Free money programs are thriving. Worldwide studies have reached the same conclusion: free money works and are a great approach to poverty alleviation.
GiveDirectly is not your average charity. The organization strives to alleviate extreme poverty in Kenya and Uganda by simply giving them money — no strings attached. Claiming to be more efficient than other charities, it is the first to operate solely on direct cash transfers.
Sound absurd? GiveDirectly occupies a top-ranking spot on GiveWell’s list of charities.
Michael Faye, co-founder of GiveDirectly stated in The New York Times Magazine that this process of giving away free money, “puts the choice in the hands of the poor, and not me. The truth is, I don’t think I have a very good sense of what the poor need.” Google must agree, as they recently donated a healthy sum of $2.5 million toward their efforts.
It’s as easy as four simple steps. First, willing donors contribute online. Second, GiveDirectly finds poor households in Kenya. Next, chosen recipients are registered and money is transferred via cell-phones or SIM cards. Finally, the recipients are free to use the money as each individually sees fit.
By providing a lump sum of cash, people choose how to alleviate their unique financial stressors, thereby preserving recipient autonomy. It sounds like a dream come true.
A similar initiative sprung to life in London in 2009. A local charity donated £3,000 to 13 homeless men who would otherwise cost taxpayers hundreds of thousands of pounds every year in the form of police, legal and social services.
The men were free to decide what to spend the money on; counseling services were completely optional. The only question they had to answer was “What do you think is good for you?”
Contrary to common societal presumptions, the men did not dump this opportunity down the drain. After the first year, an average of £800 had been spent on necessities such as phones, passports and dictionaries. One man decided to spend the money on gardening classes — not on reigniting his past heroin addiction, as some might assume.
Others decided to spend the money on education and housing. The annual cost of the project was £50,000, seven times less than the amount that would have been spent otherwise.
Research has shown that free money programs are directly linked to deficits and misconceptions in many indicators of poverty.
Crime rates plunge when people do not have to resort to stealing. Business and employment increase alongside self-sufficiency. Mental health improves as stress lightens. Do these relationships not seem obvious?
We tend to assume that people are poor for a number of obvious reasons: they are incapable of managing money, they are lazy or do not have the want to be “better.” It is exactly this way of thinking that fuels poverty and makes it appear as a disgraceful condition.
It is clear that social welfare has become fixed to a labour market that does not create enough jobs and it is too easy to blame the victim, particularly when our political-economic system does little to prevent people from falling through its cracks.
Free-money programs are a progressive approach to poverty alleviation. They help broaden the poverty discourse by encouraging people to tune into the personal stories of the poor, showing that their realities are based on complexities unaccounted for in popular stereotypes.
Programming — such as free money initiatives — also help debunk ill-fated assumptions about poverty by encouraging people to think critically about the underlying assumption that free money makes people lazy.
These free-money programs go to show that the costs of alleviating poverty may be significantly cheaper than continuing to live in a society where poverty remains as a major issue.
Graphic: Mike Tremblay