Give Directly: Using Mobile Banking and Unconditional Funds in Developing Countries

Last week while looking at Human Centered Design we saw how many organizations and companies today are using a boots on the ground approach when developing their product. Typically this is rarely seen in NGO's focusing on aid. Malaria nets are distributed, hospitals are built, heifers and goats are sent to rural villages, etc. But are these the things that are going to help everyone out of poverty? GiveDirectly.org is trying a new approach of simply giving money directly to those in developing countries, believing that the recipients of the cash will know how to best spend in.

Give Directly understands that outsiders have little understanding of the needs facing many people in the developing world. Instead of placing numerous restrictions on how the money can be used, Give Directly simply uses mobile phones to send monthly payments to it's beneficiaries in the rural Kenya. It works much like micro-financing, just without the expectation of repayment. Kenya was chosen specifically because of the availability of cheap mobile phones and the ability to send funds in a place where they will make a large impact in the lives of it's recipients.

In his New York Times article describing Give Directly Jacob Goldstein observed that, "an inordinate number, it seemed, used it to replace their thatched roofs, which are not only lousy but also weirdly expensive, as they need to be patched every few months with a special kind of grass." Allowing the locals to use the funds as they see fit ensures that the money is spent locally, boosting local economies and as neighbors see how others benefited from certain purchases the best practices will naturally spread in each community that uses them. In the words of it's co-founder, Michael Faye "This puts the choice in the hands of the poor. And I don’t think I have a very good sense of what the poor need."

Give Directly is also incredibly efficient. Due to their low overhead costs, only 7.4% of the money earmarked for aid goes to transfer costs and enrollment. Recently GiveDirectly has received large donations from Facebook co-founder Chris Hughes and Google, due to it's unique model and initial impact. With results on how effective Give Directly has been at improving the lives of it's beneficiaries due out later this year the landscape for NGO's might be given a shake-up.




For more details about Give Directly check out the This American Life Story here, read Jacob Goldstein's New York Times article, or check out GiveDirectly.org