Why cash is king in emergencies

The power is out, there is no clean drinking water, you have lost touch with your family due to loss of phone signal. This is what an emergency situation could look like. For many families, this is reality in a natural disaster or other crisis.

But humanitarian aid looks different than what you see on the news. 

Instead of distributing packages or food, many humanitarian agencies like CARE also give money to people in need. Sound surprising? Giving money to people in emergency situations is often cheaper, faster and gives them the freedom to purchase the things they know they need most. Check out these facts on giving cash during emergencies:

CARE's cash transfer project at work in Southern Zimbabwe

1. Giving cash means giving people a choice

After natural disasters or in conflict situations, people are often unable to provide for themselves and for their children. While they may be given food, clothes or blankets, those items may not address their most urgent need. When they receive cash, they have the freedom to choose what they need most. A recent study from Jordan found that cash transfers can improve the balance of power between men and women  and give them the dignity to choose and provide for themselves. One third of people we surveyed said they were less stressed as they could spend money on what they needed the most.[i]

2. Everyone has different needs

Ninety-five per cent of humanitarian funding is spent on food, clothing and other in-kind support. This covers a lot of what many people need, but everyone is different. Some people end up selling the aid items they don’t need in order to earn money and spend it on what they really need. One of CARE's partners, The Cash Learning Partnership (CaLP)  has found that people may sell their in-kind aid at a loss if it isn't the aid they need.

A debit card used in CARE's cash transfer project in Greece to support refugees

3. Having money is also about spending money…

It's a simple equation. When people have the ability to buy what they need, the increase in spending benefitsthe wider community. Southern Africa, for example, has been experiencing its worst drought in the last 35 years and as a result, an estimated four million Zimbabweans do not have enough food or money to meet their basic needs. CARE has been providing cash assistance there since 2015. Clara Makasi, a local shopkeeper, says: “Before the cash transfer project started, I would buy a case of sugar and it would sit in my store for a month. Now goods move faster because people have money to buy them.” Adding cash can strengthen business and increase buying, sometimes enough to create jobs.

4. Cash is cheaper! [i]

Cash assistance is cheaper. Why? A lot of it happens digitally, like putting money on debit cards, or sending cash via mobile phones. Distributing physical items is more costly because of the logistics (storage, transportation, distribution). At the same time, since cash is usually more cost-efficient to deliver, more people can (and do!) benefit. A study of humanitarian assistance programs in four very different countries – Ecuador, Niger, Uganda and Yemen – revealed that more than 40,000 people could have been helped if they’d been given money instead of food.[ii]

[i] Bastagli et al., 2016; Haushofer and Shapiro, forthcoming). (ODI, Cash transfers for refugees: An opportunity to bridge the gap between humanitarian assistance and social protection. Martina Ulrichs, Jessica Hagen-Zanker and Rebecca Holmes. January 2017.
[ii] IDO Development Initiatives Working Paper 505

Today more than 50% of CARE's programs include cash based assistance - in both complex emergencies and in contexts of chronic poverty. In 2017, CARE distributed nearly $224.3 million in cash transfers and vouchers and reached more than 2 million people through cash programming with more than half of our cash based assistance taking place in countries that are currently some of the biggest humanitarian crises worldwide: Somalia, Jordan, Syria, Niger, and Yemen.

You can help us continue to provide cash assistance to individuals and families around the world so they can have the power to choose what they need and boost local economies.