By Joe Armenta
Senior Editor

A new developmental organization is shaking the international humanitarian aid arena. In 2008, a group of recent graduates from the University of Cambridge developed a model to provide financial assistance to some of the world’s poorest people—one that is actually pretty simple.

Instead of establishing complicated schemes to build communities in the developing world, GiveDirectly distributes cash payments straight to people in need to spend at their leisure. The money comes with no strings attached. Once a recipient is identified, a wireless cash transfer is routed directly to her account and she is given the ability to spend the funds on whatever she chooses.

This goes against the dominant nonprofit industry standard, which advocates sustainable development by teaching skills and offering goods to poor families in hopes of indirectly improving their quality of life. The idea behind these types of programs is proverbial: give a man a fish and you feed him for the day; teach a man to fish and you feed him for a lifetime.

The problem with this is that fishing lessons are expensive and time consuming. To provide technical assistance to people requires a highly trained staff, administrative structures and institutional monitoring tools. What is more, the skill sets that people need to achieve long-lasting sustainable development are often unclear. What may seem like a sure way to improve living standards may actually have little impact when the program’s recipients no longer receive aid. With this in mind, it may be more efficient to take the funds that would have otherwise been spent on indirect expenses and give them straight to the targeted individuals.

A full discussion of the benefits of each type of program can be found here, but in debating the efficiency of providing aid to the world’s poor, it should be noted that both types of organizations function as an anti-government solution to addressing poverty. Whether it is providing services or direct cash flow, leaders of both types of organizations attempt to target individuals by transcending national borders.

The problem with this is that widespread poverty in the developing world is the result of bad governance. Poor people emerge out of the inadequate distribution of resources to a country’s citizenry. A report by the Brookings Institute finds that of the 1.2 billion people currently living in poverty, an estimated 595 million live in resource rich countries that experience high rates of corruption and poor institutional frameworks.

Governments are important in addressing the needs of people. They can offer incentives for international investment, build the necessary infrastructure to the connect markets and provide educational training to advance performance. Moreover, good governance, whereby leaders are receptive to the demands of their people, provide an outlet for the poor to demand the greater distribution of wealth in order to increase social mobility.

While it is true that outside non-governmental organizations, such as GiveDirectly, do help individuals access resources, their assistance comes at the cost of letting governments off the hook for providing such services. Why should a government invest funding in programs when it knows that an outside organization will do it for free? More importantly, why should an individual expect its government to provide such services when outsiders will literally give them money for being poor?

Moving forward to eradicate poverty will require a greater emphasis on fostering better governance. This is a slow and tedious process, but its effect will have truly long-lasting and sustainable impacts.

Photo by DFID-UK Department for International Development

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