{{short description|Direct transfer payment of money to an eligible person}} {{see also|unconditional cash transfer|conditional cash transfer}}
A '''cash transfer''' is a direct transfer payment of money to an eligible person.<ref>{{cite book |last1=O'Sullivan |first1=Arthur |url=https://archive.org/details/economicsprincip00osul |title=Economics: Principles in Action |last2=Sheffrin |first2=Steven M. |publisher=Pearson Prentice Hall |year=2003 |isbn=0-13-063085-3 |location=Upper Saddle River, New Jersey 07458 |page=[https://archive.org/details/economicsprincip00osul/page/n85 69] |url-access=limited |author-link=Arthur O'Sullivan (economist)}}</ref> Cash transfers are either unconditional cash transfers or conditional cash transfers. They may be provided by organisations funded by private donors, or a local or regional government.<ref>{{cite web |last1=McCord |first1=Anna |date=3 June 2011 |title=Cash transfers and political economy in sub-Saharan Africa |url=http://www.odi.org.uk/resources/download/3509.pdf |archive-url=https://web.archive.org/web/20110603062556/http://www.odi.org.uk/resources/download/3509.pdf |archive-date=3 June 2011 |publisher=Overseas Development Institute}}</ref>
Cash transfers constitute a critical element in the realm of global social policy, addressing needs ranging from poverty alleviation to crisis response.
== Types == === By purpose === Cash transfer programs can be classified into humanitarian cash transfers, which address urgent needs in crisis situations guided by humanitarian principles, and social assistance cash transfers that form a key component of ongoing welfare policies and systems.
==== Humanitarian cash transfers ==== Humanitarian cash transfers provide life-saving humanitarian aid in emergencies like natural disasters, conflicts, and famines, focusing on short-term, immediate relief.
As of 2015, only approximately 6% of humanitarian aid is provided in the form of cash transfers and vouchers. Evidence indicates that it is more cost-effective, better for recipients and more transparent than in-kind aid.<ref name=HPG>{{Cite journal |author= High Level Panel on Humanitarian Cash Transfers |date= 14 September 2015 |url= https://odi.org/documents/4909/9828.pdf |title= Doing cash differently: how cash transfers can transform humanitarian aid |journal= Overseas Development Institute }}</ref>
==== Social assistance cash transfers ==== Social assistance cash transfers are part of broader social protection systems aimed at reducing long-term poverty and vulnerability. These transfers target various demographic groups, including the unemployed, single parents, and individuals facing disabilities or old age challenges.
=== By selection of recipients === Cash transfer programs may be provided to recipients based on means testing, random-sampling mechanism or through universal provision.<ref name="Cash transfers: targeting"/>
==== Means testing ==== {{Excerpt|Means test|paragraphs=1}}
Means testing potential recipients of cash transfers is the more politically acceptable, as money is not perceived to be wasted by including those who do not have a desperate need for the money ("leakage"). This can either be achieved through a screening process of potential recipients, or else by making the benefits of the transfers so low only the most desperate will apply. Yet there are also many problems associated with this method as the transaction costs of screening are very high, due to the need to pay for assessment, the travelling cost of candidates to and from the assessment and also the potential risks for corruption. There also may be a negative effect on social capital as resentment develops of those who receive support by those who do not.<ref name="Cash transfers: targeting"/>
==== Proxy means testing ==== Proxy means testing refers to using proxy indicators to estimate income based on household characteristics when access to databases that contains personal income is not available.
==== Random-sampling ==== {{Excerpt|Random-sampling mechanism|paragraphs=1}}
==== Universal provision ==== {{Main|Universal basic income}}
A universal basic income provides everyone in a designated social, geographical, age or other such category with the allocated benefits.
Examples include selecting under 5s, pensioners, disabled, and woman-centered households.
