Cash transfers illustration by Franz Lang

Give a man a fish, goes the old adage, and you feed him for a day. Teach a man to fish and he can feed himself for a lifetime. But give cash to all people equally and unconditionally and they have the agency to pull themselves out of poverty — and the social mobility to make decisions for themselves that could positively impact their families and the planet for generations to come.

This is the premise behind unconditional cash transfers (UCTs), a system of aid predominantly deployed to alleviate poverty throughout the world's poorest regions and at the epicentre of acute humanitarian crises. Far from being limited exclusively to these specific humanitarian contexts, UCTs are now showing their potential both in the global north to address the ongoing epidemic of homelessness and as a tool in the fight against climate change and to support conservation efforts in the global south. But how, and why now?

Until quite recently, foreign aid has been all about giving a man a fish. Aid organisations like the UN's World Food Programme have historically given ‘in-kind’ aid (foodstuffs and equipment) to alleviate the hunger of the world's poor. This has rarely been a purely altruistic endeavour. For most countries in the global north, aid has served either as a means to exercise soft power (a gentle and persuasive approach to international relations) in the country to which aid is given or to present a moral superiority among international peers. The Nordic countries, for example, according to political scientist Maurits van der Veen, give aid to outshine their fellow Nordic countries.

In the latter part of the 20th century, the limitations of in-kind aid were realised (that is, not everyone needs the same food and equipment, people often just need the means to access it themselves) and aid organisations began giving cash to beneficiaries on the condition of certain types of behaviour. Go to the doctor, eat healthily, make sure your kids are in school and a small pot of money will be yours on a regular basis.

We think we know best because we come from the global north… That’s completely the wrong attitude.

Conditional cash transfers (CCTs) were first piloted in Mexico in the late 1990s. From there, they spread throughout Latin America, Africa, Asia and Central Europe, becoming a popular tool for international development organisations. But CCTs have been imperfect tools, clumsily applied and have often shown limited success in bringing about desired behaviour change among their recipients.

The problems with in-kind aid and CCTs are numerous. Firstly, they lack flexibility and respect for the basic agency of the recipient. When goods or cash are given conditionally, it is assumed that the beneficiary is incapable of making sensible decisions for themselves. Give them cash without conditions and there’s no guarantee that it won’t be used to purchase “temptation goods” like alcohol and tobacco.

“It’s a very imperialistic attitude towards giving,” says Martin Simonneau, programme manager at Cool Earth, a climate charity supporting indigenous communities to fight climate change and deforestation. “We think we know best because we come from the global north and we’ve studied in very big universities and so we can give you the knowledge to enhance your life. That's completely the wrong attitude.”

Not only is it the wrong attitude, it’s an attitude that’s ineffective. In his 2007 book Does Foreign Aid Really Work?, Roger Riddell (a member of the British government's Independent Advisory Committee for Development Impact) concludes that, “Aid works, but not nearly as well as it could,” largely because donors function as gatekeepers with almost total control of their aid. Therefore, “the aid which is provided is not allocated in any systematic, rational or efficient way to those who need it most.”

The same is true of the approach to homelessness policy in the global north. Wealthy nations have the financial resources to eradicate homelessness overnight, but resources are allocated according to political expediency and the personal preference of donors, rather than targeting funding towards interventions that have been proven to work. In fact, “we really don’t have a tradition of evaluating what works,” says Guíllermo Rodriguez-Guzmán, head of evidence and data at the Centre for Homelessness Impact (CHI), a what works centre currently investing in its own UCT pilot.

Sadly, UCTs didn’t arise because the international development community suddenly became more altruistic, trusting and interested in the efficacy of their giving. Rather, like Universal Credit in the UK, it was a response to the cost of policing and enforcing the conditions under which aid was given. It takes vast paid networks of people to ship goods across the world, deploy them to the communities that most need them and then to police the behaviours of recipients and evaluate and assess the efficacy of these programmes. By giving cash directly and unconditionally, an entire paternalistic system of bureaucracy is circumvented, saving a whole lot of money in the process.

Value for money isn’t the reason why Cool Earth is investing in UCTs, says Simonneau. Rather, it’s a rejection of the traditional belief, explicit or subconscious, that impoverished people are at least partly responsible for their plight. It’s also an acknowledgement of the historic and contemporary contributions of indigenous communities to their ecosystems and the increasing precarity and risk involved in doing that work. “They’re the ones who have been doing the work, so why are we still telling them how to do it?” Simonneau says.

