When Roger Roggerstand, 66, lost his home in Rose City, Texas, to Hurricane Harvey, he got help from some familiar sources.
The owner of the RV park where he lives helped Roggerstand, his wife Sally, and their cats Redd and Mojo evacuate by Jet Ski. They had to go in two steps, with Roger hopping on the back of the vehicle first, with bags on one shoulder and the cats in a carrier on the other
“Everyone wanted her to go first,” Roggerstand says of his wife. “She said, ‘No you go, and take the cats!’”
He and Sally were put up by a VFW hall and at a mega-center for evacuees. When they got back home to Rose City, about 90 minutes Northeast of Houston, the Red Cross offered residents food, and nearby churches provided soap and toiletries. His insurance offered enough to buy a new RV to live in, along with a cheap used car.
And then Roggerstand got help he wasn’t expecting: a Visa prepaid debit card stocked with $1,500, to spend however he saw fit — courtesy of the nonprofit group GiveDirectly.
“I was real skeptical,” he says, when he went to a meeting at city hall where representatives of GiveDirectly explained that every household in Rose City was getting $1,500, no strings attached. All sorts of other charities were handing out rice and beans, toiletries, clothing. Why was this one doling out cash? Gradually, as he talked to staff for GiveDirectly, his fears started to fade away.
GiveDirectly is based on a simple but radical idea: Instead of guessing what poor people need, aid groups should try giving out money so the poor can help themselves. Founded by a team of economists who were shocked to discover that basically no groups would let them donate cash directly to the global poor despite plenty of research suggesting cash transfers work better than most aid, the group works mostly in East Africa. It mainly sends money to poor villages in Kenya, but recently expanded its efforts to Uganda and Rwanda.
Now, the group has embarked on a project in Houston that veers off course from the original goal of fighting deep poverty (while hewing to the core idea that cash is the best kind of aid). By offering the 523 residents of Rose City cash grants, GiveDirectly is hoping to show that giving cash instead of food or housing or school supplies makes just as much sense in Texas as in East Africa.
That’s not a controversial assertion among the group’s enthusiasts — a group that includes me. I’ve been donating to GiveDirectly since 2012, have written about the group extensively, and am very convinced by the evidence that giving cash works better than giving in-kind goods. But like a lot of the group’s backers, I identify as an effective altruist, a term that describes people who believe you should direct your donations where your marginal dollar can do the most good. Effective altruists believe donating to East Africa, where $1,500 is two or three years’ salary, changes more lives for the better (or has a greater impact on the same number of lives) than donating within the Houston area — even after a hurricane in Houston, or in Puerto Rico, where the group is considering going next.
This isn’t just a concern I had when I heard about the program; it’s a worry that some of the group’s staff had as well. The group’s chief financial officer, Joe Huston, who was on the ground in Rose City helping to implement the program, says, “I’m still personally compelled by the argument that the dollar goes further in East Africa. I think the question for us is, should we do both?”
Why GiveDirectly decided to get into disaster relief
I first heard that GiveDirectly was weighing a Hurricane Harvey operation when I got a phone call from Michael Faye, the organization’s co-founder. Faye wanted me to know that they were considering venturing into US disaster relief, in case I wanted to write about it. He also wanted to ask informally what I thought about the idea; he was pretty set on doing it but was gathering some outside opinions.
My first thought was that it wasn’t worth it, that it amounted to a diversion of resources that should be going to East Africa.
The poverty line in the US for a family of four is $16.85 per person per day; the people GiveDirectly targets in East Africa, again, often bring in less than $2 per person per day.
That adds up to a strong case for not doing a project in Houston, since it might divert money from East Africa, where people could use it more.
Not really, Faye countered. Offering hurricane relief, he said, could help GiveDirectly reach out to a largely untapped group of donors. Interest in charitable giving spikes after a hurricane or other natural disaster, drawing in new donors, or donors whose general predilection is to fund a group in the US. Those donors could fund a Houston pilot without taking money from projects in Africa, Faye suggested. What’s more, down the line GiveDirectly could pitch them on giving to projects in the developing world.
