Which Foreign Aid Programs Work? The U.S. Runs A Test — But Doesn't Want To Talk : Goats and Soda USAID has launched a series of experiments to see how traditional aid compares to giving people cash. The first results are in. And they're proving controversial.

Which Foreign Aid Programs Work? The U.S. Runs A Test — But Won't Talk About It

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How can the U.S. be sure the money it spends on foreign aid is actually making a difference? One foreign aid officer proposed this test. Any government program should at the very least make people better off than just giving them cash. The first results of this experiment are now in, and they're proving awkward. NPR's Nurith Aizenman explains.

NURITH AIZENMAN, BYLINE: Daniel Handel is an economist who works for USAID, the government's main agency for delivering foreign assistance.

JOAQUIN CARBONELL: Yes, the hero of this story is Daniel Handel.

AIZENMAN: That's Joaquin Carbonell, a former USAID colleague of Handel who's now a fellow at Harvard University. USAID would not authorize Handel or any other current official to talk to NPR. But Handel's efforts have been described to NPR by multiple sources who worked closely with him. They say Handel was concerned by what he saw as an agency habit of spending enormous sums on programs that only boosted people's incomes marginally, programs that gave people food or livestock or job training..

CARBONELL: He was just like, wow, those numbers don't look good (laughter).

AIZENMAN: Then Handel heard about a charity that was testing a bold alternative - just give people the aid directly in cash. In fact, the charity is called Give Directly. Their argument is that in a lot of cases, poor people know what they need; they just don't have the money to get it. Studies were finding people weren't wasting the cash aid on tobacco or alcohol. They often invested it in ways that improved their standard of living.

CARBONELL: And that's the kind of when it clicked in Daniel's head.

AIZENMAN: Cash aid could offer a way to test the effectiveness of USAID's traditional programs. He thought, we should make sure any given traditional program is producing more benefits for people than simply handing them the cost of the program in cash.

CARBONELL: Can our programs do better for the poor than the poor could do for themselves, as Daniel likes to say.

AIZENMAN: So Handel went to his bosses at USAID and proposed a series of experiments. Anne Healy is with the nonprofit Evidence Action. She's a former USAID official who helped oversee Handel's efforts. She says there was a lot of pushback in the agency. People said, this is risky. If we find that cash aid outperforms our traditional aid programs...

ANNE HEALY: That would open USAID to criticism from Congress, from the American public.

AIZENMAN: That could undermine the case for traditional aid. And giving cash directly is a hard sell politically. Still, USAID agreed to test Handel's idea on some programs, including a major effort to reduce child malnutrition in Rwanda. This program teaches parents things like how to plant more diverse foods, how to wash hands to prevent diarrhea. And this strategy isn't just limited to Rwanda. Craig McIntosh is an economist at University of California, San Diego who was commissioned to study the program.

CRAIG MCINTOSH: It is fairly standard in terms of the way that they try to combat child malnutrition across sub-Saharan Africa.

AIZENMAN: USAID compared this traditional setup to another group of parents who were given a cash grant equivalent to the per-person cost of the program, $114 a family. After a year, McIntosh and his collaborators checked on the kids. And here's where things got awkward.

MCINTOSH: Bottom line - there were no improvements in any of the child health indicators.

AIZENMAN: The kids didn't weigh more. They weren't any taller. Their arms were just as thin both in the traditional aid group and the cash grant group. McIntosh says as disappointing as these results may seem, it's not hopeless. This is what Daniel Handel set out to do - find out if USAID's programs are effective. And if they're not...

MCINTOSH: It's not that you just sort of turn out the lights and go home.

AIZENMAN: You figure out how to make them work. And there was a third group in Rwanda that got a larger cash grant, about $500 per family. Those kids did show some improvement. So that tells McIntosh maybe you need to spend more. But it's unclear what USAID will do with these results. The agency would only provide NPR with a statement saying that the Rwanda experiment was commissioned under the Obama administration and describing it as, quote, "very limited." The statement further added that testing traditional programs against cash aid is, quote, "not relevant to most of USAID's programs." Nurith Aizenman, NPR News.


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