Today’s Solutions: June 29, 2022

Sometimes, getting money to those who need it can become a complicated task. Organizations aiming to provide health or living relief can do great work, but not everyone needs help with healthcare or rent. Additionally, organizations that require oversight require staff, and that costs more money. 

There is a simpler solution, which Chicago will soon try: just give money directly to those in need. 

The choice to spend and what to spend it on

Starting as soon as late June, the city of Chicago will be giving $500 a month to 5,000 households through the nonprofit GiveDirectly. The households will be those 18 or older who have experienced economic hardship due to Covid-19 and have a household income below 250 percent of the federal poverty level. This city will be spending $31.5 million on a year of this pilot program, which they hope will help Chicago in its Pandemic economic bounceback. 

The idea of just giving money to those in need has met more than its share of criticism, with worries that recipients will spend the funds on nonessentials. However, the idea of giving money directly to those in need is nothing new, and actually has iterations throughout the US. There are similar programs in Florida and Minnesota, and GiveDirectly is engaged in one in Georgia currently.

Also, studies with previous programs, like GiveDirectly’s previous one in Kenya, showed that families spent their extra cash on essentials such as childcare. It turns out that families in need not only spend their money wisely, but they’re the best judges of what they need. 

“Families know best what they need,” said Brandie Knazze, Chicago’s commissioner for the department of family and support services. “To have $500 a month to buy formula matters.”

Not only that, funds with specific purposes, like healthcare or rent, require oversight and overhead to make sure the funds are spent for their intended purpose. Simply giving money to those in need is more cost-effective and beneficial to the recipients. They can pay off debts, pay for transportation, childcare, food, etc. 

Charity analysts rank GiveDirectly among the highest philanthropies whose model directly impacts the lives of those it helps and improves organizational transparency. 

“While all generosity is needed and there are few wrong moves, there is one tool with a proven track record of success that I think should be given more consideration: giving people cash,” Jacquelline Fuller, a GiveDirectly board member.

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