GiveDirectly

GiveDirectly
Type Alleviating extreme poverty through cash transfers
United States IRS exemption status: 501(c)(3) under the name "GiveDirectly Inc."[1]
Location
  • New York City, United States of America
  • GiveDirectly, Inc. Church Street Station, PO Box 3221, New York, NY 10008, Phone: 646-504-4837 (voice mail service)[2]
Area served
Kenya, Uganda
Key people
  • Paul Niehaus (CEO)
  • Rohit Wanchoo (CFO)
  • Michael Faye (Chairman of the Board)
  • Chris Hughes (Board Member)
  • Jacquelline Fuller (Board Member)
  • Bill Meehan (Board Member)
  • Raphael Gitau (Board Member)

[3]

Employees
9 paid domestic and senior field staff; additional paid field staff in Kenya and Uganda
[3]
Website givedirectly.org

GiveDirectly is a nonprofit organization currently operating in Kenya and Uganda that aims to help people living in extreme poverty by making unconditional cash transfers to them via mobile phone (through M-Pesa in Kenya and MTN's Mobile Money system in Uganda). It is the first charity dedicated exclusively to cash transfers. Approximately 90% of donor funds are sent directly to recipients, with the remaining 10% split between fees for the transfers and recipient identification and follow-up costs. This is far more efficient than other charities, according to the American Institute of Philanthropy.[4]

In August 2012, Chris Hughes, one of the co-founders of social network Facebook and (as of August 2012) the publisher and editor-in-chief of The New Republic, who had also worked for the 2008 Obama presidential campaign, joined the GiveDirectly board and published a personal message on the GiveDirectly website lauding GiveDirectly's approach.[5]

In November 2012, charity evaluator GiveWell named GiveDirectly its #2 recommended charity for 2012 end-of-year giving.[6][7] In December 2013 GiveWell named GiveDirectly as one of its top three charities (numerical rankings were not provided in 2013, but GiveWell recommended donors give to all three top charities until they reached "minimum targets", which was $2.5M for GiveDirectly).[8] In December 2014, GiveWell listed GiveDirectly as one of its top four recommended charities, alongside Against Malaria Foundation, Deworm the World Initiative, and Schistosomiasis Control Initiative.[9][10]

History

GiveDirectly was founded by a team led by Paul Niehaus, then in Cambridge, Massachusetts. Niehaus holds an academic appointment in the Department of Economics at the University of California, San Diego, and is the President of GiveDirectly.

According to its website:[3]

“GiveDirectly was founded by Paul Niehaus, Michael Faye, Rohit Wanchoo and Jeremy Shapiro, who were studying economic development at Harvard and MIT at the time and also looking for the most effective way to give their own money to reduce poverty. They found that cash transfers had a strong evidence base, and that the rapid growth of mobile payments technology in emerging markets had opened the door to delivering cash transfers securely and efficiently on an unprecedented scale. They created GiveDirectly as a private giving circle in 2009 and opened it to the public in 2011 after two years of operational testing.”

GiveDirectly's operations were initially limited to Kenya. In November 2013, GiveDirectly officially announced that it had begun operations in Uganda. This would be its second country of operation.[11]

In June 2014, the founders of GiveDirectly announced plans to create a for-profit technology company, Segovia, aimed at improving the efficiency of cash transfer distributions in the developing world.[12][13][14]

Operations

GiveDirectly staffer enrolling a recipient in Kenya for cash transfers. Photo courtesy GiveWell.

Cash transfers

As of December 2012, GiveDirectly was operating unconditional cash transfers in selected areas of Siaya County and the Rarieda Constituency in Western Kenya. GiveDirectly lists the following four steps on its website to describe how their system works:[15]

  1. Target: We first locate and enroll extremely poor recipients. We find poor communities using publicly available data, and then send field staff door-to-door in those communities to collect digital data on poverty. We currently enroll recipients in homes with thatch roofs, a good and objective indicator of poverty.
  2. Audit: We use a set of independent checks to verify that recipients are eligible and did not pay bribes, including physical back-checks, image verification, phone checks, and data consistency checks. For example, we use GPS coordinates, satellite imagery, and crowdsourced labor to audit roofing materials.
  3. Transfer: We transfer recipient households roughly $1,000, or around one year's budget for a typical household. We use electronic payment systems; typically, recipients receive an SMS alert and then collect cash from a mobile money agent in their village or nearest town.
  4. Monitor: We call each recipient to verify receipt of funds, flag issues, and assess our own customer service. We also staff a hotline for inbound calls.

