"Instead of building hospitals, why don't we just give poor people money?"

#Money

Fri, May 31st, 2013 20:00 by capnasty NEWS

According to Kerry A. Dolan of Forbes, rather than supporting non-profit organizations Facebook Cofounder Chris Hughes and Google are giving cash directly to the poorest. Reportedly, this actually works better.

Paul Niehaus, an assistant professor of economics at UC San Diego and a board member of GiveDirect, came up with the idea of transferring money to poor people’s cell phones back in 2008. He was working with the Indian government to limit corruption and saw how the government there transferred money to people’s phones. “I realized I could do that myself,” Niehaus told me. He told the gathering in San Francisco that most of the money that’s donated to help poor people goes to international development organizations, not poor people directly. GiveDirectly’s giving has had “big impacts on nutrition, education, land and livestock” and “hasn’t been shown to increase how much people drink,” Niehaus emphasized. “A typical poor person is poor not because he is irresponsible, but because he was born in Africa.”

GiveDirectly finds poor households — typically people who live in mud huts with thatched roofs — and uses a system called M-Pesa, run by Vodafone , to transfer money to their cell phones. Transaction fees eat up a mere 3 cents per donated dollar. Niehaus says plenty of recipients use the money to upgrade their homes by adding a metal roof.

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