If you’re one of the millions of Americans who have been laid off as the coronavirus pandemic brings many businesses to the brink of collapse, the upcoming months look terrifying. That’s why policy think tanks and economists across the political spectrum (and even many lawmakers) have rallied around the same solution: sending you a lot of money, right away.
Now, a nonprofit that pioneered large-scale direct cash transfers to people is moving fast to do just that.
GiveDirectly is a charity that takes donor money and gives it straight to poor people, typically those who live in sub-Saharan Africa. In the last 10 years, the organization has moved $140 million to people in need. The principle behind the charity is simple: Instead of deciding for people in a poor area whether they need a cow or a water pump or a textbook, why not put cash in their hands and let them figure it out?
In recent years, GiveDirectly has branched out into disaster relief in the US, too, with efforts in Puerto Rico following Hurricane Marie and in Houston after Hurricane Harvey. Now it’s doing the same for coronavirus relief: sending cash right away to hard-hit households in regions of the US with an active outbreak.
“Needs are fairly diverse,” Joe Huston, chief financial officer of GiveDirectly, told me. “For any given budget that you have, when you’re trying to use that money to help people, cash lets those people use the money where needed. Cash helps nonprofits or governments respond with one intervention that meets a lot of different needs.”
As the coronavirus crisis has deepened, the idea of giving cash directly to Americans has become more mainstream. Twenty percent of Americans work in retail and hospitality, sectors that have been devastated overnight as the coronavirus pandemic sweeps the country. Experts are estimating that the economy could lose as many as 1 million jobs in the month of March. Even if we manage to swiftly get the pandemic itself under control, the shock will continue to reverberate throughout the entire economy. Laid-off workers will cut back on their own purchases, as will workers who are newly afraid of losing their jobs.
So, as my colleague Dylan Matthews has argued, we need to send every American a check right now. This financial crisis is unlike any other we’ve weathered. It is caused by the necessity of shutting down major economic activities for months. But the damage to the economy can be temporary, if we can keep all the people affected out of poverty until it’s safe for economic activity to resume.
GiveDirectly’s move seems aimed at meeting that need. The group will start its coronavirus relief efforts by targeting vulnerable Supplemental Nutrition Assistance Program (SNAP) recipients in affected areas (it’ll have to pick just a few of them to start) and either mailing them debit cards or setting up a digital wallet for them.
Right now, GiveDirectly only has the funding to do this for a few hundred people, and it’s choosing the initial recipients right now. But if more people donate, it will be able to funnel the money to more recipients. “Because this is a pandemic-driven downturn, you have to do this without being in contact with any of the people,” Huston told me — a departure from GiveDirectly’s usual face-to-face outreach strategy. It’s figuring out how to best get that done.
Studies have shown that when given cash, people mostly put the money to good use and are less likely to go hungry or live in inadequate shelter. GiveDirectly has helped drive the movement to compare the success rates of other charitable interventions with the successes of cash transfers. If just giving people money works better than some complicated intervention to help them, it argues, let’s just give them money.
The charity has dabbled in using these ideas in the United States, too. For instance, GiveDirectly has handed out prepaid debit cards to victims of natural disasters. The idea is that official federal aid, insurance payouts, and relief programs are often slow and inflexible. Cash is fast.
Scaling up cash transfers
GiveDirectly can’t move nearly as much money as the US government can. If we want a sizable check mailed to every American, only the government can do it. (For context, if CEO Jeff Bezos sold all of Amazon and spent his entire fortune, he could send us roughly $300 each, while Congress is considering payments between $600 and $2,500 per person.) But GiveDirectly argues there’s a place for small-scale cash to bridge the gaps before cash from the government comes.
“We recognize that gov’t responses, while large in scale, can’t meet the full need — whether by excluding some of the most vulnerable (e.g., elderly, undocumented, etc.), not providing sufficient resources, or simply being delayed. To that end, we’re planning to launch a public cash transfer program in the U.S., leveraging our experience with cash in disasters and contactless operations,” the nonprofit wrote in a blog post.
If you’re looking to help people affected by the crisis, GiveDirectly is a good place to start. It has a long, impressive track record of doing the single thing that most needs doing right now: giving people money.
And its advocacy for direct cash transfers may have played a role in the concept’s rise in political prominence, from a weird fringe idea to one that the world’s biggest economy is seriously considering. The research GiveDirectly has enabled, and the influence its simple idea has gained, might ultimately do even more good than the money it’s given.
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