Money matters: delivering cash to people in crisis

by David Peppiatt | Apr 23, 2019 | Thought Pieces

Much has been said about cash aid (I use this as a far from perfect shorthand for delivering cash and voucher assistance). Is it really a game changer for the humanitarian system or just hype? Will humanitarian aid in 2030 be marked by a shift away from delivery of relief in-kind to digital transfers of money? Will financial service providers become some of our main operational partners in the future? Whatever the answers to these questions, it is clear cash, particularly in the form of digital payments, will be a far more integral part of the aid system than was the case when we embarked on our last strategy in 2010. Cash, it seems, will be the new normal.

Let’s start by acknowledging some of the transformative benefits of cash.  In the right context, evidence from cash programmes has shown this can be a more efficient and more direct model of aid delivery with less overheads and, therefore, helping ever-tightening aid budgets to go further.   Experience of recipients highlight how cash enables choice, dignity and ultimately a more empowering form of aid than a food parcel or relief handout.  It can help catalyse the recovery of livelihoods and, in most contexts, it is better for local markets than trucking in aid from outside.  Donors are convinced; it is no longer a question of “why cash?” as aid agencies are now asked, “if not cash, why not?”  The focus, therefore, is less on the “why” but rather on the “how” cash aid in the future can be delivered most effectively.

Of course, cash is not a panacea to the problems of aid effectiveness and we should note the understandable caution from some corners as they observe the “dash to cash”.  Like any form of aid, cash is open to misuse.  At worst, it can empower the abusers and perpetrators of violence.  It can reinforce negative power relations depending on who controls the money.  It can be spent on anti-social behaviour, although interestingly there is little empirical evidence to support this assumption. It can disrupt markets and unfairly benefit some traders above others.  There is also a risk of weakening the standards of aid inputs as money may be spent on poor quality commodities and, therefore, result in reconstructing existing vulnerabilities. Of particular concern to international donors is the way cash transfers, by their flexible and fungible nature, can fuel corruption and finance crime and terrorism. None of these risks are particularly new, nor exclusively linked to cash aid alone, but as we think about the future role of cash in humanitarian aid we would be foolish to ignore them.

The shift to cash programming across our sector is very real and evident.  The recent Sate of the World’s Cash report, published by the Cash Learning Partnership (CaLP) in 2018, highlighted a 40% increase in cash-based assistance since 2015 with cash now making up 10-15% of global humanitarian aid.  According to the official data, two thirds of this cash is delivered by the UN system, predominantly by WFP and UNHCR, although we know much of this is in fact delivered by National Societies as implementing partners. In 2017, the Movement spent around CHF800million through cash-based assistance reaching 5.5 million people in over 80 countries.  Many humanitarian aid organisations have made bold commitments, influenced by those made at the World Humanitarian Summit in 2016, to double the spend on cash delivery or spend at least 50% of their total aid budgets through cash transfer programmes.  This has resulted in a major investment in the tools, systems, technologies and capabilities needed for cash programming.  Agencies are re-wiring their organisations to be cash-ready and entering new partnerships for cash delivery.

As we reflect on the potential role of cash as an enabler in our new strategy, here are a few key opportunities and risks to consider:

Cash and the digital revolution

The pace of new technologies and innovation in the area of digital payments will continue to have a major impact on the way people manage money through e-banking, mobile wallets, contactless payments, crypto-currencies and the growth of cashless societies.   The aid system will need to keep up with these rapid developments affecting all parts of the world.  We should embrace the opportunities digital payment systems bring in terms of speed and scale of delivery, remote reach, direct contact and above all empowering choice for the recipient. 

Some risks are evident whilst others remain unknown.  The potential for digital identities is considered huge and could play a pivotal role in enabling access to humanitarian services and also potential financial inclusion for those people on the margins who often lack a required identity to authenticate entitlement.  Our local presence and proximity to people in crisis should help ensure that those who need aid most are identified.  But this of course comes with risks both for the individual who takes on a digital identity and for the agency who handles the data of those identified.  What data can we share with the financial service providers and governments as interested stakeholders and potential partners in the delivery of cash aid?  What rights do the recipients, or affected population, have about the information we hold on their identity and status?  As we invest in new models of cash aid delivery in a digital world data protection must be paramount. 