In November 2013, GiveDirectly officially announced that it had begun operations in Uganda, its second country of operation.[11]

Self-evaluation

GiveDirectly partnered with Innovations for Poverty Action in a project funded by the National Institutes of Health in the United States to collect evidence on their operations that could be used to judge their effectiveness. The research was led by Johannes Haushofer of Princeton University and Jeremy Shapiro, a development economist, co-founder of GiveDirectly, and a member of the GiveDirectly board until 2012. GiveDirectly preregistered the study, identified what variables need to be measured, and specified their predictions, which could then be tested against the evidence.[16][17] The working paper was released in October 2013.[18] The following points were listed in the results summary of the report:

Funding

GiveDirectly seeks funds from individual donors on its website. Additionally, it has received grants from a number of foundations.

Foundation funding

Grantmaker Date of announcement Amount of grant (in US$) More information
Good Ventures December 1, 2014 5,000,000 The grant was announced along with GiveWell's announcement of its top charities.[10] It was explicitly announced that Good Ventures would not be making any other grants to GiveDirectly for the next six months, so that potential donors had an accurate picture of GiveDirectly's funding needs.
Good Ventures[19][20] December 3, 2013 2,000,000 + matching funds This was part of an announcement of grants and matching funds for charity evaluator GiveWell's top-rated charities for 2013 end-of-year giving. Good Ventures announced US$2 million to GiveDirectly, plus matching funds for up to $5 million for funds raised up to January 31, 2014, and limited to a maximum match of $100,000 per individual donor. GiveWell wrote a blog post clarifying that they had recommended the grant but had recommended against the donation matching. The amounts would be counted against GiveWell's "minimum target" values for 2013, so that the left-over minimum target for GiveDirectly for 2013 was only $500,000.[20]
Good Ventures[21] December 28, 2012 500,000 This was part of grants that Good Ventures made to all of GiveWell's top-rated charities. GiveDirectly was #2 on GiveWell's list at the time. The top charity, Against Malaria Foundation, got $1.25 million, while the #3 charity, Schistosomiasis Control Initiative, got $250,000.
Google as part of the Global Impact Awards Program[22][23][24] December 4, 2012 2,400,000 90% of the award ($2.21M) was for direct cash grants to the poor. The remaining amount, $190,000, was for the costs of setting up operations in another country (which was later revealed to be Uganda).
Good Ventures[22][25] August 6, 2012 100,000 This grant was announced as part of a collection of grants to charities identified as "stand-out charities" by charity evaluator GiveWell. Good Ventures granted only US$50,000 to other charities identified by GiveWell as standouts. The reason for the higher grant allocation to GiveDirectly was that Good Ventures staff felt that cash transfers were a particularly promising form of intervention and were also impressed with the GiveDirectly team.[25]
Lampert Family Foundation[22] July 2011 100,000

Funding based on GiveWell recommendations

Year Nature of GiveWell recommendation Total funding Funding by Good Ventures Funding excluding Good Ventures
2012[26] #2 charity for the giving season in 2012 US$1,329,539 $600,000 (separate grants of $100,000 and $500,000) $729,539
2013[27] One of the top recommended charities, with a minimum target of $2.5 million, or $500,000 excluding the amount already granted by Good Ventures $10,482,865 $7,000,000 (grants of $2,000,000 and matching funds of $5,000,000) $3,482,865
2014[28] One of the top recommended charities, with a minimum target of $1 million and a maximum target of $25 million $9,074,820 $5,000,000 $4,074,820

GiveWell review

December 2014 review and inclusion in top charities list

On December 1, 2014, GiveWell published an updated review of GiveDirectly,[29] and simultaneously declared GiveDirectly in its list of top charities.[9][10] GiveWell summarized its reasons for recommending GiveDirectly based on the following strengths of GiveDirectly:

GiveWell identified the following potential unresolved issues with GiveDirectly:

Based on their review, GiveWell identified GiveDirectly as one of its four top charities in a blog post on December 1, 2014, alongside Against Malaria Foundation, Schistosomiasis Control Initiative, and Deworm the World Initiative. Based on their recommendation, Good Ventures made a grant of $5 million to GiveDirectly. Accounting for the donation already made by Good Ventures, GiveWell said that, if they were allocating marginal funds, they would allocate 13% to GiveDirectly.[10]

2014 review updates

GiveWell published updates on GiveDirectly in June 2014[30] and August 2014.[14] The latter included a conversation with GiveDirectly on how their continued growth plans interacted with the technology that Segovia, the for-profit company created by GiveDirectly's founders, intended to develop.

