Cash-based humanitarian assistance allows people in crisis to purchase the local food, products and services they need.
In 2015, six per cent of all humanitarian aid was cash-based, according to the Overseas Development Institute report Doing cash differently . That’s a sizeable increase from less than one per cent in 2004. In 2016, cash represented 10 per cent of NRC’s total programme portfolio
Cash as humanitarian aid
What cash looks like as humanitarian assistance:
- electronic transfers, where a displaced person receives a cash transfer through technology, such as smart phones or electronic payment cards
- vouchers, which can be exchanged for a specific quantity or value of goods or services
Cash comes with different types of conditions and restrictions:
- Unconditional cash grants, which are based on needs, and people do not have to do anything to receive them.
- Conditional cash grants, which must be earned through certain activities, such as working or going to school.
- Unrestricted cash grants, which a displaced person can use for anything he or she chooses.
- Restricted cash grants, which are designated for a certain use or to buy a certain item.
- Multipurpose cash grants, which are regular or one-off cash transfers to cover a family’s needs for food, shelter, education, health, water and sanitation facilities, and to earn a livelihood. The family is free to use the cash as they wish.
Why we give cash
It’s simple. Cash-based assistance allows us to be faster, more efficient and more transparent. It gets more assistance directly to the displaced people we serve, who can spend it as they see fit.
There’s another reason: it can boost local economies. When cash is provided in the form of aid, it can create a demand for goods and services. This in turn can play a role in rebuilding or building up local infrastructure and markets.
In Lebanon, for example, a 2014 study showed how cash had significant multiplier effects on the local economy: each dollar spent by those receiving the cash-assistance generated USD 2.13 of gross domestic product for the Lebanese economy.
Cash gives the freedom of choice. With traditional in-kind assistance – like soap, blankets, rice – displaced people often sell these items, below market price, to get something they need more. Cash allows them to keep the full value of the support they receive, and to prioritise according to their needs.
How we give cash
The majority of NRC’s cash projects give unconditional and unrestricted cash. We use digital technologies, like mobile phones and electronic cards, to make the transfers.
But in some places, this just isn’t possible. The technology isn’t there, or the displaced person receiving aid doesn’t have formal identification with them – which means they cannot legally hold a bank account or buy a smart phone. In these instances, we give vouchers. As a last resort, we distribute cash directly. But because of the risks, this is extremely rare.
Is cash always best?
In short: no. Cash is not always the best solution in a humanitarian crisis.
Sometimes, local markets are too weak and not functioning adequately enough to handle the demand that cash could bring. In these cases, cash could lead to inflation.
Other times, there is no safe way to transfer the assistance – and making cash transfers could put staff or receivers at risk.
Often, displaced people face issues that cash doesn’t solve. When a disaster like a cyclone causes total devastation, cash can’t do much. But traditional aid – like tents and blankets – can be vital.
Finally, cash can’t necessarily replace other crucial services that humanitarian organisations provide: protection, medical aid and sanitation services.
With this in mind, NRC analyses each situation and determines what combination package of aid will have the most impact.
The Cash and Markets Capacity Building Roster (CashCap) deploys senior cash and market programming experts to facilitate and strengthen capacity of the humanitarian sector to undertake and promote cash transfers in a crisis or an emergency. UN agencies, integrated missions, national authorities and INGO networks can request support from CashCap and cash experts will be deployed on short notice. The deployments are paid for by ECHO -funding and therefore constitutes free support to the agencies. Read more
Empowering through cash and vouchers
In Afghanistan, we use a hybrid system of conditional cash grants and in-kind support to help build and repair shelters. This allows families to construct their homes according to their own households’ needs.
We hold fairs in the DRC, where refugees can use NRC-distributed unconditional cash vouchers to buy goods they would not be able to otherwise. For 23-year-old Deborah, this is a lifeline.
In 2015, refugees redeemed more than 99.5% of all vouchers for varying household items, in many ways proving to be more useful for individual families’ needs.
In the 2015 emergency, we gave unconditional cash handouts to 30,000 Yemenis so they could purchase food.
Saleh Ozloq bought five beehives with a cash grant from NRC. In just six months, those five colonies quadrupled.