How no-strings-attached payments are transforming philanthropy

For donors, the model also holds psychological appeal. It obviates the layers of intermediaries and opaque resource allocation that can muddy the causal link between donation and impact. If costs are deducted from donations in a transparent way, donors have a clear sense of how their money is directly changing the life of someone across the world. That’s powerful.

The work of GiveDirectly and others has been made possible thanks to the increased ubiquity in developing countries of branchless mobile-banking operators such as M-PESA and MTN. These “mobile money” services allow funds to be transferred via text message using accounts held by the mobile network, or exchanged for physical cash via agents.

The aid applications are broad. Last year, the UN Refugee Agency named direct cash payments as its preferred method of assisting refugees—delivering just under $1 billion in aid this way in 2022 alone, the majority to Ukraine. As refugees often flee their homes with only the bare essentials, direct cash payments prove a far more effective way for people to acquire the specific items they need.

In the UK, charity Homelessness Impact is currently trialing the first cash-payment scheme for the homeless. It points to a 2018 trial in Vancouver, Canada, which found it not only had the desired effect—people spent more money on food and spent fewer days homeless—but crucially were also able to save, a key long-term step to self-sufficiency.

So where does this go next? Some believe that a “universal basic income” (UBI) is a social welfare strategy that demands further exploration. This entails a regular payment from the government to everyone in the population with no strings attached. There are various approaches, but the basic idea is that these payments are not means tested and are large enough to cover necessities such as food, energy, and shelter. Paid in regular instalments, just like a salary, UBI is intended to provide a basic standard of living, help fight technological unemployment, free up time for training or caregiving, and save workers from taking exploitative jobs out of desperation. Indeed, in June 2023, it was announced that the idea would be trialed in England for the first time, with 30 people given £1,600 a month.

Is it a vision of the future? The jury’s out—but it could turn direct giving into something we all experience.