November 2013 review

In November 2013, in preparation for its 2013 end-of-year giving season, GiveWell published a new review of GiveDirectly.[31] Based on this review, GiveWell listed GiveDirectly among its top charities for the 2013 end-of-year giving season, alongside Schistosomiasis Control Initiative and Deworm the World Initiative.[8][9] GiveWell specified a "minimum target" in funding for each charity, and the minimum target for GiveDirectly was US$2.5 million.[8]

GiveWell identified a number of strengths and weaknesses in GiveDirectly.[31] The strengths identified by GiveWell were:

GiveWell listed the following major unresolved issues:

Response to the GiveWell review

On December 3, 2013, Good Ventures (an effective philanthropy organization that works in close collaboration with GiveWell) announced a grant of US$2 million to GiveDirectly, so that only $500,000 of the minimum target specified by GiveWell for GiveDirectly was not yet raised. Good Ventures also announced that it would match up to $5 million in funds donated to GiveDirectly till January 31, 2014 (with a limit of matching $100,000 per individual donor), suggesting that the actual amount needed from individual donors to achieve GiveWell's minimum target would be $250,000 (assuming no very large donors).[19] GiveWell wrote a blog post responding to the Good Ventures announcement, stating that they had recommended the grant but not the donation matching.[20]

Carl Shulman wrote on his personal blog that, judging from GiveWell's explanation for its 2013 end-of-year recommendations, the optimal course for donors may be to hold onto their money for giving in 2014 or 2015 rather than donate to GiveDirectly, despite its being the most highly recommended by GiveWell.[32] Shulman's reasoning was that the quality of top recommendations for GiveWell would probably be much higher in 2014 or 2015. He cited two main reasons: Against Malaria Foundation may be able to resume bednet distribution, and GiveWell Labs might be able to make recommendations by 2015.

May 2013 review update

In June 2013, GiveWell published an updated review of GiveDirectly (prepared based on GiveDirectly's status as of May 2013).[33] According to the update:

November 2012 review and recommendation

Staff from GiveWell (left), GiveDirectly (middle), and Good Ventures (right), on a field trip to one of the villages with recipients of GiveDirectly's cash transfer program in Kenya.

In November 2012, charity evaluator GiveWell published its latest official review of GiveDirectly.[34] Based on this review, GiveWell ranked GiveDirectly as its #2 recommended charity for 2012 end-of-year giving. GiveWell recommended a 7:2:1 split for donors between its top three charities (Against Malaria Foundation, GiveDirectly, and Schistosomiasis Control Initiative).[6][7] On November 26, 2013 (a year later), GiveWell removed Against Malaria Foundation from its list of top-rated charities due to room for more funding-related issues, and GiveDirectly thereby moved to the top spot for a few days,[35] before GiveWell updated its charity list for 2013 and stopped ranking charities.[8]

GiveWell staff member testing the m-Pesa system used by GiveDirectly for cash transfers to recipients by enrolling in m-Pesa at the shop of a local m-Pesa agent.

According to the review:

One way of putting the difference (which has been reflected in GiveDirectly's communications with us) is that government programs aim for "income transfers" (small supplements to income over many years) whereas GiveDirectly aims for "wealth transfers" (large, one-off transfers that hopefully give people more flexibility to make large purchases and investments).

Response to the GiveWell review

On December 28, 2012, the philanthropic foundation Good Ventures announced a grant of $500,000 to GiveDirectly, largely on the strength of GiveWell's recommendation (but based also on additional investigation). This was part of a collection of grants to GiveWell's top-rated charities. The top charity, Against Malaria Foundation, received $1.25 million, and the #3 charity, Schistosomiasis Control Initiative, received $250,000.[21]

Charity evaluator and effective giving advocate Giving What We Can published a blog post critiquing GiveWell's recommendation of GiveDirectly.[36] The blog post included both general concerns about the effectiveness of cash transfers compared to the best possible interventions, and specific concerns about the methodology of GiveWell's evaluation and recommendation of GiveDirectly.

