A recipient signs for a cash transfer (Photo: http://www.plan-international.org)
The popularity of cash transfer programs in the academic and aid blogosphere over the past few years, got me wondering what the difference is between the kind of cash hand-out programs that sponsorship organizations were doing in the early days and today’s cash transfer and conditional cash transfer programs.
What prompted the shift in thinking from ‘line up and get your cash’, to ‘cash handouts are paternalistic, ineffective, unsustainable and create dependency,’ to ‘cash transfers are innovative ways of achieving development gains’ and/or ‘cash transfers empower local people to purchase what they really need?’ How are cash transfers different today from 40+ years ago?
I happen to work for an organization that raises a good percentage of its funding through child sponsorship. From what I’ve heard, for the first few decades of our existence, cash handouts were simply how the organization worked. Along with most other development agencies, we moved away from direct handouts in the 80s. Like some other organizations, by the end of the 1990s we had adopted a rights-based approach. We are also now doing cash grants again in some cases such as this program in Vietnam. I’ve asked around a bit internally and haven’t found anyone able to point me to documentation on what in particular prompted the move from cash handouts to community-based development in the 80s. Obviously it was a change happening most everywhere, not just in the organization where I work. I assume there was a process and a lot of discussion around this like there is with any change in approach, but it’s most likely on paper and not on-line. I do wonder what has been or could be learned about cash transfers from that process of discussion and change in methods.
There is certainly a lot of debate today about cash transfers. When I’ve asked people outside my organization what the difference is between today’s cash transfers and those of 40 years ago, most pro-cash transfer folks say that today’s approach to cash transfers is different or that cash transfers are included as part of broader programs, or that cash transfer programs that succeed are done by governments and not INGOs.
The anti-cash transfer folks tend to feel that cash transfers are not sustainable development, encourage dependency, and cause community conflict, and that they do nothing to improve systems or infrastructure in the long run; eg., what good is having cash if there is no health system? no food to purchase? no school to attend? Or they consider cash transfers to be individualistic rather than a way to support an entire community or district’s development or worry that conditioning cash transfers can cause unintended consequences. (Here’s a fun piece that talks about what the cash transfer debate says about the international humanitarian community.)
There are tons of studies (mostly by economists it seems) showing that cash transfer and conditional cash transfer programs have improved health, nutrition and education enrollment. Some caution that cash transfer programs such as Brazil’s Bolsa Familia are not a panacea and need to be complemented with other types of programs.
I liked this recent paper ‘Richer but resented: What do cash transfers do to social relations and does it matter‘ by MacAusland and Riemenschneider (HT @rovingbandit). It questions the impact of cash transfers on less visible, more contextualized local and national relationships and power dynamics and suggests a need to go beyond material analysis during design, implementation and impact evaluations of cash transfer programs.
Especially helpful for someone like me who is trying to better understand the discussion around cash transfer programs is the paper’s reference to Copestake’s (2006) aspects of well-being (material, relational and symbolic) and three views on social protection as applied to cash transfers.
I’m pasting in the paragraphs I found especially useful to tempt you into reading the whole paper. I liked the excerpt below because it provides good insight into how different development theories color the objectives set in cash transfer programs and the way that success and impact are measured.
‘…An „income-first‟ view of social protection focuses on the consequences of cash transfers for recipients’ incomes and on their costs, including fiscal costs and perverse incentives to stop working or to seek rents. Second, a „needs-first‟ view starts from a more multidimensional view of poverty and focuses on the state‟s role in guaranteeing access to basic needs, including livelihoods, assets, and public action. This would criticise the income-first view for being too narrow. Third, a „rights-first‟ view identifies injustice as a key cause of poverty, and criticises the „needs-first‟ approach for being paternalistic.
Very broadly, these views can be identified with philosophical approaches to development. The income-first view is most closely identified with a modernisation theory and Washington Consensus approach, which is rationalist, individualist and utilitarian in nature, measuring utility primarily in terms of income. The appeal of this view in part lies in the measurability and equivalence of outcomes and costs – so that outcomes measured in dollars can be compared to costs measured in dollars. This possibility is very attractive for planners, since it enables an unambiguous (on this single metric) judgement of whether an intervention should proceed. In terms of approaches to social protection, the income-based view is reflected most clearly in the safety nets approaches of the early 1990s (World Bank 1990).
The needs-first view starts from a similarly utilitarian and individualist standpoint but broadens this by introducing other dimensions of well-being, largely adding material dimensions (such as education, health, and livelihoods) but in some cases relational aspects (such as a capacity for social action). This draws in part from Sen‟s capability perspective (Sen 1985) and is currently being operationalised through the Millennium Development Goals and now multidimensional poverty indices (see e.g. Alkire and Foster 2009). In the social protection literature, this view is closest to the transformative social protection approach (Devereux and Sabates-Wheeler 2004) that emphasises the role of social protection in overcoming not only material shortcomings but in enhancing self-esteem and social status.
The rights-first view has developed rather differently, in part from Latin American traditions of dependency theory and structuralism, which place more emphasis on relational and symbolic aspects of well-being. One application of this tradition can be found in Figueroa (2001) who argues that persistent inequality in Latin America can be explained by processes of social exclusion (based on cultural difference) leading to political exclusion from social protection programmes and education, and resulting economic exclusion. As Copestake (2006b: 4) summarises, this interpretation highlights: “the extent to which economic growth and inequality reduction are dependent upon cultural and political mobilisation, not least through advocacy of human rights. This is in stark opposition to the more common assumption of economists that improved human rights are more likely to follow economic development than to be a precondition for it.”
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The consequences of these different views for assessments and planning of cash transfers are quite profound. For instance, the different views will put quite different weights on the negative consequences of excluding members of the community from controlling payments or targeting as opposed to the problems associated with additional costs of targeting. The decision whether to pay for additional community participation will look very different depending on which view is held. Similarly, the different views will imply quite different judgements on whether cash transfer programmes should be replicated, given different material, relational and symbolic outcomes.’
I still don’t really know what I think about cash transfers, (I suppose “it depends’ is always a good answer) but at least I have a bit of a better framework for thinking about them and analyzing what I read about them. Copestake’s three areas (material, relational and symbolic) also give a good framework for analyzing other types of aid and development programs, beyond cash transfers (such as Gift In Kind, as @cynan_sez points out).
I also still haven’t figured out how the old style sponsorship cash handouts were different from today’s ‘innovative’ models. Any old timers out there with insight to share on that?
Wait... What? 