Cash Transfer Programming
For a PDF version of this factsheet, please click here.
During humanitarian crises, cash transfer programs provide financial assistance directly to beneficiaries so that they can decide to purchase what they need most from local markets.
What are they?
Cash transfer programs are direct transfer payments to victims of humanitarian crises to assist them in situations where opportunities for employment, income, livelihood, or economic production are extremely limited or have ceased to exist. Many actors fund or implement such programs, such as governments, international aid agencies (UN, Red Cross and NGOs), and national civil society organizations.
The cash received can be spent where, how, and when the recipient chooses. In the appropriate circumstances, cash transfers can be an effective short- or long-term response option that helps aid recipients meet their essential food and non-food needs while also supporting local producers.
When are they useful?
Cash transfer programs can be implemented in a number of contexts. Before a disaster occurs, cash transfers may be provided in preparation for a predictable shock or as a risk reduction strategy (e.g. irrigation or retaining walls). At the beginning and throughout a crisis, cash transfers may be provided to cover essential food, non-food, and income needs as well as to protect livelihoods. During the recovery or transition period, cash transfers may be provided to support livelihoods, the construction of shelters or short-term employment opportunities. Cash transfers are also useful in chronic food crises and droughts to provide an income in communities between harvests and when families are at their most vulnerable.
Types of Programs
- Unconditional cash transfers—People are given money as a direct grant with no conditions or work requirements. There is no requirement to repay any money, and people are entitled to use the money however they wish.
- Conditional cash transfers—The agency puts conditions on how the cash is spent, for instance stipulating that it must be used to pay for the reconstruction of the family home. Alternatively, cash might be given after recipients have met a condition, such as enrolling children in school or having them vaccinated. This type of conditionality is rare in humanitarian settings.
- Vouchers—A voucher is a paper, token or electronic card that can be exchanged for a set quantity or value of goods, denominated either as a cash value (e.g. $15) or as predetermined commodities or services (e.g. 5kg of maize; milling of 5kg of maize). Vouchers are redeemable with preselected vendors or at ‘voucher fairs’ set up by the implementing agency.
- Cash for work—Payment (in cash or vouchers) is provided as a wage for work, usually in public or community programs.
Why provide cash to disaster survivors?
Families in disaster situations often resort to detrimental coping strategies such as consuming seeds or selling household assets, threatening their long-term wellbeing to satisfy more immediate needs. Through the provision of cash transfers, program recipients are able to access essential goods and services from local markets and service providers of their choice. This in turn allows cash recipients to preserve or supplement their assets. By helping preserve key household assets, short-term cash transfers also support household resilience and post-crisis recovery.
Cash programming is not always appropriate in humanitarian crises and must always be considered in light of the specific needs of affected communities. Cash programs are also often best integrated with other projects, therefore helping to meet a wider variety of needs. For instance, during a humanitarian crisis, cash transfer programs can be linked to re-building and improving infrastructure, as well as long-term rehabilitation efforts to build resilience.
Cash transfer programs are difficult to implement, however. They involve a heavy workload for agency staff and significant investments from donors and sponsors to ensure they are implemented successfully. Moreover, local authorities, infrastructure and cultural factors are all vary from one location to another, and can either help or hinder the effective implementation of cash programs. For these reasons, cash transfer programs are a unique specialization, requiring highly experienced personnel and partners.
Misconceptions about cash transfer programs
As cash transfer programs have become more common in responses to humanitarian crises, so have many misconceptions around them. The most prevalent of these is that the money provided may be misused or stolen. However, experience shows that with very few exceptions, families in humanitarian crises spend the money from cash transfer programs on essential food and non-food items, to re-pay debts, and to protect their livelihoods. The heightened security measures and professionalism with which these programs are carried out reduce the risk of money being diverted or stolen. The humanitarian community has in fact addressed many of the concerns regarding cash transfer programs by developing guidelines and best practices.
- Guidelines for Cash Transfer Programs
- The Cash Learning Partnership, which aims to improve the quality of emergency cash transfer and voucher programming across the humanitarian sector
- East Africa Crisis Evaluation (Humanitarian Coalition)