Earlier reviews

In April 2012, GiveWell published its first official review of GiveDirectly.[37] Their overall conclusion regarding cost-effectiveness at the time was: "While we have not articulated the full case for this, our intuition is that our top-rated health charities accomplish more good per dollar spent.", clarifying that households experience a decreasing marginal value from a $1,000 loan from GiveDirectly as opposed to $10–$20 bednets.

In November 2011, GiveWell identified GiveDirectly as one of six "standout organizations" in its list of top ranked charities, below the top-rated organizations Against Malaria Foundation and Schistosomiasis Control Initiative and alongside Nyaya Health, Small Enterprise Foundation, Pratham, KIPP (Houston branch), and Innovations for Poverty Action.[38] GiveWell continued to stand by this label for GiveDirectly after publication of the official review in April 2012.

Previously, GiveWell had called GiveDirectly a "charity to watch" and called GiveDirectly's approach "one of the most intuitive ways of helping" in a July 2011 blog post.[39]

Media and blog coverage

Media coverage

GiveDirectly was featured in a story on National Public Radio in August 2011;[40] in an article by Dana Goldstein in The Atlantic in December 2012;[41] in a Forbes Magazine article by Kerry Dolan in May 2013;[42] and in a New York Times article in August 2013.[43]

GiveDirectly founder Paul Niehaus was interviewed for a story on cash transfers on BBC's NewsHour in January 2012[44] and there was a follow-up blog post by interviewer Duncan Green on his Oxfam blog.[45]

In 2013, Planet Money reporters David Kestenbaum and Jacob Goldstein went to Kenya to see GiveDirectly in action. Their findings and other critical commentary on GiveDirectly were featured in a segment of an episode of This American Life in August 2013.[46] A follow-up was published in October 2013.[47]

An article in The Economist on cash transfers in October 2013 discussed GiveDirectly's work in Kenya.[48] An article in Digital Journal published at the same time also reviewed GiveDirectly's work.[49]

In November 2013, a Freakonomics radio podcast between Stephen J. Dubner, Dean Karlan, and Richard Thaler about fighting poverty with evidence discussed GiveDirectly.[50]

Julia Kurnia, director of the direct person-to-person microfinance lending platform Zidisha wrote an op-ed in the Huffington Post in January 2014 criticizing GiveDirectly’s direct cash transfer approach on the grounds that it encourages a dependence mentality.[51]

In January 2014, an article in The Independent discussed GiveDirectly and what other charities thought of their cash transfer approach. The author concluded: "While Niehaus acknowledges cash transfers "won't change everything", he says he would like them to be seen as a "benchmark for development activity" everywhere. Let's hope that ambition is realised."[52]

In February 2014, Fast Company listed GiveDirectly as fourth on its list of the world's ten most innovative companies in finance, below Nice Systems, Square, and Bitcoin.[53]

On March 11, 2014, Kevin Starr and Laura Hattendorf of the Mulago Foundation wrote a lengthy article in the Stanford Social Innovation Review skeptical of GiveDirectly's accomplishment so far, saying that the evidence so far was underwhelming, though there might still be bigger gains a few years down the line. They contrasted GiveDirectly with other charities that they felt delivered more bang for the buck: VisionSpring, KickStart, and Proximity Designs.[54] Holden Karnofsky of GiveWell wrote a lengthy response countering that GiveDirectly's impact had been more rigorously established, and that Starr and Hattendorf were using flawed metrics to judge impact.[55] The GiveDirectly board independently published a response on the GiveDirectly blog.[56] Chris Blattman, an economist with experience in randomized controlled trials as well as knowledge of cash transfers, also responded to Starr and Hattendorf's post on SSIR.[57]

Blog coverage

GiveDirectly received positive mentions in a blog post by Alex Tabarrok for the Marginal Revolution economics blog[58] and in multiple blog posts by Matthew Yglesias for the Moneybox blog of Slate Magazine.[59][60]

It also received mentions in a blog post by Jacqueline Fuller for the Harvard Business Review blog,[61] in a blog post by Michael Clemens for the Center for Global Development,[62] in a blog post by Vishnu Sridharan for the New America Foundation,[63] and in a blog post by Brad Tuttle for the Moneyland blog of Time Magazine.[64]

In 2014, Nairobi-based journalist Jacob Kushner visited the GiveDirectly recipient villages and wrote up detailed notes of what he learned, summarized in a blog post on the GiveWell blog.[65][66]

