Episode 480: The Charity That Just Gives People Money : Planet Money GiveDirectly is a charity that just gives money to poor people — no strings attached.

Episode 480: The Charity That Just Gives People Money

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Bernard Omondi lives in a village in western Kenya, basically right on the equator. He's 25 years old. He's got two kids. They live in a small house with mud walls and a dirt floor and an old couch. There's no sink because there's no plumbing. There's no running water, no electricity.


And one day last year, the village elder came by his house with some people Bernard had never met. They explained that they were from a charity called GiveDirectly. And they wanted to give him $1000 with no strings attached. It wasn't a loan. He wouldn't have to pay it back. And he could do anything he wanted with the money.

GOLDSTEIN: He didn't know whether to believe them. His friends told him it was probably some kind of trick. But he decided to sign up. And the next month, he says, he got a text message that changed his life.

BERNARD OMONDI: (Through interpreter) It was sent very early in the morning. I was still in my bed. I jumped up. My wife asked, Bernard, what is it? Then I told her, the guys of GiveDirectly have sent us the money. It's here.


GOLDSTEIN: Hello, and welcome to PLANET MONEY. I'm Jacob Goldstein.

KESTENBAUM: And I'm David Kestenbaum. Today's show is going to be a quickie. For the full PLANET MONEY experience, you're going to have to listen to This American Life this weekend. We have a big story. We've been working on it for months. We went to Kenya for it. And it's all about this charity that gave Bernard Omondi the money.

GOLDSTEIN: The charity is called GiveDirectly. And it's at once really simple and kind of radical. It just does one thing. It gives money to poor people with no strings attached - no training, no experts - just money. This is Michael Fay, one of the founders of the group.

MICHAEL FAYE: We literally just wanted to give away our own money. We don't have a very exotic story of founding the organization. We were in graduate school. We were studying development economics. We had a little bit of extra money to give. And we wanted to know the best place to give it. Surprisingly, we had no idea.

GOLDSTEIN: Faye says they wanted to know, if we give a dollar, where exactly does it go, and how much does it help? Where's the data.

KESTENBAUM: They did find this one thing where there was a lot of data. It was on giving money to poor people. Governments had been doing it. And it seemed to work really well. Somehow, the data just hadn't made it into the charity world. Faye and his grad-school friends read the evidence on giving money to poor people. And they thought...

FAYE: Wow, this is incredible. Cash is one of the most researched interventions in development. And then you started to get this idea that, wow, this could be something quite big.

GOLDSTEIN: On one level, this idea of just giving money to people - it makes perfect economic sense. The basic idea - this Econ 101 idea - really is people know what they need. And if you give them money, they can buy it.

KESTENBAUM: It's like that show we did about how economists at least pretend to hate Christmas because Christmas is basically all these people spending time and money to buy stuff that often isn't what people want most. They end up returning a lot of it. The economist's ideal Christmas would be people sitting around, handing each other money. And in a perfect economic world, the ideal charity would be basically the same thing, people giving away money, letting the recipients do whatever they think is best with it.

GOLDSTEIN: But in the charity world, this idea seems foreign.

CHRIS BLATTMAN: I've never come across another charity that just gives money.

GOLDSTEIN: This is Chris Blattman. He's a professor at Columbia. And he actually studies giving money to poor people in the developing world.

BLATTMAN: In a dozen countries and hundreds of NGOs, I've never even heard of it. I've never heard of anybody ever doing this. I've heard people saying, maybe we ought to try this. Or wouldn't that be interesting? But nobody has just ever - nobody's ever done it as a charity as far as I know. That's nuts.

GOLDSTEIN: We talked to lots of people at aid groups. We talked to a former head of UNICEF. We talked to people at local and international groups in Kenya. And almost all of them thought just giving money was a bad idea.

KESTENBAUM: They basically told us, look, if you spend a lot of time on the ground trying to help people, you would know this is not a good idea. The real world is not some perfect economic model. It's filled with people. They told us some people will buy alcohol with the money or, you know, they'll mean well but they just won't spend it very well. At the very least, they said, you have to provide some kind of education. You have to help people so they can do something smart with the money.

GOLDSTEIN: One of the people we talked to was Morris Wambea (ph). He works for Heifer International in Kenya. This is a group that's basically at the other end of the spectrum from GiveDirectly. Heifer doesn't give cash, it gives cows and goats and other kinds of livestock. And it provides a lot of training, training on how to be a successful farmer.

MORRIS WAMBEA: I think the training aspect has to be there in any activity you want to do.

GOLDSTEIN: What if you don't do training? What if you just give money?

WAMBEA: I'm telling you today that you will not succeed. You will not succeed. Without any training you cannot succeed in any project.

KESTENBAUM: This is the other thing about GiveDirectly. They're starting this debate in the aid world. The GiveDirectly guys are frankly skeptical that spending money on training and big organizations is always worth it. Training is expensive. You've got to fly in experts. You've got to pay salaries. There are SUVs. That's thousands and thousands of dollars. So they ask, what if you just gave that money to people instead? Maybe that would be better.

GOLDSTEIN: We have a lot, lot more on that question on our story on This American Life this weekend. Find out where you can listen. Go to thisamericanlife.org. In the story we meet a lot of people who got cash. We meet some who didn't. And we see one of Heifer's cows, which is impressive and a little bit frightening.

This cow is so much bigger than any of the other cows we've seen here. I'm getting licked.

GOLDSTEIN: (Foreign language spoken).


GOLDSTEIN: Maybe it's not a good idea.

KESTENBAUM: I'm David Kestenbaum.

GOLDSTEIN: And I'm Jacob Goldstein. Thanks for listening.

That cow must have ate my pants.


JERRY LEE LEWIS: (Singing) Ha ha. Ha ha. Ha ha ha ha. Ha ha ha ha ha. Oh, oh. Oh, money, that's what I want. Easy honey, easy now.

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