Amid aid cuts, the future of cash programming hangs in the balance

For years, a simple idea had been gaining traction among humanitarians and development experts: When people are in crisis, the most effective form of aid isn’t always food, shelter, or supplies. It’s money. Advocates argued that cash empowers recipients to make their own choices — ones that best fit their circumstances. It supports local markets, bolsters fragile economies, and restores a measure of dignity in the midst of upheaval. Cash and voucher assistance, or CVA, typically comes in the form of digital transfers, physical cash, or value vouchers that recipients can use to meet their basic needs. Some CVAs are sector-specific and can only be used toward certain goods or services, such as food or education. Other CVAs can come in the form of multipurpose cash assistance, or MPCA — unrestricted cash that can be spent on anything. But after years of rising popularity, the momentum behind cash aid is faltering. Despite strong evidence of its effectiveness — and consistent demand from aid recipients — cash programming is now among the first things to be cut as global aid budgets tighten. Its share of overall humanitarian assistance has begun to decline: from 24% in 2022 to 20% in 2024, according to data from the CALP Network, whose 90-plus members believe cash and vouchers are the best way to help people in crises. The U.S. has long been the single largest supporter of cash aid, accounting for nearly half of all global contributions, according to CALP. Just last year, the U.S. Agency for International Development publicly backed efforts to scale up cash transfers as a means of improving the cost-effectiveness of aid. Now, with the Trump administration’s dismantling of USAID and its broader retreat from foreign assistance, advocates fear the backsliding on support for cash could accelerate. In April, for example, State Department spokesperson Tammy Bruce said the agency had canceled some awards “because they provided cash-based assistance, which the administration is moving away from” — and cited concerns about “misuse and lack of appropriate accountability for American taxpayers.” “We are at a critical juncture” for cash programming, said Cate Turton, director of CALP. In an era of efficiency-minded policymaking, cash aid advocates are trying to position it as a solution to the aid sector’s myriad problems. Last week, cash advocates including CALP published a public letter making the case that the ongoing “humanitarian reset,” as well as the United Nations reform process, is a critical opportunity to move toward more unified, multipurpose, cross-sectoral cash assistance. They argue that the current humanitarian system is deeply fragmented, creating redundancies and inefficiencies — and that cash, inherently cross-sectoral, could cut through that. “Cash assistance reveals and challenges fundamental power imbalances in a system designed to preserve institutional interests and mandates rather than serve affected populations efficiently,” the letter said. The case for cash So why is cash on the chopping block in the first place? For many in the sector, the growing skepticism and shrinking budgets seem to fly in the face of decades of research, experience, and recipient feedback that points to cash as one of the most effective forms of humanitarian aid. The 2004 Indian Ocean earthquake and tsunami marked a turning point in humanitarian response. Triggered by a massive undersea earthquake off the coast of Indonesia, the disaster killed more than a quarter of a million people across 14 countries. Aid agencies deployed cash across a wider range of programs and geographies, and many in the aftermath sought to coordinate efforts and share lessons learned. By 2005, those conversations led to the creation of what would become the CALP Network. The movement grew steadily through 2015, which Turton describes as a “big moment for cash.” A high-level panel brought global leaders together, recognizing cash as a cornerstone of humanitarian reform. That momentum only accelerated during the COVID-19 pandemic, when humanitarian cash assistance reached a peak of $10.6 billion — or nearly a quarter of humanitarian assistance — by 2022. There were many reasons for this. Studies have shown that cash can be significantly more cost-effective than traditional aid. According to the World Bank, “cash transfers are cheaper to deliver than in-kind transfers, even in humanitarian settings.” Mobile money, where infrastructure allows, is the most efficient method, followed by manual cash delivery and vouchers. “Food transfer,” the 2022 review noted, “is the most expensive way to deliver assistance.” GiveDirectly, the biggest philanthropy behind the popularity of cash transfers, estimates that “cash aid is at least 25% more efficient than in-kind aid like food.” “We consider cash to be hugely important as a really evidence-based and cost-efficient, and effective intervention. It's an intervention that supports client choice as well as other outcomes like eliminating poverty, but it also supports local markets,” said Daphne Jayasinghe, senior director for policy and solutions at the International Rescue Committee. IRC has even been able to deploy anticipatory cash before climate disasters in places such as northeast Nigeria. That means they use technology to map out communities vulnerable to floods and other climate shocks, and distribute cash before disaster strikes — so communities don’t have to resort to negative coping strategies and are less likely to go hungry. And beyond efficiency and innovation, the case for cash is also rooted in what people in crisis actually want. When researchers ask people in crisis what kind of aid they want, the answer tends to be consistent: cash. From Lebanon to the Democratic Republic of Congo, surveys consistently show that people in crisis overwhelmingly prefer to receive cash. That preference, as well as the greater efficiency, advocates argue, should guide how the sector responds to the current squeeze. “Cash is about 25% more efficient than traditional aid,” last week’s open letter said. “The choice is clear: continue