The COVID-19 shutdown wreaked economic havoc around the world, but it was very good for one specific type of philanthropy: direct giving. “COVID brought a stark reality to how many interventions can fail during a crisis,” said Tyler Hall, director of communications at GiveDirectly, the leading organization in the direct giving space. “People needed cash to meet their own needs. It was the simplest way to help.”
Founded in 2008 to give small grants to those in need in Africa, GiveDirectly has since grown to include impoverished people in the Middle East and the U.S. In 2020, during the height of the pandemic, the New York-based nonprofit grew six-fold. Cash transfers skyrocketed from $33.7 million in December 2019 to $211.5 million in December 2020. All told, GiveDirectly has funneled more than $550 million to 1.25 million people — 250,000 of those folks in the last year alone.
Give Directly has long received funding from foundations, including the George Kaiser Family Foundation, Schusterman Family Philanthropies and Google.org, as well as from the Global Innovation Fund and government aid programs including USAID. But private individuals make up the bulk of the donations, with money coming from major billionaire donors like MacKenzie Scott, Jack Dorsey and Elon Musk, as well as from smaller donors. During the pandemic, money from wealthy individuals surged — particularly in the form of larger gifts by existing donors.
This growth in private giving was partly due to the rising wealth of rich people, Hall said, as well as the growing body of research showing the impact of direct cash — some 300 studies. Entrepreneurs and business execs working in high-paced, metrics-driven organizations appreciate seeing evidence-backed results. “They like that level of transparency and rigor. They see the value of their gift,” Hall said.
Contrary to some speculation, impoverished people do not tend to squander cash. Rather, as the research shows, they spend it on necessities such as medicine, livestock, water, solar lights, tin roofs and irrigation, as well as to fund small business startups, such as motorcycle taxi services.
Direct giving: the method of this moment
GiveDirectly’s success in raising money is an indication of the strong interest in direct giving right now, much of it sparked by the pandemic. As IP’s Liz Longley reported in 2020, the Schultz Family Foundation, co-founded by Sheri and Howard Schultz of Starbucks in 1996, launched a direct cash model near the start of the pandemic. Called the Plate Fund, it sent $500 emergency relief grants to laid-off restaurant workers. Funders large and small jumped in to help out, including the Seattle Foundation, the Bezos family, #allinSeattle, the Washington Hospitality Association, Google.org and more. As the organization’s website reports, the fund raised $7.9 million from more than 3,200 donors, and distributed it to more than 15,800 restaurant workers in King County, Washington.
Governments around the world launched direct cash programs during COVID. The stimulus checks and the expanded child tax credits in the U.S. are just one example. Some cities and states have also been experimenting with universal basic income pilot programs, including Chicago, Los Angeles and New York state. As IP has reported, philanthropy has played an important role in championing UBI, which has drawn the interest of many of the same tech funders who’ve supported GiveDirectly.
Jack Dorsey, for example, has given at least $30 million to Mayors for a Guaranteed Income (MGI) and the Open Research Lab’s Basic Income Project. Facebook co-founder Chris Hughes has been another longtime supporter of UBI, working to advance the idea of a guaranteed income through the Economic Security Project, a policy group he co-founded and co-chairs, which also receives support from a long list of major foundations and major donors.
When free money becomes a free-for-all
Of course, not all direct giving approaches are equally transparent or research-backed. Multimillionaire Bill Pulte, heir to the PulteGroup homebuilding fortune, has taken to sending money to people who ask via Twitter. As the Associated Press recently reported, Pulte sent $7,000 to a woman who tweeted that she’d fled an abusive marriage, $500 to a man who needed dental work, and $125 to a woman requesting gas money to attend her brother’s funeral. As of May 23, 2022, according to AP, Pulte sent $1.2 million to individuals through this unvetted Twitter philanthropy.
Pulte also increased his Twitter followers — from 35,000 three years ago to 3.2 million, after three years of Twitter philanthropy, as AP reported.
Pulte has said he wants to motivate an army of other donors to help people in crisis by giving directly through social media. But one can easily imagine a dark side to this sort of giving. What if he, or someone with even more social media savvy and less altruistic aims, wants to do something else? Say, attracting followers with giveaways, then leveraging them for personal aims? Perhaps by instructing them how to vote, or how to disrupt democracy, a la the January 6 insurrection. Twitter giving could become a social media strategy used by billionaires to “buy” votes or other forms of influence.
A perhaps less dystopian concern is that unvetted, social-media-based direct giving by private individuals could lead to a competition among the poor for cash, like a twist on the video game Virtual Beggar. In fact, some say it already has. As Timi Gerson, vice president and chief content officer at the National Committee for Responsive Philanthropy, told AP, Pulte’s Twitter giving has turned into a “grotesque Hunger Games,” a competition among poor people to get noticed by a multimillionaire as they struggle to make ends meet within a flawed system of “deeply unequal access to healthcare and housing and services.”
“Endless fingers in the dike aren’t going to solve anything if the dam wall is crumbling. You’ve got to fix the structure,” Gerson said. “If you want to effectively solve the deeper problem, you’ve got to fund groups and organizations that are looking at things systemically.”
In other words, rather than tapping into the best of direct giving — letting people solve their problems immediately, without the often sluggish, top-down approach of many nonprofit and government interventions — Twitter philanthropy is a social-media-fueled wrinkle on the privatization of problem-solving. It’s a lightning-fast manifestation of the current trend of outsourcing social ills to wealthy individuals who are idiosyncratic in their aims at best.
Still, sometimes people just need cash
Despite these concerns, some nonprofit leaders addressing systemic problems say their work benefits from direct cash giving. Joelle Kirtley is the CEO of Mass Liberation, a small, relatively new nonprofit in Los Angeles that helps formerly incarcerated people build stable lives after release. “Small nonprofits are always working with just enough money,” she said. “They don’t have huge budgets and reserves, or an emergency fund to give out to clients. When you’re working from grants, there’s no place to give to clients. That’s not even an option.”
But in Kirtley’s case, Mass Liberation does have the option of stepping in with cash to address clients’ specific needs, via a partnership with the three-year-old, L.A.-based direct cash foundation The Change Reaction. As we’ve written, The Change Reaction, founded by billionaire philanthropist Greg Perlman and his wife, Jodi, relies on a network of social workers and other professional “change agents” like Kirtley to vet potential recipients. Connecting with these intermediaries enables The Change Reaction to work within existing structures to find real people with real needs, and address them.
Kirtley hopes that direct giving will become a larger part of grantmaking in the U.S. “Relatively small amounts of money can make a huge difference in an individual’s life. We know direct giving is a model that works and that we can trust people in poverty to spend the money well. If you actually give people $1,200, they’ll put a roof on their house or build a business. Even so, it’s not what we do in the States with nonprofits.”
Regarding direct giving writ-large, GiveGirectly’s Hall said, “It’s really skyrocketed. We hope that unconditional cash grants continue to be a larger portion of giving.” Other nonprofits hoping to expand in the direct cash arena should figure out how to show potential donors clear results, Hall said. “It’s important to be measuring the impact of what you’re doing and have transparency in the process and the growth.”
Transparency can mean admitting to mistakes. “We started out in Kenya, and not everything goes right when you start out,” Hall said. “Obscuring that can create mistrust with donors. Owning that is helpful. Also, understanding what’s working and isn’t working is very helpful. Carry that growth mindset and the humility to test and fail.”