It does have many advantages as it increases social unity amongst a section of society benefitting from the programme and avoids the transaction costs of screening. A universal approach requires carefully selecting a target group as some groups may cover a greater number of poor families, but include the less needy. Similarly, a more narrow recipient group risks excluding many of those who do actually need support.<ref name="Cash transfers: targeting"/>
=== By frequency === One method of managing a cash transfer is to provide all the money at once in a lump sum, rather than in small regular amounts. Researchers at the Overseas Development Institute carried out a study on the effectiveness of the Swiss Agency for Development Cooperation's experiments with lump sum cash transfers and came out with the following six findings:<ref>John Farrington (2009) [https://web.archive.org/web/20110704191359/http://217.161.13.39/resources/details.asp?id=3510&title=cash-transfers-lump-sums-project-briefing Cash transfers: lump sums] London: Overseas Development Institute</ref> # Lump sum transfers work better in post-emergency than developmental contexts as their potential to be rapidly transferred to the recipients suits the urgency of post-emergency requirements. # Success of lump sum transfers greatly depends on the local market and whether there are long-term income generating investments to be made. Areas affected by illness (e.g. HIV/Aids) or other such problems are likely to benefit more from regular small payments. # Economic conditions other than limited markets or limited investment opportunities are also important, for instance, if the scale of the transfer greatly exceeds several years of local incomes recipients are unlikely to be able to know how to prudently invest the cash. Where there is a clear investment potential, care should be made to support the recipient while lump sum investment matures, e.g. someone who buys a cow still needs to eat while waiting for the long term benefits (calf, milk) and so must be helped in order to ensure s/he doesn't sell the cow. # While business planning, skills enhancement and training support is useful, if a clear investment opportunity (fishing boat, cow, etc.) is available, that is normally enough. # Context must be considered, e.g. people cannot build a house if they have no access to land. # Large cash transfers risk creating corruption or being used as a tool to gain political support for the government.
== Implications == === Dependency and sustainability === Cash transfers have been criticized for being financially unsustainable due to the dependency they can create.<ref name="Pellissery 2013" /><ref name="ABS-CBN 2021">{{Cite news |title= Why giving out 'ayuda' during a lockdown isn't sustainable |url= https://www.abs-cbn.com/news/08/05/21/why-giving-out-ayuda-during-a-lockdown-isnt-sustainable |date= 5 August 2021 |access-date= 17 February 2025 |author= ABS-CBN News Channel |work= News.ABS-CBN.com |publisher= ABS-CBN Corporation }}</ref>
The dean of Ateneo de Manila University's government faculty points to the buffer that the Philippine government had "worked so hard to build" in the decade before the COVID-19 community quarantines, which he stated would fall apart with future humanitarian cash transfers to 80% of the population.<ref name="ABS-CBN 2021" />
Likewise, Joel Ruiz Butuyan also questioned the effects of increasing cash transfer budgets on the annual national debt.<ref name="Inquirer Butuyan 2025" />
=== Efficiency === A High Level Panel on Humanitarian Cash Transfers was convened in 2015, which found that in many cases, cash transfers were better for people in humanitarian crises. In Somalia, 2.5 times more of aid budgets went directly to aid recipients when given cash rather than food aid.<ref name=HPG/> In Iraq, 70% of Syrian refugees resold large parts of their food aid, in order to purchase what they needed more urgently.<ref name=HPG/>
Similarly, a study in Ecuador, Niger, Uganda and Yemen found that 18% more people could have been helped if everyone was given cash, not food.<ref name=HPG />
The panel suggested that governments and non-governmental organizations increase amount of unconditional cash transfers, invest in planning and preparedness, explore delivering cash transfers through private sector systems, longer-term social protection systems and digitally, and improve coordination in the humanitarian aid system.<ref name=HPG />