The problem we’ve always faced is one of risk aversion and stigma. The typical idea of someone experiencing homelessness is a middle-aged man who has drug and alcohol problems.

In the global north, a similar redress is taking place in our approach to people experiencing homelessness, where the agency of people in need of support has historically been ignored. “The problem we’ve always faced is one of risk aversion and stigma. The typical idea of someone experiencing homelessness is a middle-aged man who has drug and alcohol problems,” says Rodriguez-Guzmán. “This creates a narrative of the deserving and undeserving poor, which is damaging, and people don’t want to give cash to the ‘undeserving poor’.”

The re­fusal of donors to give money to poor people, writes Riddell, is “linked to the paternalis­tic and condescending view that poor people do not know how best to use it. These beliefs sit uncomfortably alongside the increasingly mainstream view that beneficiary choice and participation are fundamental to the aid relationship.”

While inaccurate stereotypes permeate political discourse, hard evidence tells a very different story. A 2014 World Bank report confirmed that policymakers’ concerns about cash being used for temptation goods was ill-founded. Having analysed data from Latin America, Africa and Asia, the report concluded that, “Almost without exception, studies find either no significant impact or a significant negative impact of transfers on temptation goods.” When people are given unconditional cash, they don’t buy more fags and booze, they spend their money on food, shelter, clothing and education.

Just give cash to those who need the aid.

“The case for sig­nificantly enhancing the impact of aid by giving it directly to poor people would seem to be compelling,” concludes Riddell. Rodriguez-Guzmán agrees: “Homelessness is simply a poverty issue, and the most obvious way of solving a poverty issue is to increase income.”

While CHI’s pilot programme is still in the planning stages, it draws on a successful pilot launched in Canada in spring 2018. The University of British Columbia and Foundations for Social Change set up the New Leaf Project, a direct cash transfer programme, “to empower people to move beyond homelessness in Canada”. Recipients were chosen based on strict criteria (over 19, newly homeless and living in sheltered accommodation in Vancouver with no history of substance misuse) and given one-off payments of CAD$7,500.

After 12 months of monitoring, the study found that cash recipients moved into stable accommodation faster than their peers, spent more money on staples like food and rent, experienced ongoing food security and were even able to save money. They also cost the taxpayer significantly less than their peers due to reduced ongoing shelter and administration costs.

“The pilot was an inspiration for us,” says Rodriguez-Guzmán, “and we felt this was something that should be tested that was quite different to the things we’re currently doing in the UK.”

Instead of simply replicating the Canadian pilot, CHI’s pilot will be built to address the specific conditions of the UK’s social safety net and designed in such a way that, should it prove effective, it will be easy to replicate and scale. While Canada has a strong social safety net, there is no mandate to house people experiencing homelessness as there is in the UK, so the intervention may have very different effects.

Like CHI, Cool Earth draws its UCT inspiration from a non-governmental organisation (NGO) working in very different contexts. Give Directly is a non-profit operating in east Africa, the US and Yemen, with a strong track record of delivering successful UCT programmes backed up by rigorous evaluations. In the last decade it has delivered over US$500m in cash, delivered with 89% efficiency, conducting impact assessments with 99% of its recipients.

For Simonneau, the speed and scalability of this kind of operation is one of the most attractive aspects of UCTs, both because of the urgency of the climate crisis and the sheer number of communities that need to be empowered to protect their ecosystems. “What we're trying to assess is whether giving cash unconditionally is an effective and scalable way of keeping ecosystems protected. It’s expensive to run water and sanitation or hygiene projects, but if you just give cash to everybody, and it works, the potential for scale is huge.”

In fact, scale is perhaps the most exciting aspect of the whole UCT project. As the divide between rich and poor widens and the climate crisis deepens, the need for quick and effective forms of aid will only increase. Rolling out traditional, slow and costly programmes may no longer be an option.

“In the field of climate change, everything is uncertain,” says Simonneau. “We don’t have the luxury of time anymore. And while we don’t think cash transfers are going to be a silver bullet solution to the problems we face, they seem to be the best way to support a silver bullet solution — because it’s the people working on the front lines of deforestation and ecosystem degradation that will be coming up with the solutions. And we need to support as many of those people as we can.”

Or, as Riddell puts it: “Just give cash to those who need the aid.”