Power and Money: How Cash Transfers Can Change International Humanitarian Assistance

Conflicts and disasters take a huge toll on people’s lives and aspirations. The loss of life, livelihoods, homes and assets is a testament to the destructive impacts of crises. When the ability of communities and governments to provide relief and protection to affected people is lacking or overwhelmed, international humanitarian actors try to meet these needs. They are often described collectively as the ‘international humanitarian system’, and include donor governments, the United Nations and its implementing organisations, the Red Cross and Red Crescent Movement and international NGOs. Several have specific mandates and missions about the types of aid that they provide and those whose interests that they seek to protect (such as refugees and children).

International humanitarian assistance has evolved in the last two decades. The amount has grown, reaching a record $28 billion in 2015 (in 1995 it was $6.8 billion). Another major shift has been a move provide ‘cash transfers’, meaning giving people money as an alternative to distributing commodities such as food, clothing and tents. When goods are available in local markets – and they often are – people can buy what they need. Money is more flexible than packages of in-kind aid, which might contain food that is not in line with local tastes or clothes that do not fit. Cash can be distributed through banks, remittance agents and even mobile phones, and delivering cash is usually cheaper than delivering food aid, because cash does not require warehouses and large trucks. Study after study finds that people spend the money responsibly. Research and evaluations have established that humanitarian cash transfers can be effective at achieving a wide range of aims – such as improving access to food, enabling households to meet basic needs, supporting livelihoods and improving access to shelter. There is no evidence of cash assistance being more or less prone to diversion, fraud and corruption than other forms of assistance.

Cash assistance to Internally Displaced Persons in Al NAbek, Rural Damascus. Photo OCHA. Credit UNHCR.

Despite these benefits, cash transfers only comprised about $1 billion (3.5%) of humanitarian assistance in 2015 (vouchers, which are closely related to cash transfers, accounted for an additional 3.5%).  This amount is actually a dramatic increase from the early 2000s, when cash transfers range were virtually non-existent. It remains, however, vastly short of what it would be if cash transfers were always used when they were the most appropriate form of assistance.

A second concerning issue is that donors and aid agencies risk missing out on more transformative benefits that cash transfers could bring to the international humanitarian system, by making humanitarian aid more accountable and tailored to the needs of the people served and ensuring that more of the resources end up in their hands. Cash transfers could also prompt a more sensible division of labour between aid organisations. At present, there are countries where dozens of aid agencies are delivering cash for food, cash for winter goods and cash for other specific objectives in line with their missions, which mirrors how they have distributed in-kind goods (e.g. distributing food, distributing winter kits). The greatest advantage of cash though is that people can spend it on what they determine is needed, rather than what an aid agency thinks that they should buy. Rather a proliferation of smaller programmes with narrow objectives, a more logical approach would be to have fewer, larger programmes that aim to meet the range of people’s needs for which cash transfers are appropriate.

The reasons that cash transfers are not used more and for less narrow objectives are related to power and control. Cash transfers hand over a small amount of an aid agencies’ considerable power, by enabling the person assisted to determine what goods and services they buy. Increasing cash transfers therefore lessons donor and aid agencies’ control over how their assistance is used (though, it is worth noting, food aid can be sold, as 70% of Syrian refugees in Iraq reportedly have done). A move to larger cash transfer programmes to meet people’s basic needs, as opposed to many smaller programmes by numerous agencies, also taps into power relationships and incentives in the humanitarian system. It challenges a status quo in which aid agencies tend to deliver cash programmes within their own sectors and silos, rather than across them. It also implies a reduced role for some aid agencies, as every single aid agency would not need its own capacity to register people and deliver money in a given setting. Resources saved could be diverted to other crucial and under-resourced aspects of humanitarian response, such as better engaging with people affected by crisis and ensuring their protection from violence, coercion and rights violations.

The evolution of humanitarian cash transfers has been largely a ‘ground up’ process – driven first by organisations and aid workers in crisis settings committed to finding better ways to help people. More recently the discussion on cash transfers has moved into a high level policy sphere. The UK government convened a high level panel on cash transfers in 2015. Another striking and positive development is that 33 donors and aid agencies made commitments on cash transfers at the 2016 World Humanitarian Summit through a document called ‘The Grand Bargain’. These policy actions and commitments by donors and aid agencies open the door to institutionalising change and promoting better responses from the highest levels.

Turning these commitments into action, and truly harnessing the potential of cash transfers to be a vehicle for positive change in the humanitarian system, requires dealing with power dynamics and incentives to retain the status quo. The two largest, and inter-related, factors that are required if cash is to be a catalyst for more systemic improvements in humanitarian action are a willingness on the part of individual organisations (and leaders in those organisations) to look beyond agency self-interest, and a willingness on the part of donor governments to better coordinate their funding and create incentives for more compelling models of cash transfer programming to emerge. The debate on whether cash transfers should be part of humanitarian action has been won, but the one on how cash transfers should be taken forward in the humanitarian system continues.