Three reasons more charities are giving people cash (And one reason not to).
Charities are always looking for an answer to one big question: What's the best way to help people?
Increasingly, the approach they're trying is perhaps the simplest one — just give people money.
This has been a trend overseas for more than a decade. The nonprofit GiveDirectly has been providing cash aid across Africa since 2009. But in recent years, more stateside groups have been handing out cash after crises like Hurricane Ida. Charities in Washington, D.C., gave about $26 million during the pandemic.
U.S. cities have also been turning to cash as a way to address long-term problems like income inequality. Dozens of cities are starting guaranteed income pilots to send needy families monthly payments.
Here are three reasons why more groups are putting cash in people's hands.
1. The Pandemic
Just like it's changed nearly everything else, the pandemic changed how people receive material help.
The success of the stimulus checks passed to deal with the recession were a big part in getting people comfortable with the idea of giving out money. But it wasn't just those checks — expanded unemployment benefits and the child tax credits — have demonstrated how much of an impact handing out cash could have, for better or worse.
During the pandemic, traditional aid like food lines, no longer made sense when avoiding getting sick meant keeping a physical distance from others.
It was especially risky for Michael Wilkerson who has multiple medical conditions. He recently lost more than 90 pounds due to hyperthyroidism and needed new clothes. But since he has a higher risk from COVID-19, Wilkerson worried about going to traditional charities in-person in Washington, D.C.
"With my condition, I didn't want to be around certain people if they weren't masking up and doing what they're supposed to do," Wilkerson said.
2. Money Let's People Decide How To Best Help Themselves
Wilkerson signed up for a program called Thrive East of The River that was giving people in need $5,500. At first he was leery, but the money showed up in Wilkerson's account ahead of schedule.
He used the cash to pay off credit card debt, buy those new clothes and new kitchen equipment. At 59, he's also not moving as well as he used to. The wheeled racks he bought kept him from having to bend down for kitchen supplies while a new blender allows him to prep quick meals.
"I'm not getting any younger," Wilkerson says. "So I need to make my apartment more conducive to my living."
In the past, charities held the view that if you give people cash they'll squander it on things like drugs and alcohol. Better to just give out canned food and coats.
"People are rejecting those tropes," says Mary Bogle, a researcher with the Urban Institute. "This is all being undone by modern cash transfer policy."
Many charities have come around to the idea that the best way to help people is to trust them with cash — after all, they know best what they need.
For Wilkerson, being trusted came with its own value. "I know when I don't have cash on hand, I don't feel worthy," he says. "It's like whatever was looming over me when I didn't have the cash, as soon as cash came, that cloud went away."
3: Fast Money
Maricela Velazquez fell behind on her rent in Germantown, Md., when a case of COVID-19 forced her to quarantine last December. That same month, Congress created a rental assistance program to help people like her harmed by the pandemic. But the program didn't really start going until March, and even today renters still have trouble accessing the help.
Instead, Velazquez got assistance from Identity, Inc, a charity that sent her more than $800 to cover the rent.
"It's an advantage because by getting it in cash, I can pay my rent immediately," says Velazquez.
A big selling point of direct cash aid is that it cuts through red tape. While renters get stuck in a web of document requirements and bureaucracy when applying for the federal rental assistance program, Velazquez was able to pass the aid she got over to her landlord without any hoops or months of waiting.
Direct deposit and apps like Venmo also make sending money simple. Other forms of aid, like water and food, can take time to actually arrive — and that's before accounting for the country's tangled supply chain.
"Cash is speedy," Bogle said. "It is a very efficient way to get resources out the door to people who otherwise might not have access."
When Not To Give Cash: "You Can't Eat Money"
Louisiana pastor Mathew Chouest said his town of Golden Meadows looked like a war zone a few days after Hurricane Ida made landfall just 20 miles away.
"Unless you come see it with your own eyes I don't think people realize how bad we got hit," says Chouest.
Chouest worked with different charities that came through the area as they helped repair homes and deliver warm meals. He said someone called offering to send a check. But Chouest told the caller that at the moment they needed supplies, not cash.
"You need bread. You need lanterns," Chouest said. "You can't eat money."
Economists, including the ones advocating for giving cash, say money can't help when the main problem is scarcity — dollars don't solve a gas shortage like the one in Louisiana after Ida shut down oil refineries and blocked roads by debris.
Still, never nonprofits did deliver cash to needy people in the bayou after Ida, along with hot meals and small heaters for the dropping temperatures. And experts say that's the future of disaster assistance — send those traditional supplies for what money can't buy and cash for what it can.
WBHM reporter Mary Scott Hodgin contributed to this story.
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