A Study: The Impact of Direct Cash Transfers on Homelessness (1/3)
Direct Cash Transfers
Direct Cash Transfers, or DCT, are individual grants delivered directly to beneficiaries without the intermediaries typically needed for other poverty reduction services such as food donations. Replacing intermediaries with a mobile app eliminates corruption and bureaucracy while increasing efficiency as money flow can be tracked from start to end. The successes of cash transfer programs in countries such as Brazil and Mexico’s Oportunidades include improved school enrolment, increased women’s access to health services, and overall, the mitigation of poverty.
DCT programs have now become “one of the most studied forms of antipoverty interventions” in the past few decades (Srinivasan, et al., 2014). The conventional strategies used to alleviate poverty are simply not generating the evidence of change that DCT are generating. Inspired by Mexico’s Oportunidades, Opportunity NYC Family Rewards was the first conditional cash transfer (CCT) program to be issued in a developed country. The program’s randomized control trial included 4,800 families and 11,000 children, issuing $8,700 to each family over 3 years from 2007–2010 in hopes of helping the city’s poorest families break out of their intergenerational poverty cycle (James Riccio, 2010).
The conditions of these transfers were for families to improve their human capital through improved children’s school attendance, preventive health care, and parents’ work and training.
By the spring of 2013, parents had increased savings and relied less on friends for cash loans, more students entered and graduated high school, and lastly, more families received preventive dental care in particular (Riccio, et al., 2013).
While previous anti-poverty efforts have included in-kind transfers such as food aid, microfinance loans, or skills training programs, an increasing amount of research is showing that direct cash transfers may be the best solution of all.
Although various governments including Mexico (Oportunidades) have implemented cash transfer programs, it is a relatively new strategy for nonprofits. A pilot project in London gave $4,500, or £3,000, to 13 homeless men and found that a year later, 11 of those men were indoors after having spent money in productive ways (Peters, 2015).
The London project showed productive use of cash, especially when compared to the half a billion dollars the Red Cross spent after the 2010 Haiti earthquake to build only six permanent homes (Lalwani & Winter-levy, 2016). A UK-based non-profit organization called Broadway identified the longest-term rough sleepers in London who had been homeless between 4 and 45 years, and gave each person hundreds of pounds — unconditionally. From a new pair of trainers to a caravan on a travelers’ site, each person was asked what they needed and just like that, requests were granted.
Of the 13 people participating in the project, 11 had moved off the streets only two years later.
The pilot project was pronounced a success after results were analyzed by the Joseph Rowntree Foundation, especially due to the fact that none of these funds were spent on temptation goods (Schweid, 2011).
