focus on unconditional cash transfers, and specifically the ones that GiveDirectly has been delivering up until now, and explain what’s different and interesting about their new basic income pilot.

Part of international development aid is about re-distributing resources to people living in poverty. But while this seems pretty straight-forward, it is in fact not easy to work out exactly what type of resources we should move, and how they should be moved.

Traditionally, much development aid has focused on 

, that is, on the provision of specific goods and services. This might include very disparate things: from cattle, books or food, to schools and hospitals. However, some argue that 

providing cash might be better that providing in-kind aid.

 There are several arguments for this thesis, but here I’ll just mention two points. First, providing cash can be 

 This is becoming increasingly true thanks to new electronic ways of moving cash: for instance, GiveDirectly makes transfers through mobile phones, which can be cheaper than in person distributions.

 Secondly, providing cash generally leaves recipients more 

 This is good because recipients might have better information about what would be most useful for them.

However, some do not think that in-kind aid should be substituted by cash transfers. Part of the disagreement is rooted in worries about recipients 

 (what are sometimes referred as ‘temptation goods’). In fact, however, evidence suggests that this worry is 

: the evaluation of GiveDirectly’s cash transfer program shows no increase in spending on temptation goods.

Other worries seem to be more pressing: supporters of in-kind transfers argue that some essential services (such as hospital, roads and schools) 

bring benefits to people other than the recipients

 (they lead to what economists call “positive externalities”): for example, hospitals and school are likely to increase levels of health and education, and healthy and educated workers are likely to be more productive, which would in turn benefit not only them, but also the wider population. Goods which have positive externalities are likely to be 

, so might not be adequately provided through cash transfers.

Interestingly, however, cash transfers are not always offered as an alternative to public services. Sometimes, transfers are used with the specific intent of increasing the uptake of these services. This is the case of 

: transfers which are conditional on the satisfaction of certain behavioural requirements, generally concerning the health and education of children resident in the recipient household. For instance, Mexico’s “Oportunidades” conditional cash transfers programme, provides cash transfers to households conditional on their children regularly attending school and making health clinic visits.

, which means that transfers are made without any condition being set.

We have written extensively about the advantages and disadvantages of conditional and unconditional cash transfers in our new report on 

. The (really short) summary is that conditional cash transfers lead to 

 than unconditional cash transfer: more people employ education and health services, which increases workers’ skills, knowledge, and experience. However, unconditional cash transfers have the advantage of 

 households simply because they may not meet certain behavioural requirements and allow vulnerable households to identify their own needs

. They also have lower administrative costs than conditional cash transfers, since there is no need to verify that the conditions have been met.Because of this, unconditional cash transfer have received increasing attention as a tool for international development.

Other types of unconditional cash transfers

GiveDirectly provides beneficiaries with unconditional cash transfers

 - they transfer low-income households a certain amount of money, without any condition attached. They have been doing this for a while, and have mainly worked in Kenya and Uganda.

Yet, many people seem to be pretty excited about GiveDirectly’s news that they will be testing a basic universal income and their announcement of the pilot has received a large amount of media attention. 

So what is so different about their new basic income program?

First of all, the basic income pilot will provide transfers to 

all full-time residents of treatment villages

 Up until now, GiveDirectly has been only providing transfers to some people in target villages. However, some evidence suggests that an increase in the mean wealth of the village is correlated with a significant decrease in life satisfaction among individuals in households that did not receive transfers.

 By targeting all residents, universal basic income might avoid this problem.

Secondly, the basic income pilot will provide 

smaller and regular transfers for 10 years

. While the details of the pilot are yet to be defined, the payments are expected to amount to somewhere between $250 and $400 a year per person

. In contrast, GiveDirectly’s has so far made one-off transfers of about $1000. This change is interesting because having a transfers for longer time might give people the security needed to take more risks and invest a larger portion of their resources, which might enable them to increase their income in the long run.

GiveDirectly universal basic is unlikely to be able to substitute the provision of public goods, or lead to as much investment in human capital as conditional cash transfers would. However, it is likely to be a cheap and flexible way of transferring resources, that can provide an inclusive safety net for people living in poverty. It will also avoid decreases in life-satisfaction for households not receiving transfers (since all households in target villages will receive transfers) and might give recipients more financial security to make investments, and increase their longer term income.

What’s so special about GiveDirectly’s basic income pilot? 

Marinella holds a PhD in political philosophy from Oxford University. She formerly worked as a Research and Communications Analyst for Giving What We Can.

Marinella Capriati

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How we talk about what donations will achieve

What’s so special about GiveDirectly’s basic income pilot?