Every month I’ll be donating $50 to some of the poorest people in the world. I won’t be visiting them in sandals to build them a school or supporting some egocentric project I think they need. I’ll just be sending money directly to poor people. This sounds great to me.
GiveDirectly find poor households in Kenya and give them money to spend on whatever they think appropriate. A great audit of their work hase been done by Just Giving, who have rated Give Directly their number two charity worldwide. Some bitesize information for you:
- The average recipient lives on only $0.65 a day and 18% of eligible households report having enough food for tomorrow.
- 90% of donations donations go into the pockets of the recipients. I say pockets, I mean mobile banking account.
- 10% of donations is spent on a phenomenally efficient search and payments infrastructure.
- They use census data to select regions of Kenya with high poverty rates and villages within those regions with low-quality housing and access to an M-Pesa agent. M-Pesa is a mobile payments network operating in Kenya.
- To identify poor people they find people who live in mud huts. Crude, but both cheap and effective.
- They take the poor households’ phone numbers of give mobile phones to those who don’t have one.
- They audit every single recipient to protect against fraud and mistakes.
There are complaints to be made against this form of charitable giving.
By only operating where M-Pesa operate it ignores the very, very poorest. This is fair comment, but I don’t see a way round it. And by operating in this way GiveDirectly are encouraging M-Pesa to expand their network so that eventually these people will be reached.
More fundamentally, Give Directly do nothing to deal with the systematic way poverty is recreated in the developing world. They don’t deal with unfair terms of trade, weak property institutions or immigration controls. That is true, but nobody really knows how to fix those problems. the people who might are currently too poor to do anything about it. A less poor populace is a more politically and economically active populace. Which will go some way towards fixing those problems.
Of course, if you think the main problem poor people have is they are workshy, or fecund, or criminal then this charity isn’t for you. You’re also an arsehole, why are you on my blog? I happen to think the main problem poor people face is a chronic lack of options. Money gives these people options. In surveys undertaken the vast majority spent some money on housing (iron sheeting), nearly half spent money on food, and not insignificant amounts were invested in farm and non-farm businesses.
Finally, the most common criticism is that poor people are irrational. I think the list of spending options above refute that pretty effectively. In fact savings rates for this free money is far higher than saving rates in the developed world. I happen to not mind if a non-zero part of the money donated goes on a big meal, or a party, or on some whisky. This is what I spend my money on. Poor people deserve to have fun too, even if it isn’t a “rational” use of money, they should be the judges.
This charity appeals to my priors. I think people without money need money. I also don’t like bureaucracies. I also don’t like the charitable trend to helping people who are doing alright. These people really are the poorest and they’re helped efficiently. Its scalable too, there are hundred of millions of people they could help in this way, so every pound, dollar or yen you donate will help.