fragmenting assistance to preserve institutional mandates, or put crisis-affected people first through unified cash assistance. The humanitarian reset demands we choose the latter.” The letter laid out a number of recommendations as to how the aid sector could make that shift. Among the recommendations: elevate cash coordination in the U.N. reform process, stop measuring success solely by sector-specific benchmarks that cash often transcends, and prioritize recipient outcomes over volume-based metrics. Why effective doesn’t necessarily mean embraced Despite the evidence, cash aid often encounters resistance. “The humanitarian architecture is designed around sectors,” said Isabelle Pelly, head of policy at GiveDirectly. “And so cash as a form of assistance, which is inherently cross-sectoral, just doesn’t fit neatly within that sectorally mandated system — even though it has been proven to be highly cost-effective at meeting sectoral outcomes: food security, shelter, nutrition, and even health.” “This is the moment for donors to fund the use of cash, not incrementally, but ambitiously.” --— Tom Fletcher, U.N. under-secretary-general for humanitarian affairs and emergency relief coordinator Some of that resistance is institutional. As a former U.N. official and director of emergencies for Care International, James Shepherd-Barron wrote, cash transfer programming posed an “existential threat” to traditional aid agency business models. In the words of one unnamed U.K. official he quoted: “It doesn’t take twenty NGOs to load an ATM card.” Politics also plays a part. In countries such as the U.S., in-kind aid programs — especially those involving food — are deeply linked to domestic agricultural interests because American commodities get sent to people in need abroad. If food aid were considered a single export market for U.S.-grown wheat, it would frequently rank among its top 10 export destinations. Security concerns further complicate the picture, with some donors viewing cash as “risky” due to fears it could be stolen, misused, or diverted to adversaries — as Bruce’s statements in April illustrated. Pushback has not only come from donor capitals. In several conflict-affected states of Burkina Faso, for example, regional governors imposed bans on cash transfers in part out of concern that transfers could finance terror groups. But cash advocates argue those concerns are often overstated. “We need to be clear that incidences of loss and diversion are exceptions — not the norm,” said Turton. “We’ve developed sophisticated, robust systems for managing risk — especially for digital cash. In really difficult environments, like Somalia, there are incredible tools for mitigating risk.” Still, diversion does happen. In 2023, GiveDirectly was mired in controversy as staffers stole $900,000 from a mobile payment scheme in DRC. That said, there have been far more documented cases of theft and fraud involving in-kind aid — as the widespread food theft in Ethiopia that led USAID to suspend food assistance for several months. All of these factors have created strong headwinds for the growth of cash assistance. “We went from 10.6 billion to 9.7 [billion] between 2022 and 23,” said Turton. “And then we're landing on $8.2 billion in 2024.” For a time, the sector remained cautiously optimistic. “As a cash community, we’ve been saying — it's okay, don't panic, because the proportion of humanitarian assistance delivered in cash was still holding firm,” she said. “But the data we have just published shows a second year of decline in the percentage of aid delivered as CVA — and we are almost back at 2019 levels.” In other words, both the total value and share of cash aid programming are now falling. Beyond politics, risk aversion, or structural resistance, part of the reason is far more mundane: it’s just easy to cut. “Cash transfers are simple to budget for — and therefore simple to reduce,” said Pelly. “It’s very easy to cut a zero off a budget line for cash transfers and substantially reduce your budget.” That’s not the case for sectors such as health, which often take years to build and can’t be dismantled overnight. An opening in the squeeze But even amid the funding cuts and political headwinds, some advocates see an opportunity. As Turton put it: “How can we make the case that cash is the moral response to the crisis right now, because it allows us quite simply to reach more people with less resources?” While the U.S. State Department has made clear its discomfort with cash-based assistance, it’s not yet clear how far-reaching this shift will be. Some in the sector believe a more efficiency-focused argument could still resonate with parts of the Trump administration. In a recent congressional hearing, for example, Secretary of State Marco Rubio criticized some of the USAID contracts that he had dismantled: “Some of these projects had a prime contractor who had a sub, who had a sub, who had a sub, who had a local provider. That's crazy. That's lunacy. Why do I need six subs to pass one to the other to ultimately get down to the ground?” He added: “In some cases, [aid should go] directly to the person, the group on the ground.” It’s the kind of frustration that, in theory, could align with a cash-first approach that skips intermediaries altogether. Even the apparent efficiency-obsessed face of the Department of Government Efficiency itself, Elon Musk, has donated to GiveDirectly in the past. As the organization recently noted, “maximizing the portion of humanitarian aid given as cash from 20% to 50% could mean directly helping ~2.7 million more people this year without spending more.” Some advocates are pushing hard to seize that moment. “This is the moment for donors to fund the use of cash, not incrementally, but ambitiously,” Tom Fletcher, who heads the U.N. Office for the Coordination of Humanitarian Affairs, said in a recent video posted on X. Turton agreed: “If you're seeing humanitarian volumes overall dropping down, you would ideally want to see humanitarian assistance delivering cash going up,” she said. “You want to do more with less, want to make support go further, be as efficient as you can.”