Conditional cash transfers – direct payments of cash to households conditional on pro-growth behaviors like enrolling girls in school and using preventative health services – are a remarkably effective way to fight poverty abroad, and donors concerned about international development should look for ways to increase their use.
The idea behind cash transfers is straightforward. Like refundable tax credits, they are premised on the idea that poor people aren’t ignorant, they’re just poor. So providing them with small amounts of cash contingent upon certain actions provides resources without directing them in their use.
Mexico and Brazil have been at the forefront of providing conditional cash transfers to their citizens – about one in four households in these countries receive governmental or NGO aid this way. Indeed, these programs have proven so popular and ingrained that they typically survive power transfers between political parties with little more than a name change.