Giving to the Poor May Be Easier Than You Think

It is a Sunday and the sermon is on Matthew 25: 31-46. “The Sheep and the Goats.” The verses that give a chilling example of what it means to be a Christian. Like every other well informed person today, you think, “If only it was as simple as feeding the hungry, providing water to the thirsty, welcoming the stranger, clothing the naked, or visiting the sick and imprisoned.”

Simply feeding the hungry, providing water, and clothing the naked can create a culture of dependency, there are tricky political intricacies when it comes to immigration and welcoming the stranger, and visiting the sick and imprisoned is easy but only if the sick are family members and the imprisoned are innocent.

These are some of the roadblocks that we create when we hear a sermon on verses like Matthew 25. Sure, the Bible calls us to live lives in which we willingly give to the vulnerable and serve the “least of these”, but has the pastor ever taken an economics class? We can’t just give away things to those who are in need. Or can we?

-Just Give-

Unconditional cash transfers (UCTs), the development economics term for just giving people money and with no strings attached: no loans, no education, no training, no cows, and no holiday gift boxes has been gaining a bit of momentum recently. Research studying UTCs was featured in the weekly broadcast of the public radio show This American Life and complimented by an article in the New York Times Magazine.

At first glance the logic of UCTs sounds backwards and naive, like a baby boomer pastor preaching on Sunday morning. The easy criticism is, “won’t the people just gamble or drink the money away?” With a second, more concentrated, look however, the results of unconditional cash transfers look to be difficult to dispute.

Anecdotally this incredibly simple program seems to be working. Most of the people who received the $1000 cash transfer purchased a durable tin roof to replace the fragile thatched roofs found on many rural Kenyan houses. One man even bought a motorbike and began a small taxi business.

Researchers are currently collecting data from the organization GiveDirectly who has been practicing the idea of UTCs in rural Kenya. The data collection will not be complete until later this year, so ridged scientific evidence about the effects of this program are not available, yet.

-Lessons Learned-

There are, however, a few lessons to be learned from this project even before the final results of the study are completed. Behind the apparent success of the project are two simple economics 101 lessons: people themselves know best what they need and want, and the idea that the cost of something also includes the cost of foregoing the next best alternative.

First the economics of giving: Economists generally don’t like gifts. When an NGO or a family member gives a gift, often the value placed on the gift by the receiver is much lower than the actual market-clearing price of the gift. To use a crass example, think of that ugly sweater your grandma gave you for Christmas last year? How much have you worn it? Would you pay the $25 your grandmother paid to give it to you? Cash is simply a much better thing to give because the receiver can exchange cash for whatever they want or whatever they most need.

The idea of opportunity cost is a lesson, in the light of this study, that may pertain specifically to relief and development organizations and those who financially support them. NGOs and their donors need to begin asking the simple yet provocative question, “Why don’t we just give money?”

Within the next few months, collection of the data will be completed and there will be empirical evidence on the effects of just giving cash. This needs to be considered a viable alternative to many of the programs relief and development organizations run.

Consider this example given by aid and development researcher, blogger, and cash transfer enthusiast Chris Blattman. Say a project run by an organization spends $1500 on training in order to give people $300 or a cow. We now need to seriously ask the questions, “What if we just gave them $1800?” Or, “What if we had just give them six cows?” And finally, “Is the training program really worth six times as much as a cow to the poor?”

-Implications-

Now before any of you weigh in with a comment such as, “I support the organizations I do both for the work it does materially for the poor but also for its specific spiritual and Christian mission”, recognize my point. With this forthcoming research, organizations are going to have to prove why their programs are better suited than just giving cash.

Instead of running away from scientific rigor, Christian aid and development organizations need to embrace science, statistics, and data. They are going to need to recognize the opportunity they have before them. To show the world why faith based and transformational development is so important.

Embracing science, research, and data analysis means that Christian aid and development organizations need to begin investing in evaluation projects and teams. (Thats right, it’s an investment, with positive financial, social, and spiritual returns.) The parts of their work that can be rigorously studied and quantified can and should be held to the same standard as secular organizations.

To quote the blunt remarks of Chris Blattman again: “When a relief or development organization operates without experimenting with programs and evaluating results, it is still experimenting with people. They are still deciding who they help and who they don’t”. The only difference between professional researchers and organizations that don’t objectively evaluate their programs is the organizations are “running experiments with their eyes closed”.

Giving to the poor may be easier than you think but that does not mean that integrating a spiritual mission into our work in poverty alleviation is going to be easy. Christian aid and development organizations need to embrace experimental evaluations into their work, analyze and evaluate the data collected, and be willing to change and tweak their programs to better serve the “least of these”.

One thought on “Giving to the Poor May Be Easier Than You Think

  1. I have wondered why relief organizations have not tried different routes of giving funds to the poor. Even programs that are functioning with limited issues should be evaluated or “tweaked” to find superior ways to give. I wonder about how the culture is affected when funds are just dropped into a poor/slum environment. From my locations in suburbia it must require lots of juggling to ascertain the different issues, and conflicting methods and fund streams to give. Forgive my ignorance on the subject matter. Most of it comes from grad studies and how NGO’s operate in other countries. I look forward to reading more from your blogs on how I can help and understand this complex problem.

    Wayne Smith

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