The role of foreign assistance and philanthropy

Bilateral aid agencies and philanthropy played a catalytic role in supporting piloting and evaluating the impacts of cash without conditions. While conditional cash transfers have become widespread over the last quarter century, the idea to give cash without conditions was novel and impacts were unknown: Would transfers go to good use or be wasted?

Aid agencies and philanthropic organizations first supported NGO and social enterprise efforts to design these innovative but untested new approaches to reducing poverty, and then funded rigorous evaluations to learn if the new approaches were effective. Helping build a strong evidence base is critically important to “de-risking” new ideas and getting once novel approaches into the mainstream.

A wide range of multilateral and bilateral aid agencies, philanthropies, small individual donors, and LMIC country governments fund some UCT programs or evaluations of the model. For example, USAID supported several rigorous evaluations to compare the impacts of giving cash directly relative to other traditional aid programs, which is known as cash benchmarking. Impact evaluations led by Innovations for Poverty Action, J-PAL, the World Bank, and many other research organizations, often funded by philanthropic and government funders, have contributed to the large body of evidence on the effectiveness of cash transfers. 

Role of governments

During the Covid-19 pandemic, many governments turned to UCTs as a tool for delivering timely support to households and workers facing sudden income loss and economic uncertainty. The scale and speed of these programs were unprecedented. In South Africa, for instance, initial efforts to distribute food parcels reached just 1.2 million recipients, while an estimated 9.8 million households were unable to meet basic food needs. Researchers, including J-PAL affiliate Kate Orkin, shared evidence with the government on the effectiveness of cash transfers and then worked with the government to shift the aid from the food parcels to digital transfers, reaching 28 million people with emergency cash.

In Chile, J-PAL affiliated researchers Francisco Gallego and Claudia Martinez and staff from J-PAL Latin America and the Caribbean worked with the government to design a UCT program for workers who were not formally employed or previously registered in the government’s database of beneficiaries.

Many other regions also expanded access to cash transfers during the pandemic, from Togo to the Philippines to Brazil. Governments rapidly launched or expanded digital payment systems, relaxed eligibility criteria, used existing social registries, and adopted other strategies to reach informal workers and vulnerable populations. These efforts reached 1.36 billion individuals (one in six people in the world) at its peak in 2020-2021.

The wave of government-led UCTs has evolved since the pandemic, and, in some cases, evidence collected during the crisis has informed policy designs for the post-pandemic era. For example, following the success of the UCT program during the pandemic, South Africa established the Social Relief of Distress Grant, a cash transfer program to support people who are unemployed and ineligible for welfare. While it remains uncertain how much of the social safety net expansion during Covid-19 will be sustained long term, early evidence suggests that many countries have retained aspects of it.