currency

There’s only one poverty – why charities should give money

By Theo Clay 3 November 2022

Fuel poverty. Food poverty. Period poverty. As the cost-of-living crisis bites, people everywhere are struggling with the basic necessities to live every day. Charities are valiantly stepping in by providing goods and services which support people in time of need. 

But at their core these are not separate issues. If you can’t heat your home or feed your family, it’s fundamentally because you lack one thing: money. So, what if instead of worrying about goods, services, premises, overheads—we just gave people cash? 

Giving money is more empowering 

The mental toll of poverty is huge. You’re no longer in control of your own life. Your future, and that of your family, is unpredictable. This lack of autonomy is a considerable driver behind the mental and physical health disparities we see between rich and poor. Instead of forcing people to be passive and grateful recipients waiting upon generous charity, why would we not give people some of their agency back? In giving goods rather than cash, we’re saying that we know best. Why aren’t we allowing people to make their own choices about how to overcome the barriers they face? 

Giving money is more efficient 

We all saw the photos during the pandemic of paltry food parcels sent to children on free school meals, whilst the companies sending them siphoned off healthy profits. In the comment sections and on social media people discussed how much more they could get for the money if they’d been given the cash so they could go to the supermarket directly and pick out the food themselves. Parents know what their family needs far better than any external organisation. By giving money to people directly we can cut down on wasted time and goods. Instead of more expensive delivery operations and bureaucracy, why don’t we just give people the money directly?  

Giving money works 

Cash transfers have been used in international development for over 20 years, and their effectiveness has been examined across a number of metrics including monetary poverty, gender empowerment, health, and employment or educational outcomes.  

Yet despite this success, cash transfers are rarely used by charities working in Britain, although they have been gaining some traction in North America through organisations such as the UpTogether (cash transfers to families) and the New Leaf Project in Vancouver (cash transfers to people experiencing homelessness). We now have rigorous evidence spanning decades that shows giving cash is an effective way to tackle poverty. In fact, it’s so effective that a ‘Why Not Cash?’ movement has emerged arguing that humanitarian NGOs should default to cash payments to individuals unless there is a clear argument to the contrary. 

Of course, cash is not going to be appropriate in every situation. If there is not a ready market where the person can buy what they need then it will not solve the problem. A cash transfer will not cut air pollution, improve a green space, or educate someone in prison for example. 

But where cash is effective, there is an opportunity cost to providing goods instead. During the cost-of-living crisis we need to get people the help they need most efficiently as quickly as possible. If a person would most benefit from a cash transfer, then giving them a good or service instead is using resources we do not have, thereby limiting our ability to help someone else in need. In a crisis this is not just wasteful, it’s irresponsible. 

We at NPC want to explore more where the charity sector should be adopting cash transfers, and how they can benefit people in this crisis. We want to see where cash transfers could be effective tools for charities and funders to use, how cash could sit alongside services which already exist, and how we can encourage a shift towards it. 

If you are interested in being involved, then please get in touch with me at theo.clay@thinkNPC.org 

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