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Charity Finds Success With Strings-Free Grants to the Poor

Paul and Michael started GiveDirectly in 2008 while pursuing advanced degrees in economics at Harvard. Their graduate research had uncovered multiple reports demonstrating the effectiveness of cash transfers as a model to alleviate poverty. They wanted to donate, but couldn't find a single nonprofit using this approach, so they created their own.

Today, GiveDirectly remains the first and only nonprofit devoted to unconditional cash transfers directly to the impoverished. Their lean model uses mobile-based banking technology from M-Pesa to transfer 90% of the money raised into the hands of the poor. Just 10% is spent on transfer fees and the cost of locating and enrolling recipients.

Since launching in Kenya, GiveDirectly continues to evaluate its approach with randomized control trials. They use a lottery system similar to medical trials and compare developmental outcomes of households who have received funding against those who haven't. Their rigorous data shows that no-strings-attached cash transfers improve health and downstream financial gains. They also use this data to refine their model, and make it available on their website.

Source: Harvard Business Review. Read full article. (link)

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