=== Financial capabilities === Cash transfer programmes in developing countries are constrained by financial resources, institutional capacity and political ideology.<ref name="Cash transfers: targeting">Rachel Slater and John Farrington (2009) [https://web.archive.org/web/20110704190817/http://217.161.13.39/resources/details.asp?id=3505&title=social-cash-transfers-targeting-project-briefing Cash transfers: targeting] London: Overseas Development Institute</ref> Governments in poorer countries tend to have restricted financial resources, and are therefore limited in the amount they can invest both directly in cash transfers and in measures to ensure that such programmes are effective.<ref name="Cash transfers: targeting"/> The amount invested is influenced by 'value for money' considerations, as well as by political and ideological concerns regarding 'free handouts' and 'creating dependency'.<ref name="Pellissery 2013">Sony Pellissery and Armando Barrientos (2013) [http://www.epw.in/author/sony-pellissery Expansion of Social Assistance: Does Politics Matter?]</ref>
=== Inflation === Many governments in poorer countries, where cash transfers could potentially have the most impressive impact, are often unwilling to implement such programmes due to fears of inflation and more importantly, dependency on the transfers.<ref name="odi.org.uk">Anna McCord (2009) [https://web.archive.org/web/20110704191415/http://217.161.13.39/resources/details.asp?id=3509&title=cash-transfers-political-economy-sub-saharan-africa-project-briefing Cash transfers and political economy in sub-Saharan Africa] London: Overseas Development Institute</ref> Quite often it is NGOs who encourage the schemes. If introduced, these schemes are often directed at the non-working poor (although the DfID backed Hunger Safety Nets Programme is a notable exception). In sub-Saharan Africa transfer values are normally limited to 10 to 30% of the ultra poverty line, though donors are now recommending the provision of a transfer level equivalent to 100%.<ref name="odi.org.uk"/>
Whether due to the cautious approach or not, studies have shown that inflation is often avoided as traders increase their stock in anticipation of the schemes.<ref>Rebecca Holmes (2009) [https://web.archive.org/web/20110704191427/http://217.161.13.39/resources/details.asp?id=3507&title=cash-transfers-post-conflict-project-briefing Cash transfers in post-conflict contexts] London: Overseas Development Institute</ref> Furthermore, the projects have often helped to build the state's legitimacy as it helps ensure citizens survival and programmes are targeted at marginalised groups and support their integration (e.g. in Nepal successive governments have used cash transfers to help integrate marginalised groups and reduce the risk of conflict).<ref name="odi.org.uk"/>
=== Monitoring and evaluation === Ensuring the participation of poor communities in the monitoring and evaluation (M&E) of social protection programmes – and cash transfer programmes in particular - is gaining support from donors and governments who see potential gains in efficiency, legitimacy and satisfaction. 'Participatory monitoring and evaluation' (PM&E) techniques and mechanisms are particularly effective at giving a voice to the people who receive the money, and, when they work well, they serve increase the accountability of governments, local officials and programme implementers.
Qualitative and participatory research carried out by the Overseas Development Institute (in Kenya, Mozambique, the Occupied Palestinian Territories, Uganda and Yemen) investigating individual and community perceptions of cash transfer programmes<ref>{{cite web|last=Jones |first=Nicola |display-authors=et al |title=Transforming cash transfers: beneficiary and community perspectives on social protection programming |url=http://www.odi.org.uk/projects/2622-transforming-cash-transfers-beneficiary-community-perspectives-social-protection-programming |publisher=Overseas Development Institute |access-date=23 January 2013 }}{{dead link|date=May 2020|bot=medic}}{{cbignore|bot=medic}}</ref> reveals that the money has a number of positive, and potentially transformative, effects on the lives of the individuals and families that receive them, including:
• People prefer to receive cash than other forms of assistance (food aid, public works, etc.) because it gives them the freedom to spend the money on the things they feel they need.
• People experience an increase in their quality of life e.g. they are able to construct permanent shelters, have three meals a day and pay health-related costs.
• More children are going to school as a result of receiving the transfer.
• Particularly vulnerable or excluded beneficiaries felt that they were now able to meet the basic needs of their families, giving them greater economic freedom, security and enhanced psychological well-being.
