4 min read
Apr 1, 2016
Notice about research

Giving What We Can no longer conducts our own research into charities and cause areas. Instead, we're relying on the work of organisations including J-PAL, GiveWell, and the Open Philanthropy Project, which are in a better position to provide more comprehensive research coverage.

These research reports represent our thinking as of late 2016, and much of the information will be relevant for making decisions about how to donate as effectively as possible. However we are not updating them and the information may therefore be out of date.

Cause Area: Economic Empowerment

Donor fit:

Economic empowerment; development; mental health

What do they do?

GiveDirectly makes unconditional cash transfers to low-income households. The organisation transfers approximately one year’s worth of annual income (~$1,000) directly to beneficiaries using mobile-payment systems. Specifically, GiveDirectly transfers $1,040 to each enrolled household in Kenya, and $875 in Uganda. These transfer amounts are based on GiveDirectly's standard transfer size and adjusted for purchasing power. GiveDirectly makes three transfers in Kenya (a small initial $90 transfer followed by two $475 transfers). While the grant structure was different in Uganda (9 monthly transfers of about $97 each) the more recent campaign in the country have employed a structure similar to the Kenyan programs. GiveDirectly has recently announced they will provide at least 6,000 Kenyans with a basic income for 10 to 15 years. The evaluation of the project will be run by a research team including Abhijit Banerjee of MIT. GiveWell estimates the overall cost of the project will be roughly $30M.

Overall evaluation

We believe GiveDirectly is an effective charity. Poverty (understood in an income-based sense) has effects on food security, access to healthcare and safe water services. Living in poverty can lead to a self-sustaining cycle keeping people from improving their living conditions, a so-called poverty-trap, though a recent study using 20 year panel data in Northern Nigeria finds no clear evidence of poverty traps. Unconditional cash transfers have been shown to be effective ways of tackling economic vulnerability. GiveDirectly's program has been found to increase households' assets and lead in an improvement in recipients' food security and psychological well being. GiveDirectly has very low administrative cost and so 85% its expenses make up the cash transfer that is delivered to its recipients. Because of their lean and effective model and the resulting scalability it could effectively use $15 million more than the funds it is expecting in 2016 and likely even more in the future as they scale up.

Cost-effectiveness [⚫⚫⚪⚪⚪]

As we explain in the above report, unconditional cash transfers are a relatively cheap type of intervention, which has low monitoring and management costs. GiveDirectly can target villages and households through its eligibility criteria, which assess households on the basis of assets, vulnerability, and roof material. It employs satellite imagery to estimate thatch-iron proportions at the village level. GiveDirectly distributed to recipients 84.5% of its incurred expenses.

Robustness of evidence [⚫⚫⚫⚫⚪]

Unconditional cash transfers face an unusually low “burden of proof”, since they obviously lead to improvements in recipients’ wealth, income and consumption. Among development interventions, cash transfer schemes are exceptionally well-studied, with more than ten RCTs having evaluated the effectiveness of UCTs in a variety of geographical contexts. The study that evaluates the intervention closest to GiveDirectly's current program is Haushofer and Shapiro 2013. It shows the intervention lead to an increase in household consumption, assets, food security and psychological well being, though the follow up period is only 4 months on average and only part of the beneficiaries in the study received a large one-time transfer. When transfers are coupled with business training, some trials have witnessed very positive effects on income in the long run. GiveDirectly is in the process of conducting three RCTs: one examining the macroeconomic effects of GiveDirectly's program in Kenya; one assessing two behavioural interventions - having recipients decide when and how to receive their payments; and providing more information to recipients about spending options; and one assessing the effectiveness of showing recipients a motivational video before their participation in GiveDirectly's program.

Track record [⚫⚫⚫⚫⚪]

GiveDirectlywas founded in 2009 and is thus a relatively young organisation. The founders were graduate students in development and one of them is currently an Associate Professor at the University of California, San Diego. It has managed to transfer money at a ratio of roughly 85% and has shown a long-term commitment to transparency and improvement. It has received a $2.4 million award from in 2012, as well as an additional $2 million in 2015 to fund part of a randomized controlled trial in Rwanda. In 2015 GiveDirectly also received a $25 million grant from Good Ventures.

Room for more funding (✔)

GiveWell is confident that GiveDirectly would effectively use $15 million aside from what it already expects to receive and might be able to absorb up to an additional $75 million.

    • *[^fn-1]: World Bank Group. 2016. Global Monitoring Report 2015/2016: Development Goals in an Era of Demographic Change. Washington, DC: World Bank.