References

  1. "GiveDirectly". GiveDirectly. Retrieved 2012-11-30.
  2. "Contact". GiveDirectly. Retrieved 2012-11-30.
  3. 3.0 3.1 3.2 "GiveDirectly team page".
  4. "GiveDirectly Financials". Givedirectly.org. Retrieved 2011-12-01.
  5. "a personal message from Chris Hughes". GiveDirectly. Retrieved 2012-08-19.
  6. 6.0 6.1 Karnofsky, Holden (November 26, 2012). "Our Top Charities for the 2012 Giving Season". GiveWell. Retrieved November 26, 2012.
  7. 7.0 7.1 "Top charities - November 2012 archived version". GiveWell. November 2012. Retrieved December 1, 2013.
  8. 8.0 8.1 8.2 8.3 Karnofsky, Holden (December 1, 2013). "GiveWell’s Top Charities for Giving Season 2013". GiveWell. Retrieved December 1, 2013.
  9. 9.0 9.1 9.2 "Top charities". GiveWell. December 1, 2014. Retrieved December 1, 2014.
  10. 10.0 10.1 10.2 10.3 Hassenfeld, Elie (December 1, 2014). "Our updated top charities". GiveWell. Retrieved December 1, 2014.
  11. 11.0 11.1 11.2 Mukhopadhyaya, Piali (2013-11-20). "GiveDirectly is in Uganda!". GiveDirectly (blog). Retrieved 2013-11-21.
  12. Hassenfeld, Elie (June 20, 2014). "Update on GiveDirectly". GiveWell. Retrieved June 21, 2014.
  13. Coleman, Isobel (June 20, 2014). "Segovia: A New Player in Cash Transfers". Development Channel blog, Council on Foreign Relations. Retrieved June 21, 2014.
  14. 14.0 14.1 "GiveDirectly Update - August 2014". August 2014. Retrieved September 6, 2014.
  15. "Operating Model". GiveDirectly. Retrieved 2015-01-12.
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  17. Kenya (2011-05-18). "Innovations for Poverty Action page on the project with GiveDirectly". Innovations for Poverty Action. Retrieved 2011-12-01.
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  19. 19.0 19.1 Tuna, Cari (December 3, 2013). "Our Giving Season Plans". Good Ventures. Retrieved December 3, 2013.
  20. 20.0 20.1 20.2 Karnofsky, Holden (December 3, 2013). "Good Ventures Matching Gift to GiveDirectly and Grants to Top Charities". GiveWell. Retrieved December 3, 2013.
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  33. "GiveDirectly update - May 2013". GiveWell. June 2013.
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  38. "Top charities -- November 2011". GiveWell. Retrieved 2012-11-30.
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  44. "MP3 of interview of Paul Niehaus on cash transfers". Oxfam blogs.
  45. Green, Duncan (2012-01-04). "Why don’t we just send aid money directly to poor people’s cellphones?". From Poverty to Power (Oxfam Blogs Network). Retrieved 2012-11-30.
  46. "503: I Was Just Trying To Help". This American Life. 2013-08-16. Retrieved 2013-08-19.
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  51. Kurnia, Julia (January 18, 2014). "About to send a donation? Think twice.". Huffington Post.
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  53. Miller, Nancy L. (February 10, 2014). "The World's Top 10 Most Innovative Companies in Finance. You'd think something as universal as money would be hassle-free to use. But with banks and card networks acting as invisible middlemen and imposing sizable exchange fees, some companies are creating radical new approaches to move cash from one place to another.". Fast Company. Retrieved March 30, 2014.
  54. Starr, Kevin; Hattendorf, Laura (March 11, 2014). "GiveDirectly? Not So Fast. We are mistaking an important experiment for a proven solution.". Stanford Social Innovation Review. Retrieved March 11, 2014.
  55. Karnofsky, Holden (March 20, 2014). "Big Impact vs. Big Promises". Stanford Social Innovation Review. Retrieved March 21, 2014.
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  57. Blattman, Chris (March 14, 2014). "Are Cash Transfers Overrated?". Stanford Social Innovation Review. Retrieved March 30, 2014.
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  66. Kushner, Jacob (May 28, 2014). "A journalist visits GiveDirectly villages in Kenya". GiveWell. Retrieved June 3, 2014.

External links