They’ll probably just waste it, or use it on drugs…


A constant concern I seem to hear about charitable giving is about what poor people will do with economic assistance once they receive it.

Won’t poor people just waste the money or benefits? Won’t they use it to buy unworthy items like cigarettes, alcohol, or drugs? A second line of criticism has more to do with self-sufficiency. Won’t receiving economic assistance just make people dependent? Won’t it show people that they don’t really need to have a job, or to strive to be self-sufficient?

An organization called GiveDirectly (and others like it) have challenged these assumptions recently by giving what are called “unconditional cash transfers” to individuals living in poverty. Basically, they locate impoverished people and communities overseas in need of assistance, and then they give individuals large amounts of money with no strings attached; the recipient can use the money however they want, for whatever reason they see fit.

This approach has received lots of criticism, for all the listed reasons above. Surely the recipients, not having to answer to anyone about their spending choices, will squander the money in all sorts of different ways! However, in October, researchers at the Poverty Action Lab at MIT published their findings on the effects and outcomes of unconditional cash transfers. Surprisingly, their findings suggest that very little of the money was wasted. Instead, recipients used the money for such purposes as to buy more food for their families, to invest in the education of themselves and their children, and to build up revenues around small business or agricultural products. Conversely, the study could “find no evidence of increased expenditure on temptation goods such as alcohol, tobacco and gambling.”

You can listen to the NPR Planet Money radio show for a summary of report’s findings here, or read the full report here.

Perhaps we should give the poor more credit; they might know how to best improve their own lives, if we would just give them a little help and a little trust.

(PS: as an extra, here and here are clips from a recent Daily Show segment for a humorous take on the narrative surrounding waste and fraud in food stamp assistance, highlighting some of the concerns around economic assistance I mentioned in the first paragraph.)

[Are those of us WITH THINGS doing even better – to find out, click here]

[For a post looking at How you can be Poor with a Lot, click here]


Steven Cottam

Steven Cottam hangs out in the Church Hill neighborhood of Richmond, Va, alongside a lot of cool folks who are up to a lot of good. He works as an outdoor educator, working to get urban youth out and enjoying God's creation. He lives with his wife Megan, his (soon to be born) daughter Jackie, his dog Wanda, and their roommate Kelly. Past adventures have included getting his Master's in Theology from Catholic Theological Union, serving as a elementary school religion teacher, and living in a Catholic Worker house in Phoenix, AZ.

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  • DaviD Jacobs

    There is a marked difference though between what is driving someone to hunger and homelessness. In the South African context, most of the inner city homeless tends to be issues of drug and alcohol abuse, or mental illness.

    In the townships are generally where one finds the true poor, where hunger and poor living conditions are driven by economic issues. Generally someone who is poor due to economic circumstances has not alienated their family and neighbours, unlike an alcoholic or drug addict, and the township is a source for family and neighbourly support. As I have often said, the biggest philanthropists lie in our townships: non-profits are perhaps feeding 30% of the need in Western Cape townships, yet very seldom is there a case of someone starving to death: the other 70% of people are supported by other members of their communities.

    In this context, studies show that giving money in a regular way directly to the poor in the townships yields a good success in terms of how the money is used. The Child Care Grant which is given per child to all families earning less than a certain amount is a case in point. Since its inception, child hunger, infant mortality and stunting have fallen significantly. Many people feared it would encourage the poor to have more kids, but the number of children per female has remained pretty static over the 15 years since CCG has been in place.

    However, studies show that giving money sporadically to people in the Cape Town CBD, especially children, does not help though. Sporadic incomes (such as giving to someone begging at a traffic light) tend to aggravate addiction problems, as generally people are more giving at certain times than at others (e.g. summer tourists in Cape Town).

  • Wayne

    After spending years in the police I tend to agree with DaviD. The poor aren’t the ones on the street begging although they may be classified as poor. The poor are in the disadvantaged areas and townships and are the ones that benefit from direct cash giving. They spend their money on necessities. Very few of those on the streets in the cities are “the responsible poor” of the article. They are the drugs and alcohol addicts who fuel their habits from the begging. They are opportunists financing the street lifestyle through begging. I’m not saying that you don’t find the responsible among them, but they are in the minority. I am opposed to giving to the street beggars unless you know them. I have given to those I know support their families. The ones who go straight to the liquor store and look inebriated never see anything from me. I do hand out food occasionally but never cash.