Cash for the Poor?

A tale of unconventional givers

The hot June sun rode waves of humidity as D.J. and Mike stepped off a Greyhound bus at a stop they thought would be Hickory, North Carolina. Instead, it was a Citgo station four miles outside the town. With no one to pick them up, they were stranded. Then they spotted other marooned travelers.

The truck’s hood was up, its air filter tossed to the ground, and its elderly owner grumbling under the aging pickup’s belly. His wife, sitting nearby, told the two men that they dropped off a relative at the Greyhound station. “Now he’s on his way, and we’re stuck,” the woman said with humor, rather than dismay. As Mike and D.J. left the Citgo station to begin the trek toward town, they dropped an envelope filled with $200 in cash in the truck’s front seat.

They walked away like that, again and again, for a week. They talked to more people, and gave out more envelopes, each stuffed with $50, $100, or $200, across D.C., Virginia, and North Carolina. To some they gave money without a word—the sight of their desperation was enough.

But D.J. and Mike weren’t just giving away cash. They “wanted to make someone’s day,” says D.J. The money came with a Bible verse, a link to their blog, and prayers from the two men, who did not want their last names to be used for this article. Their project—riding Greyhound buses for a week to meet people, hear their stories, and help them out with cash—hinged on anonymity. What it didn’t rely on was results.

“Some people’s lives may have been transformed forever. And some people may have gone out and bought a six pack,” D.J. says.

But is giving money away—seemingly at random—a good way to help people?

Cash for the cash-strapped

Unbeknownst to D.J. and Mike, giving out cash is getting trendy—or at least receiving quite a bit of media coverage. Facebook co-founder Chris Hughes made headlines when he decided to put his support behind GiveDirectly, a non-profit that gives poor households in Kenya cash via mobile phone, typically $1,000 in installments spread throughout one to two years. The only qualification for receiving funds? Live in a house made of mud and thatch. “It’s a pretty good predictor of poverty,” says Paul Niehaus, one of GiveDirectly’s founders. “In Kenya, the folks that we’re getting are living on an average of around 65 cents per day. Put that in context, that means a latte in the morning is one week’s budget for a typical recipient. The other reason we use [houses] is because they’re objective and that makes it a lot easier to monitor them.”

Preliminary results indicate that nearly all recipients use the money to buy food, start businesses, or replace thatch roofs with metal, while very few have used the money for alcohol or tobacco. And studies of other simple cash-transfer programs in the developing world also report significant long-term improvements in income, health, and education. Despite many people’s misgivings about handing out funds with no strings attached, it seems that for many impoverished Kenyans, a one-time influx of capital can be just what they need to make more money on their own. 

The impressive findings won over a skeptical Jacquelline Fuller, director of Google Giving. “They’re going to provide a new yardstick for the entire development community, which is: Prove that you can do more for the poor than the poor can do for themselves,” she says. “I think that’s going to help raise the bar everywhere.”

Google gave $2.4 million to help GiveDirectly expand to another (yet unnamed) country. Supporters think the charity can be replicated elsewhere, and that giving cash may be a simple and efficient way to alleviate extreme poverty—now that bypassing corrupt leaders and distributing money on a macro scale is possible thanks to mobile-phone payment technology.

But GiveDirectly supporters don’t think donors should abandon their traditional work entirely. Rather, they suggest that cash transfers could be to international development what index funds are for investors. Transferring cash is “very efficient,” so it can be “the benchmark that you use to evaluate and direct your actively managed portfolio,” suggests Niehaus. “Index funds were probably the biggest no-brainer ever to hit retail investing. It took 30 years for them to become mainstream. I think that similarly cash transfers are such an unorthodox idea to most Americans that it could take most of our lives to see them become mainstream and play that benchmarking role—which I think they should.”

Changing things up

A mix of strategies and tools for helping the poor also appeals to D.J. This wasn’t his first foray into philanthropy, and he wanted to try something different. “For me this is kind of the portfolio approach to philanthropy. You’ve got the planned, rigorous, disciplined, long-term relations where you know all the people, all of that. And this is more just the private-equity side of philanthropic giving,” he says.

An accomplished lawyer who worked in a top slot in the George W. Bush administration, D.J. helped set up a scholarship fund for kids in San Pablo, Guatemala in 2005. Since then, the small non-profit running the fund has helped about 70 children go to school every year, and set up an Internet café in the town, training locals to administer the programs. D.J. remains the non-profit’s chairman.

But two books inspired D.J. to search for a different way to approach philanthropy. Barbara Kingsolver’s The Bean Trees made him realize that many Americans operate in an economic sphere he’s never encountered. “It occurred to me that I live in Loudoun County, Virginia; I work in Manhattan; and I don’t very often run across people who are truly in need,” he says. “I started thinking: How do I position myself in such a way that I can meet people who are really in financial need?”

At the same time, Steve Corbett and Brian Fikkert’s When Helping Hurts convinced him of the negative side effects of much of Americans’ giving. “You can create a sense of entitlement; you can create cultural dependencies; you create distortions in the relationship. There’s the giver and the receiver, and the giver is sort of the master to the receiver, who’s more subservient. That’s unhealthy. So it’s very, very difficult to give money to people in a way that is just positive,” he says.

