{{show_title_date || "Sending cash to charities with no strings attached, 8/27/13, 10:45 AM ET"}}

Giving cash directly to the poor

Updated

GiveDirectly.org’s donation method is a somewhat radical idea in the charity world: give money directly to those in need with no strings attached. It gives the recipient financial autonomy and removes the decision-making structure from charities.

Jacob Goldstein wrote about GiveDirectly.org in The New York Times Magazine and explained on Jansing & Co. Tuesday morning, “There’s a very econ-101 idea going on here, which is each person knows what he or she needs. The first thing is sort of optimize for themselves.”

He said, “When you sort of tell somebody about this idea, like, hey, here is this charity that’s just giving people money, the first thing they often say is, oh, well, aren’t people just going to drink it away?”

Goldstein observed that it does not appear that the recipients are wasting the money. He cites the story of Bernard Omondi of Kenya who was given $1000. He said Omodni “bought a metal roof to replace his grass roof, which leaked and actually they have to replace.  And then he bought a motorcycle and started a little taxi business. He runs this motorcycle taxi business.”

Omondi’s use of his money is one example that illustrates a “no strings attached” method of charity can be effective, he said. A similar system is working well in developing countries, like Mexico and Brazil, where the poor are given cash with some contingencies, like sending children to school or getting them vaccinated.

GiveDirectly.org  is a study in progress and Goldstein said that more cases are being reviewed, “We’ll find out later this year how it’s working.”

Giving cash directly to the poor

Updated