IRC considers expanding cash transfers beyond goods to services

WASHINGTON — The International Rescue Committee has been using cash transfers for more than 10 years to help people meet their basic needs of food, water, and housing in emergency or protracted crisis situations. Now, the humanitarian organization is exploring whether cash is a viable replacement for services in addition to in-kind goods. In 2016, IRC set the goal of 25 percent of in-kind aid to be replaced by cash by 2020. But according to Radha Rajkotia, IRC’s senior technical director of economic recovery and development, the organization had already surpassed the 25 percent benchmark by mid-2018, and is re-evaluating its goals for cash programming. “One of the questions that we’re looking at now — we’re looking at data right now to work out whether this is appropriate — is to consider whether we should be looking beyond just goods and into services,” Rajkotia said. “We [previously] based the goal on the denominator. Essentially the way we think about it is ‘what is the stuff that can be replaced?’” IRC set the original 25 percent benchmark at the World Humanitarian Summit after conducting its own study on cash transfers that were being provided to refugees in Lebanon and taking into account other evidence that such programs resulted in people spending cash “on things you would want people to spend it on.” Rajkotia said the public goal was “intimidating” at the time, but the organization has been inspired by reaching for something so ambitious. By the end of fiscal year 2017, IRC was providing 17.5 percent of its traditional in-kind programming in cash. This swift progress led the organization, which currently has cash programs in 23 countries, to explore additional ways in which they could expand it. Cash transfers were controversial when they were first introduced in the humanitarian sphere because implementers were concerned money would not be spent responsibly. Rajkotia acknowledged that a move to begin replacing services with cash may meet pushback from colleagues, and said some have expressed fears that expanding the sphere of cash could cause certain employees or organizations to find the work they performed is no longer needed. “Are there certain services that we may be able to displace and think about providing cash for instead? This is very new and it’s a very sensitive area of exploration because obviously I think service providers and services are necessary,” Rajkotia said. “Cash may be able to replace a very simple information campaign. It might be able to replace training services that are provided. So right now, the analysis that we’re doing is to understand ‘are there certain kinds of services that we may want to replace with cash?’” “Are there certain services that we may be able to displace and think about providing cash for instead?” --— Radha Rajkotia, IRC’s senior technical director of economic recovery and development Lynn Yoshikawa, North American regional representative of the Cash Learning Partnership, or CaLP, a membership organization of humanitarian actors who use cash programming, said IRC is not the only organization exploring how cash use may be expanded. She said CaLP has a role to play in helping guide other major NGOs, United Nations agencies, and CaLP members such as the International Committee of the Red Cross, Mercy Corps, and CARE as they debate what can and cannot be replaced by cash, even as many have adopted the “why not cash” mentality. “But that’s also translated into the perception that cash is going to replace all types of humanitarian assistance, when we actually know, in reality, that cash can’t meet all needs,” Yoshikawa said. “It can certainly meet a need when there are financial barriers, but in terms of behavior change, cash alone is not going to do that.” It took years to bring the humanitarian community around to the understanding that there is a place for cash in aid, and that it can be more effective than in-kind goods. In addition to concerns about how money would be spent by beneficiaries, there is a tendency in the sector to stick to traditional programs organizations already know work, instead of exploring how they could be more effective. There were also concerns about capacity building for cash distribution and how it would impact internal accounting and reporting mechanisms. That skepticism has led to intense scrutiny of cash programming to determine if it is indeed a better option, Yoshikawa said, noting that there is strong evidence for the efficacy of cash. But as the active discussion continues about the future of cash replacing services, she encouraged implementers to examine their traditional, service-based programs the same way. “Cash really has raised the bar in terms of there is a lot more scrutiny and demand for ‘what evidence is there for cash?’ But I think we can turn that around too: ‘Well, what evidence do we have that — whether it’s in-kind goods or services — are the best option as well?’” Yoshikawa said. “I think this is a good opportunity for the aid sector as a whole to really reflect on the extent to which we are basing decisions and programming on evidence.” Yoshikawa stressed that conversations around expanding cash to replace services must be context-dependent, and implementers must recognize that cash transfers will not necessarily be the best option in all humanitarian situations. A needs assessment must be conducted first to determine the best course, she said. “You can provide cash to pay for rent, but … it might not be able to help with some of the tenure issues” that refugees can run into, Yoshikawa said. “Let’s say refugees don’t have contracts in place or legal agreements, and let’s say that they’re evicted. So cash might be able to pay the rent, but let’s say if a landlord is trying to change the terms of the agreement to be exploitative, that is where we do need legal assistance.” She also said there are concerns in the health care sector that providing cash in lieu of services won’t necessarily lead to the best outcomes, because that does nothing to increase the quality of health care being provided. John McArthur, a senior fellow in the global economy and development program at the Brookings Institution, echoed the importance of recognizing individual situations when considering the most cost-effective way to provide assistance. “If you’re spending $1,000 helping a household learn to farm, there’s one question which is, ‘is there a better use of $1,000 for that household, in general? Could they make more of it themselves if they just had it themselves?’ I think that’s an important question,” McArthur said. “There’s another question which is, ‘if you know that this household has asked for help to get better at their farming and they need some type of skills or knowledge, what’s the best way to get them that skills or knowledge? And what tools do they need to do that?’” In addition to cost effectiveness, organizations must keep an eye on desired outcomes, McArthur said, as they consider how to get the best return on investment on something like $1,000 spent on agricultural training. Multiple questions must be asked, he continued: “Does that work? What’s the return on that? … What are the other potential uses of $1,000 for that same household? … What’s the best way to help farmers develop their skills?” “It might be that the current program isn’t doing it, and there’s a higher-return way to do something, some other approach. And the cash transfer question might force that in a clear way, but not replace it,” he added. Rajkotia said IRC is grappling with the challenge of measuring impact and success as it considers expanded use of cash in place of services. The organization wants more information about how beneficiaries use cash in different stages of displacement in crisis situations and how practices may differ by country or region. It also wants to be able to concretely compare cash to traditional programming to determine in what ways money is more effective. “I also don’t think consumption replaces services. I think that giving a poor person $100 so they can afford food doesn’t provide a health system,” --— John McArthur, a senior fellow at the Brookings Institution IRC is keeping these questions of cost effectiveness and outcome in mind as it continues its internal conversations to put forth a revised goal on cash transfers in November. Rajkotia said the new goal will likely still be for 2020, the same year for which the original 25 percent goal had been set. McArthur sees the likelihood of more uses for cash in the humanitarian and development spheres, but said implementers must always be mindful of the contexts it actually makes sense to replace services with cash. “I don’t think we’ve hit the limit. I think we’re just getting our heads around it. But I also don’t think consumption replaces services. I think that giving a poor person $100 so they can afford food doesn’t provide a health system,” McArthur said. “Many services have a degree of public goodness to them and it’s not a substitute for that. It’s a complement to that.”