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
Area served	Kenya, Uganda
Key people	Paul Niehaus Rohit Wanchoo Michael Faye Jeremy Shapiro [2]
Employees	9 paid domestic and senior field staff; additional paid field staff in Kenya and Uganda [2]
Website	givedirectly.org

GiveDirectly is a nonprofit organization operating in Kenya and Uganda that aims to help people living in extreme poverty by making unconditional cash transfers to them via mobile phone.

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.

Michael Faye wrote that when the founders started GiveDirectly, they were economics graduate students looking at where to best donate that money, and they were motivated to look at unconditional cash transfers; due to the lack of existing organizations that supported this they started their own.

GiveDirectly's operations were initially limited to Kenya. In November 2013, GiveDirectly officially announced that it had begun operations in Uganda.^[4]

In November 2012, charity evaluator GiveWell named GiveDirectly its #2 recommended charity for 2012 end-of-year giving.^[5][6] In December 2013, GiveWell named GiveDirectly as one of its top three charities (numerical rankings were not provided in 2013.^[7] In December 2014, GiveWell listed GiveDirectly as one of its top four recommended charities.^[8][9] GiveWell listed the same top four charities in November 2015.^[10][11] The status as a top charity was reaffirmed in a June 2016 top charity refresh.^[12]

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.^[13][14][15]

In April 2016, GiveDirectly announced an initiative to test a universal basic income in order to "try to permanently end extreme poverty across dozens of villages and thousands of people in Kenya by guaranteeing them an ongoing income high enough to meet their basic needs" and, if it works, pave the way for implementation in other regions.^[16]

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.

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.^[17][18] The working paper was released in October 2013.^[19]

This is far more efficient than other charities, according to the American Institute of Philanthropy.^[20]

Funding

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

GiveDirectly's most significant foundation funder has been Good Ventures, a private foundation started by Facebook co-founder Dustin Moskovitz and his wife, former Wall Street Journal writer Cari Tuna. Good Ventures works in close collaboration with charity evaluator GiveWell and most of its grants to GiveDirectly were recommended by GiveWell.

GiveWell review

November 2016 review and continued inclusion in top charities list

GiveWell published an updated review of GiveDirectly in November 2016.^[21] GiveWell continued to recommend GiveDirectly as a top charity^[22] and expects Good Ventures, a foundation GiveWell closely works with, to grant $2.5 million to the charity out of Good Ventures' budget of $50 million for GiveWell top charities.^[23]

GiveWell published an updated review of GiveDirectly in June 2016.^[24]

Based on this updated review, GiveWell continued to recommend GiveDirectly as a top charity.^[12]

On December 1, 2014, GiveWell published an updated review of GiveDirectly^[25] and simultaneously declared GiveDirectly one of its top charities.^[9][10]

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.^[9]

2014 review updates

GiveWell published updates on GiveDirectly in June 2014^[26] and August 2014.^[15] 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.

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.^[27] 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).^[5][6] 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,^[28] before GiveWell updated its charity list for 2013 and stopped ranking charities.^[7]

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.

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.^[29]

Charity evaluator and effective giving advocate Giving What We Can published a blog post critiquing GiveWell's recommendation of GiveDirectly.^[30] 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.

Reception and impact

Reception by development economists

After the release of GiveDirectly's impact self-evaluation in October 2013,^[19] World Bank economist David McKenzie offered his thoughts on the study. He praised the robustness of the study's design and the clear disclosure of the study lead's conflict of interest, but raised two concerns:^[31]

• The use of self-reporting made the results hard to interpret and rely on (this being a feature of any study that attempted to measure consumption).
• The subdivision of the sample into so many different groups meant that there was less statistical power that could be used to clearly decide which group had better outcomes.

Chris Blattman, a blogger and academic in the area of development economics, with a particular focus on randomized controlled trials, also blogged the study. He expressed two main reservations:^[32]

• The observer-expectancy effect, where the people being asked questions may be subtly influenced in their answers by the experimenter's expectations.
• The lack of clear positive effect on long-term outcomes, as well as the lack of increased spending on health and education.

Impact on setting cash transfers as a benchmark

Jeremy Shapiro, a GiveDirectly co-founder and the person who published GiveDirectly's impact evaluation, has argued for using cash transfers (and more specifically, unconditional cash transfers) as a benchmark against which other development interventions should be evaluated, due to the simplicity and scalability of cash transfers.^[33]

Others who have also endorsed the idea of using cash transfers as a benchmark, citing GiveDirectly, include Innovations for Poverty Action^[34] and GiveWell.^[35]

Media coverage

GiveDirectly was featured in a story on National Public Radio in August 2011;^[36] in an article by Dana Goldstein in The Atlantic in December 2012;^[37] in a Forbes magazine article by Kerry Dolan in May 2013;^[38] and in a New York Times article in August 2013.^[39]

GiveDirectly co-founder Paul Niehaus was interviewed for a story on cash transfers on BBC's NewsHour in January 2012^[40] and there was a follow-up blog post by interviewer Duncan Green on his Oxfam blog.^[41]

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.^[42] A follow-up was published in October 2013.^[43]

An article in The Economist on cash transfers in October 2013 discussed GiveDirectly's work in Kenya.^[44] An article in Digital Journal published at the same time also reviewed GiveDirectly's work.^[45]

In November 2013, a Freakonomics radio podcast between Stephen J. Dubner, Dean Karlan, and Richard Thaler about fighting poverty with evidence discussed GiveDirectly.^[46]

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.^[47]

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."^[48]

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.^[49]

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.^[50] 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.^[51] The GiveDirectly board independently published a response on the GiveDirectly blog.^[52] 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.^[53]

On June 4, 2015, Nico Pitney covered GiveDirectly favorably in an in-depth article for the Huffington Post.^[54]

Blog coverage

GiveDirectly received positive mentions in a blog post by Alex Tabarrok for the Marginal Revolution economics blog^[55] and in multiple blog posts by Matthew Yglesias for the Moneybox blog of Slate Magazine.^[56][57]

It also received mentions in a blog post by Jacquelline Fuller for the Harvard Business Review blog,^[58] in a blog post by Michael Clemens for the Center for Global Development,^[59] in a blog post by Vishnu Sridharan for the New America Foundation,^[60] and in a blog post by Brad Tuttle for the Moneyland blog of Time magazine.^[61]

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.^[62][63]

See also

• Free Money Day

References

External links

• GiveDirectly website
• Innovations for Poverty Action page on GiveDirectly
• GiveWell official review of GiveDirectly