=== Political patronage === Cash transfer programs have been criticized for enabling political patronage between legislators and voters and serving as a conduit for legalised vote buying.<ref name="Rappler Punongbayan 2025">{{Cite web |url= https://www.rappler.com/voices/thought-leaders/in-this-economy-opening-floodgates-ayuda/ |title= Opening the floodgates to ayuda |work= In This Economy |publisher= Rappler |last= Punongbayan |first= JC |author-link= JC Punongbayan |date= 10 January 2025 |access-date= 17 February 2025 }}</ref><ref name="The City Post Villarin 2024">{{Cite web |last= Villarin |first= Marlon |work= The City Post |publisher= Carlo MultiMedia Service |date= 18 December 2024 |access-date= 17 February 2025 |url= https://thecitypost.net/kids-can-tell-akap-aics-is-a-vote-buying-tool/ |title= Kids Can Tell: AKAP-AICS is a Vote Buying Tool }}</ref><ref>{{Cite web |url= https://malaya.com.ph/opinion-of-the-day/commentary-its-patronage-politics-and-serves-political-ends/ |title= It's patronage politics and serves political ends |work= Malaya Business Insight |last= Generoso |first= Ding |date= 26 November 2024 |access-date= 17 February 2025 |publisher= People's Independent Media }}</ref><ref name="Inquirer Butuyan 2025">{{Cite news |url= https://opinion.inquirer.net/179872/let-the-dynasty-giants-come-to-blows |title= Let the dynasty giants come to blows |newspaper= Philippine Daily Inquirer |date= 9 January 2025 |access-date= 17 February 2025 |last= Butuyan |first= Joel Ruiz |publisher= Inquirer Group of Companies }}</ref> These programs may be duplicated under different names to provide each prominent legislator a program that can be credited towards them.<ref name="Rappler Punongbayan 2025" /><ref name="ABS-CBN Tulad 2024">{{Cite news |title= Imee Marcos wants integration of AKAP, AICS |url= https://www.abs-cbn.com/news/2024/11/19/imee-marcos-wants-integration-of-akap-aics-011 |date= 20 November 2024 |last= Tulad |first= Victoria |work= News.ABS-CBN.com |publisher= ABS-CBN Corporation |access-date= 17 February 2025 }}</ref>
JC Punongbayan argued that the selection process, due to their control by representatives' district offices, has led to multiple cash leakages, with barangay officials prioritize relatives and friends in the handing out of benefits, leading to nonpoor and undeserving people receiving benefits.<ref name="Rappler Punongbayan 2025" /> He also points to legislators such as the Speaker of the House of Representatives of the Philippines hosting mass distributions of cash transfers "like a gameshow host giving out prizes in a noontime show" and their allies crediting longstanding Department of Labor and Employment to congressional leaders as evidence of patronage politics.<ref name="Rappler Punongbayan 2025" />
''The City Post'' claimed that cash transfer programs blur the line between governance and vote-buying.<ref name="The City Post Villarin 2024" /> It also excoriated legislative bodies that usurp the functions of the executive and frowns on legislators that use cash transfer programs to promote their candidacies in future elections.<ref name="The City Post Villarin 2024" />
== Examples == {{Anchor|By country}}
=== Conditional cash transfers === {{Main|Conditional cash transfer#Projects by country}}
=== Unconditional cash transfers === {{Excerpt|Unconditional cash transfer#Programs and organizations involved|subsections=yes}}
== Impacts == === Health === The first comprehensive systematic review of the health impact of unconditional cash transfers included 21 studies, of which 16 were randomized controlled trials. It found that unconditional cash transfers may not improve health services use. However, they lead to a large, clinically meaningful reduction in the likelihood of being sick by an estimated 27%. Unconditional cash transfers may also improve food security and dietary diversity. Children in recipient families are more likely to attend school, and the cash transfers may increase money spent on health care.