“We’ve found that most donors tend not to shift money between domestic and international,” Faye says. “They either choose one, or have a portfolio of both, but don’t seem to shift up and back.” What’s more, GiveDirectly had excess capacity to try something new. They had the staff and infrastructure to hand out $100 million in 2017, and were on track to only give out $50 million (the amount of donations to the group, less a very small amount of overhead).
There was also motivation to do a demonstration project in the US. While the superiority of cash is widely accepted among people who think about philanthropy a lot, the insight has not penetrated the public consciousness. People often react to tragedies by sending canned food or clothing. Why not try to push the US charitable sector toward cash, just as GiveDirectly has tried to push international aid? Why not give those hurt by the hurricane cash, instead of other peoples’ junk?
Did that all make sense, Faye asked? I paused for a second. He was describing an operation to which I wouldn’t choose to donate. I split my giving about 50-50 between GiveDirectly and another group, the Against Malaria Foundation, which distributes bednets in sub-Saharan Africa (a very cost-effective way of saving lives), with slightly more going to AMF. I chose those organizations because I really buy the logic that anti-poverty giving goes further abroad, in poor countries, especially for small donors like me who can’t diversify our giving too much. As horrible as the situation in Houston is, I didn’t think my marginal dollar would do more good there than it would in Kenya.
But Faye wasn’t soliciting a donation from me (that would have been pretty inappropriate, given my role as a journalist; it’s awkward enough being a donor to GiveDirectly who also covers the group). He was asking if, as someone who’s thought a lot about these issues, I thought it would be worthwhile to let other people give, to broaden the circle of people introduced to the idea of giving cash, and maybe to force some other groups operating in the US to shape up. I told Faye this didn’t sound nuts — but that I also worried about directing existing donors toward a project in the US.
Maybe, I suggested, there was some way to do this, but yet also signal to GiveDirectly’s core donor base that the group was in no way suggesting that they shift their contributions away from East Africa toward Houston.
Clearly, GiveDirectly shared some of my ambivalence. That became apparent on October 6, when I, and most other GiveDirectly donors, got one of the most unusual fundraising emails I’ve ever read:
GiveDirectly is going to Texas. And we want to tell you why.
…Our intent is to provide a direct giving option for those that want to give to people -- and not organizations. We are not recommending you give to Texas per se. But if you know people who want to lend a helping hand, we encourage them to give directly. And by introducing a few more people to the effectiveness and dignity of cash, we may even accelerate the end of extreme poverty, which will continue to remain our focus.
“We are not recommending you give to Texas per se” — this is not exactly the hard sell that many fundraising emails go for. But it got the point across: By launching the Houston project, GiveDirectly wasn’t saying this was a top priority necessarily. It was just saying that the US could use a direct cash option as well.
Faye later told me he wished he had worded the appeal differently; it undersold the project, which Faye passionately believes should exist. But the wording also captured a key ambivalence in this endeavor: wanting to expand a very good idea to a place where its humanitarian impact might be less profound.
Cash works for the world’s poorest people — and for hurricane victims
I didn’t give to the project — but the peculiar wording of the pitch didn’t dissuade everyone. Small donations trickled in. Then Texas hedge fund billionaire and Enron veteran John Arnold and his wife Laura Arnold kicked in $5 million.
The result was easily enough money to give $1,500 to the 230 households in Rose City and to expand to more towns later on. Rose City was chosen both for its size and because every house but one was damaged in the storm.
The GiveDirectly team announced their plans the same way they do whenever they enter a new village in Kenya: through a town meeting.
Some residents arrived deeply skeptical. “GiveDirectly, they swooped in out of nowhere. We hadn’t heard of these people,” 26-year-old resident Kristen McNeel recalls. The talk of suddenly getting $1,500 out of nowhere — it felt like a scam.