D.J. and longtime friend Mike began trying to think of how to meet people and help them in ways that wouldn’t foster either dependency or servility. Their solution? A philanthropic road trip on Greyhound buses, riding wherever the next departure took them, and giving money to people they met along the way. They named the venture “Good Will Tour 2013” and established rules: 1) Don’t give to people who ask for it. 2) Give away money only while walking away, to avoid awkward thanks and promote anonymity. 3) Talk to everyone. 4) No planning—follow the next opportunity wherever it leads. They hopped on a bus in D.C. and ended up giving away about $5,000.

They didn’t donate to everyone they met. On the way to Hickory, D.J. sat next to Samantha, a woman with a history of substance abuse who had just been released from prison, where she served time for using cocaine while driving. Samantha told D.J. her ultimate goal in life was to meet a “sugar daddy” and she preferred when other people took care of her two children. D.J. listened to her story and offered to buy her lunch, but thought any cash he gave her would be misspent. Yet he found her story fascinating, and her personality lively and humble.

“It wasn’t just the money. It was the time. People asked for legal counsel; they asked for personal counsel. It was amazing how people were just very, very open with their lives: ‘Here’s what I’m going through; help me through this,’” D.J. says. “All the money said was: ‘We’re serious about wanting to help you.’”

On the shoulders of giants

Although cash giving is something of a novelty today, it isn’t new. Henry Ford thought gifts to individuals were the most genuine form of philanthropy, and often gave away cars, food, and money, always wanting to shake the hand and look in the eye of the recipient. Although he left behind him what would long remain the largest foundation in the world, he was wary of organized charities. Once, when driving through rural Massachusetts, Ford spotted a farmhouse that had been wrecked in a storm. He gave the elderly farming couple all the money he had in his pocket—$200—before driving on.

For more than 16 years multimillionaire Percy Ross used his “Thanks a Million” newspaper column to give money to strangers who wrote him to request everything from a harness for a farm cow to taxi fares to visit their parents. Ross received thousands of requests, responding to the worthiest with checks—usually in amounts less than $1,000—and featuring several of the stories in his weekly column, which ran in about 800 newspapers. Even before the column, Ross was known for his largesse. In 1978, while riding along in a Minneapolis parade, he threw $16,500 worth of silver dollars to children along the route. He stopped writing the column in 1999, when he said he had given all he had—$30 million. “I’ve achieved my goal. I’ve given it all away,” Ross wrote in his final column. “You’ve given me so much over the years. In many respects, I’m far richer today than when I started.”

Former Secretary of the Treasury William E. Simon dedicated much of his time and money to the New Jersey hospital now known as Morristown Medical Center. There he met Sister Jo, a nun who convinced him to offer cash support to patients engulfed in financial difficulty because of medical expenses. Though the details of how it all began are now murky, according to his daughter Aimee Bloom, the program known as Project Independence formally began in 1989 and is now supported primarily by her father’s philanthropy, the William E. Simon Foundation. Since then, the foundation has dedicated $6.4 million to needy patients in one-time gifts averaging around $7,000, program staff report. Social workers refer patients, who often don’t know about the program, to a board that decides whether and how much to give to each. The foundation asks for nothing in return. “I think my dad felt very strongly that he just wanted to give somebody a break who fell on hard luck,” Bloom says. “He didn’t really want any strings attached.” A number of philanthropists finance similar programs run by churches and religious groups that quietly give out cash or pay people’s bills.

No one can say what difference Ford’s, Ross’s, or Simon’s gifts made in the recipients’ lives. And experts are quick to point out that even the targeted cash infusions pioneered by GiveDirectly are unlikely to work everywhere or solve every problem. Large-scale systemic change in developing countries often requires complex problem-solving and concentrated effort. Tamping down an endemic disease, or even building a well or paving a road requires collaboration that one person with $1,000 can’t achieve alone. And if a country’s economy rules or laws are perverse, even a determined person with money to spend may find it impossible to improve much.

Cash infusions may be inappropriate for many populations: Program advocates say successful cash recipients have special circumstances. Bloom says recipients in Project Independence are generally hardworking, responsible individuals whose illnesses have made a job impossible, or whose medical bills made it hard to make mortgage payments. Niehaus says his program works because rural Kenyans are impoverished mainly  because they were born in an undeveloped country. A cash-transfer pilot program with education, work, and health requirements for a low-income population in New York City has shown mixed results so far, researchers at social policy research organization MDRC found. Google’s Fuller found that the GiveDirectly team was split about whether the approach would work elsewhere.

“There are probably people in your extended family that you wouldn’t hesitate to give $1,000 if they needed it. But there also probably people in your extended family or your neighbors that you’re not so sure they would make good choices with that. Human nature is human nature,” she says.
But for philanthropists like D.J., sometimes measurable results don’t matter. He wanted to establish a personal connection, to make someone’s day, and that’s what he got.

“We want to tell you all that we really appreciate the generous donation that one [of] your guys left for my husband,” the elderly woman from the Citgo station in Hickory wrote on Mike and D.J.’s blog about a month later. “Words cannot express how thankful we were and still are.”   

Liz Essley Whyte is managing editor of Philanthropy. 

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