<ref name="doi10.1002/14651858.CD011135.pub2">{{cite journal |title=Unconditional cash transfers for reducing poverty and vulnerabilities: effect on use of health services and health outcomes in low- and middle-income countries |journal=Cochrane Database of Systematic Reviews |volume=11 |article-number=CD011135 |year=2017 |doi= 10.1002/14651858.CD011135.pub2 |last1=Pega |first1=Frank |last2=Liu |first2=Sze |last3=Walter |first3=Stefan |last4=Pabayo |first4=Roman |last5=Saith |first5=Ruhi |last6=Lhachimi |first6=Stefan |issue=4 |pmc=6486161 |pmid=29139110 }}</ref> An update of this landmark review from 2022 confirmed these findings, plus concluded that there is now sufficient evidence that such cash transfers also reduce the likelihood of recipients living in extreme poverty.<ref name="doi10.1002/14651858.CD011135.pub3">{{cite journal |title=Unconditional cash transfers for reducing poverty and vulnerabilities: effect on use of health services and health outcomes in low- and middle-income countries |journal=Cochrane Database of Systematic Reviews |volume=2022 |article-number=CD011135 |year=2022 |doi= 10.1002/14651858.CD011135.pub3 |last1=Pega |first1=Frank |last2=Pabayo |first2=Roman |last3=Benny |first3=Claire |last4=Lee |first4=Eun-Young |last5=Lhachimi |first5=Stefan |last6=Liu |first6=Sze |issue=3 |pmid=35348196 |pmc=8962215 }}</ref> The present study concluded that cash along with ECD activities have positive impact on child development in Bangladesh.<ref>{{Cite journal |last1=Hossain |first1=Sheikh Jamal |last2=Roy |first2=Bharaty Rani |last3=Sujon |first3=Hasan Mahmud |last4=Tran |first4=Thach |last5=Fisher |first5=Jane |last6=Tofail |first6=Fahmida |last7=El Arifeen |first7=Shams |last8=Hamadani |first8=Jena Derakhshani |date=2022-01-01 |title=Effects of integrated psychosocial stimulation (PS) and Unconditional Cash Transfer (UCT) on Children's development in rural Bangladesh: A cluster randomized controlled trial |journal=Social Science & Medicine |language=en |volume=293 |article-number=114657 |doi=10.1016/j.socscimed.2021.114657 |pmid=34942577 |s2cid=245284715 |issn=0277-9536|doi-access=free }}</ref>
=== Wellbeing and mental health === In 2022, a systematic review and meta-analysis of 45 studies examined the impact of cash transfers on self-reported subjective wellbeing and mental health outcomes, covering a sample of 116,999 individuals.<ref>{{Cite journal |last1=McGuire |first1=Joel |last2=Kaiser |first2=Caspar |last3=Bach-Mortensen |first3=Anders M. |date=2022 |title=A systematic review and meta-analysis of the impact of cash transfers on subjective well-being and mental health in low- and middle-income countries |url=https://www.nature.com/articles/s41562-021-01252-z |journal=Nature Human Behaviour |language=en |volume=6 |issue=3 |pages=359–370 |doi=10.1038/s41562-021-01252-z |pmid=35058643 |s2cid=246082713 |issn=2397-3374|url-access=subscription }}</ref> After an average follow-up time of two years, the study found that cash transfers have a small but statistically significant positive effect on both subjective wellbeing and mental health among recipients. The value of the cash transfer, both relative to previous income and in absolute terms, is a strong predictor of the effect size.
==See also== {{Portal|Business and economics}} * Basic income * Humanitarian aid * Cash and Voucher Assistance * The Cash Learning Partnership
==References== {{Reflist}}
==Further reading== * [https://transfer.cpc.unc.edu/ The Transfer Project] * [http://www.cashlearning.org The Cash Learning Partnership] * [http://www.cash-atlas.org The Cash Atlas] * Hanlon, Joseph, Armando Barrientos and David Hulme. ''Just Give Money to the Poor: The Development Revolution from the Global South''. Sterling, VA: Kumarian Press, 2010. * {{cite journal|url=http://www.odi.org.uk/resources/specialist/natural-resource-perspectives/97-cash-transfers-rural-rehabilitation-development.pdf |archive-url=https://web.archive.org/web/20090124072901/http://www.odi.org.uk/resources/specialist/natural-resource-perspectives/97-cash-transfers-rural-rehabilitation-development.pdf |archive-date=2009-01-24 |title=Cash Transfers – Mere 'Gadaffi Syndrome', or Serious Potential for Rural Rehabilitation and Development? |last1=Harvey |first1=Paul |first2=Rachel |last2=Slater |first3=John |last3=Farrington |date=March 2005 |journal=Natural Resource Perspectives |issn=1356-9228 |publisher=The Overseas Development Institute |number=97 |access-date=2009-01-31 }}
{{DEFAULTSORT:Cash Transfers}} Category:Public economics Category:Social programs Category:Private aid programs