But when GiveDirectly’s staffers — Huston, the CFO; field director Stephanie Palla; and analytics/tech manager Meylakh Barshay — didn’t ask for her bank account info, she found that reassuring. Instead they just wanted her name, address, and a government ID to show she lived in Rose City.
“I’m not one of those people who likes to just take any kind of handout,” McNeel explains. “I pay taxes. If I can get by on my own money, I’d prefer to get by on my own money.” She thinks of herself as a worker, not a leech. She’s a contractor at an oil refinery, catching leaks; she got some help from FEMA that let her buy a trailer where she and her dad could stay while they got their house back into a livable condition. (Many Rose City residents are still waiting for FEMA checks.)
“We don’t want to be looked at as some poverty stricken community, because we aren’t,” she says of Rose City. But, McNeel says, the GiveDirectly team framed the transfer differently, in a way that made her more comfortable. They “made it feel like I wasn’t just taking a handout. This was a gift from a bunch of people you don’t know.”
And the thing about a gift in cash is that it can be directed where it’s most needed. Studies of cash in the developing world have shown this repeatedly: When Mexico randomly gave poor villages either cash or food, cash recipients used the money to buy just as much food as they would’ve received otherwise. The difference is it’s food they actually wanted and needed, not whatever the government had on hand.
Cash had the same advantages in Texas. “A charitable truck is parked there giving out beans and rice when the restaurant and Walmart are open down the street,” Faye observed. “People get water bottles but water bottles don’t help remove the mold from their house.”
Unlike gifts of soap or food, a gift of cash let Roger Roggerstand procure exactly what he needed most “I needed just sheets and pillows and pillow cases,” he says. “Somebody else may not have needed that.” He’s saving some for a mattress, and used a bit more for pots and pans and miscellaneous dishes: “Little things you don’t know you miss until you don’t have ‘em.”
McNeel used the money on “the stuff FEMA’s not paying for”: gas for her car, repairing her soaked lawnmower, a hot water heater. “I did sneak off and get some Mexican food off of it,” she adds, with more guilt in her voice than someone who survived a hurricane should have. “It’s so good.”
“The most common [spending] was the types of purchases you can make at a Home Depot or a Lowes,” says GiveDirectly’s Huston. “There’s a ton of construction work you have to do.”
If it gave aid in-kind, GiveDirectly would’ve had to predict what recipients would need the money for, and provide construction help or dishwashers and dryers or bedding. By giving cash, they acknowledged that they knew less about what recipients needed than the recipients themselves did.
Should GiveDirectly do it again?
Faye came away from the project convinced that GiveDirectly could add disaster relief in the US to its portfolio. “I’m convinced that these are separate pools of funds, and the money we raised would not have gone to those in Africa.”
The piles of money might be different. But the people dispersing it are the same. And for GiveDirectly, that’s the tricky thing about doing these projects. They have an immensely dedicated staff whose time is valuable. Is it best spent on East Africa — or disaster relief at home?
GiveDirectly’s missionary mission might argue for more local US projects, not least because the advantage of cash over in-kind is even greater in rich countries with existing supports than poor ones. In Texas, Huston says, the money is used more to fill gaps between in-kind services than in Kenya, where the cash tends to go to staples like food and housing. That makes the fact that the aid’s in cash all the more important, and the case for moving in that direction most vivid to other aid groups.
Think washers and dryers. Or Roggerstand’s pillows and pillowcases. Or McNeel’s lawnmower repairs. Those aren’t things that in-kind programs are likely to provide. They’re too specific to individual people’s situations. But if you give cash, that doesn’t matter.
Beyond the massive Arnolds’ gift, the experiment seems to have earned GiveDirectly at least one other new donor.
“I’d like to one day help out and give back, and be able to donate the same amount of money,” says McNeel, the Rose City resident who was skeptical of the handout at first but used to replace her ruined lawn mower, and to fill up her car’s tank. “That’s my goal. I want to be able to donate $1,500 back to their organization.”