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GiveWell recommends GiveDirectly (again), and benchmarks others against cash

For the fourth consecutive year GiveWell has named us one of their top-rated charities of 2015. GiveWell also rated GiveDirectly strongest on all aspects of organizational performance, including on “transparency and communication,” “robustness of the case for impact,” and “room for more funding.”

Perhaps most significantly, Givewell has adopted cash transfers as a benchmark (or “baseline”) in their cost-effectiveness analysis. As we’ve written before, we find the idea of cash as a benchmark a powerful one that has the potential to transform the $150 billion aid industry (in a similar way to the “index fund” transformed the investment industry).

And we’ve come a long way on this. Just a few years ago, the New York Times called GiveDirectly the “Crazy cash give-away experiment”; this year, a global panel convened by United Kingdom’s Department for International Development has recommended that the development community “benchmark other humanitarian responses against cash transfers” and the European Commission’s Humanitarian Aid and Civil Protection department has said that “we need to always ask the question ‘Why not cash?’”

But, we have a long way to go, as no more than 6% of humanitarian assistance goes towards cash transfers (the exact amount is unknown). And even with the rapid growth in the “room for funding” of GiveWell’s top charities, and expected donations ($15 million), we’re still just a fraction of overall development flows, which top $150 billion. For this reason, we’re always thinking of ways to go beyond direct impact, and ask how every transferred dollar can also help transform the sector.

What if we measured all of these programs against cash? What if we asked of every program: does this do more for the poor with a donated dollar than the poor could themselves? What if GiveWell’s effectiveness table with cash transfers as the baseline was adopted by all international donors? Imagine the impact on the lives of those living in poverty, if we could shift those dollars to more efficient ways of spending.

It’s up to all of us to show what’s possible, push the evidence and in doing so, make the case for cash transfers as a useful benchmark. In the coming years, we not only hope to do this at much bigger scale, but we also hope governments and organizations start to follow GiveWell’s lead and raise the standards for giving everywhere.