The practice of making cash grants directly to low-income individuals, in our view, has some appeal. Intuitively speaking, it seems that cash grants (if appropriately directed) would allow recipients to use money as they see fit, meeting the needs individuals feel rather than needs disconnected, larger organizations may perceive for them.
A major concern with such programs is ensuring that grants reach those in need. We would guess that cash grant programs would be highly appealing to anyone in a region, whether or not they were the sort of people donors wish to help.
When examining cash grant programs, we generally ask the following questions:
- What proportion of total expenses are reaching clients in the form of cash grants (as opposed to being used for other programs/expenses)?
- How is the size of cash grants determined? Is it appropriately targeted to the needs of recipients?
- Are there reasons to be concerned that the grants might create unexpected negative consequences for the local economy (e.g., by causing higher prices or increased crime due to sudden large influxes of funds)?
- Do cash grants successfully reach those in need, as opposed to being intercepted by more powerful interests?
For more details, see our in-depth evidence review of cash transfer programs.