A Different Approach for Aid Money

Just Give the Damn Stuff Away – Turns Out, That Works


Ethical and Practical Reasons Governments Help People

Just to set the stage for this discussion, let’s remind ourselves why governments assist those who are less fortunate at some point in their lives. There are, of course, many reasons, but two tend to be the most prevalent:

It’s the Right and Moral Thing to Do: Most cultures and religions have a core belief that we should help others who are in various states of need. This is especially true for children, the infirm, those subjected to natural disasters. Many societies also include the chronically poor, those with addictions, and others who for whatever reason are without at least some of life’s essentials.

Society is Better Off: To the extent we can eliminate poverty and other social ills, our country is more stable and the economy grows. For practical reasons, we want to eliminate shortfalls where we can.

Reasons to Hesitate

The spirit of John Calvin is rarely far away from us. Ebenezer Scrooge is right there with him. They do raise some fair questions.

We hear often about people losing the will to work if they have other means to live. Some take this as a given. Ronald Reagan ran incessantly over the image of the welfare queen driving a Cadillac to pick up welfare checks.

Legislation regularly comes up with things like work requirements to ensure we have no free loaders amongst us. Senator Joe Manchin is among the current chorus leaders on this count, expressing fear of a people who expect to be carried by the rest of us forever.

 The Track Record for Traditional Assistance

 Here is the interesting thing. These types of debates and models of behavior are not new, they have been here forever. We know, regretfully, that the traditional benchmarks of qualifying for assistance, work requirements, checking on status by bureaucrats and all the rest of it don’t seem to work very well. People in traditional assistance programs quite often fail to move out of them into better lives.

And the overhead cost of all that administration is mind-numbing. In so many cases, both domestically and in foreign aid, we spend way more in administration and oversight than we do in actual assistance. No business would tolerate such a resource allocation for more than a nanosecond. There is too little return on investment (ROI).

Could we at least acknowledge what we have generally done is not working? Could we not ask if there are better approaches at hand? If the cost is high, the results minimal, and (by the way) the draining of dignity from recipients because of all this, can we not do better?

The answer to these questions is, yes. And as luck would have it, a better model is at hand and in evidence,

 A New Model That is Working Around the World

I first saw what I call the new model in foreign assistance programs being run by nongovernmental agencies and some non-US governments. I watched a test bed program in Kenya for some time and was impressed with what I saw.

Put simply, the donors scrapped all the overhead and put the money saved into the assistance pool. They explained to receiving communities that henceforth they would simply receive direct cash payments. They were asked to think about how best to use the money, but it was theirs to spend. The sponsors would check in rarely to see how things were going, but no hands-on oversight. That’s it – that is the model.

What they found over time was that almost everyone, immediately and over the long term, used the money wisely. Some started businesses, others pooled with others for some bigger aim. About everyone improved their families lives. The percentage who wasted the money was almost too miniscule to measure.

This sort of approach in now being tried literally around the world and the results seem to be similar across the globe. Given the resources and the freedom to be responsible, people rise to the occasion. The ROI goes up impressively. People work their way out of poverty more often and earlier than otherwise.

 Imagine That

 Imagine this approach more widely applied in the US. Instead of WIC certificates, with a long list of food items you cannot buy and a shorter list of stores that accept WIC, people just get the funds to buy food. Imagine no housing vouchers (which many landlords will not accept anyway) being replaced by cash payments. Those payments could go up, picking up what had been spent on program administration.

Today, many programs require that the beneficiary have a job before receiving benefits. Have a medical condition that keeps you out of work? Too bad. No childcare available? You figure it out. The idea of requiring work is morally powerful and desirable. But using it as a lever for assistance often just cuts our success rate in improving people’s lives or – more importantly – enabling them to improve their own lives.

We will talk later in another posting about all these issues connect in ways that will not be denied. Medical care, childcare, housing, transportation, and other areas – neglect one and the house of cards tends to crash.

Accepting Some Tradeoffs and Validating Results

 Let’s be honest enough to acknowledge such an approach would not be perfect. Some people would cheat, some would coast rather than strive. But is that reason enough to punish everyone, in advance? If the evidence is, as it seems to be, that this type of approach builds personal responsibility and gives solid results, would we not be foolish to ignore it from the start?

 How Might We Proceed?

We could proceed modestly. Pick a few programs, national and local, to give this a try. Do some serious education for participants and the public. Ensure participants understand a lot rides on them. If they make this work, others will have new opportunities. If they do not, we are stuck in the old ways for as far ahead as we can project.

Educate the public on why we are doing this. Ensure people know that while this may seem counter intuitive to many of us, it has a proven record. And it calls on everyone’s better selves to succeed. Include solid measurements of success and give a promise to report back to the taxpayers in a few years on whether this proved out or not.

I am convinced that in the overwhelming percentage of cases, it will prove out handsomely. We should be less concerned with solving problems and more with creating opportunities. Less donating, more investing – in people.

A win-win if ever there was one. Let’s have the courage and the imagination to give it a try.

         Bill Clontz

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2 replies to A Different Approach for Aid Money

  1. Isn’t this what Andrew Wang was proposing in the 2020 primary?

    • Some similarities, but Wang’s core proposal was a broader one of a guaranteed minimum income for everyone, rather than targeted assistance. I believe Oakland CA is trying this out on a pretty large scale as something of a proof of concept project. Will be interesting to see how it goes.

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