The Three-Word Question That's Changing What Charities Do With Their Resources

If there is no doubting the good that humanitarian groups have done in the last half century, there is also no doubting that they could have done much more. Effectiveness has rarely been their lodestar, and one reason why is that the sector has lacked a stable reference point against which to judge interventions, other than the status quo. That is, in order to be considered worthwhile, a humanitarian act only had to bear the burden of making a marginal improvement in the condition of those it sought to help.

In the U.S., the lack of a more ambitious threshold made a certain kind of sense. For one, the nation’s charitable tradition has long celebrated voluntary acts of giving as expressions of individual preferences and passions, and has historically resisted any constraints, regulatory or conceptual, on donors’ choices. And the country’s deeply ingrained sense of pluralism has favored a multiplicity of approaches to addressing poverty over singling out one in particular as a standard.

But that logic may no longer hold: A new trend within the humanitarian sector—the increasing popularity of simply transferring cash to people in need—now allows for the establishment of a charitable benchmark. In other words, before a donor gives a gift—say, to support an agricultural training program in sub-Saharan Africa, or to provide food in the aftermath of an earthquake in Pakistan—they would first ask themselves if their money would be, “Cash transfers are among the most well-researched and rigorously-evaluated humanitarian tools of the last decade,” and should be thought of “as the ‘first best’ response to crises.” Given that the evidence has shown cash transfers to be an inexpensive and “highly effective way to reduce suffering,” the panel’s report went on, “The question that should be asked is ‘Why not cash?’”