The potential for new partnerships

If we are to embrace the potential of new technologies for cash delivery we will need to forge new partnerships to harness skills, know-how and expertise from the private sector.    It is clear, for example, that our future business model in this area will require close collaboration with financial service providers, telecommunication companies and fintech innovators- not our traditional partners of choice.  There are some positive examples to learn from in the Movement, such as the Turkish RC Emergency Social Safety Net partnership with Halkbank or the Kenya RC collaboration with Safaricom M-Pesa, which demonstrate the possibility for new and very different operational alliances outside of our narrow aid sector.  We will need to invest in the skills needed to manage such partnerships, and define our mutual interests, roles and responsibilities, without compromising our humanitarian principles.  Furthermore, we will need to be clear on our offer and comparative advantage as a partner in cash delivery.

Linking humanitarian cash transfers to social protection and development

As well as partnerships with the private sector there is also real potential to build linkages with development partners in a shared objective to provide social protection for those most at risk of crisis shocks and stresses.  Social protection systems, such as emergency social safety nets, can play a key role in helping vulnerable communities cope with crises, protect livelihoods and avoid the need for international assistance.  National Societies, as auxiliaries to their governments and with a permanent local presence, have a unique opportunity to help strengthen the links between humanitarian cash transfers and longer-term social protection programmes.

Globalisation and localisation of cash transfers

The globalisation of cash transfers is extraordinary.  The daily flow of remittances across the world show how money can be transferred immediately and directly from one individual in one location to another thousands of miles away.  However, in the case of humanitarian cash delivery to crisis-affected populations, there is a clear need for local actors to ensure good targeting and registration, enable last mile delivery, and monitor the impact of cash assistance on the programme objectives, be that to save lives, protect livelihoods or help restore local markets.  As National Societies, and we would argue the premier local partners of choice for cash delivery in crises, we must be clear on our added value in the delivery chain, from the global to the local in international response or within our own localised contexts.  As a Movement, we should advocate for investment in localised cash capacity which in Red Cross/Red Crescent terms means cash readiness of National Societies, evident by the organisational systems, structures, capabilities and confidence in place to deliver cash when appropriate and needed.

Dignity for people in crisis

As the gap between unmet humanitarian needs and available aid resources widens it seems inevitable that cash will be seen as an important tool to help improve efficiencies and leverage further reform of the aid system.  Whilst greater efficiency is needed, and a valid driver of change, it is important that we do not let this override our central focus on the value for people in crisis.  Human dignity is a priceless commodity and one that can so easily be eroded in times of crisis as people are forced to receive relief handouts and disempowered to make choices or take control of their lives. Cash we know, given in the right context to the right hands, can empower and enable a more dignified transfer of assistance for the recipient.  As our aid system changes over the coming decade, with new models and platforms for cash delivery, we must ensure that human dignity is the driving force of our policies, programmes and partnerships.


  1. Alfredo Libombo Tomás

    Goodf reading. This is a very interesting article. I have been following the issue since I joined Mozambique Red Cross as the SG. Government is reluctant in using it prefering the vouchers.
    We tried it now to support the victms of IDAI ciclone in central of Mozmbique but no sucess. We need to work/advocate more and I believe they will admit the advantages one day.

  2. Juriaan Lahr

    An excellent post about cash considerations for the Strategy 2030. You have highlighted a number of topics that are also top of our mind. Netherlands Red Cross is working in the cash innovation space with the 121 system, we would like to take the opportunity to reflect on some of the topics you raised, and how 121 is addressing them.
    Cash is open to misuse
    On the topic of “how” of cash transfers, we feel that the traceability of aid and cash could be of added value to reduce the risk of misuse. If we can find ways to move from closed loop humanitarian cash programs to semi-open loop cash systems, by connecting to financial service providers, we are going to enter into a space where compliance with regulations and meeting Anti-Money Laundering (AML) standards becomes the default. In the 121 project we are exploring how we can collaborate with e.g. mobile network operators, and how to meet the Know Your Customer (KYC) and AML requirements. We are working with an audit and assurance company who is researching the risks of non-compliance in 121.
    Scale up of cash
    You mention the scale up of cash, and the bold commitments of aid organizations. Do we also have insight into how much more cost-effective the transition to cash will make humanitarian aid delivery? 121 looks to envision a system that is more radical than how currently cash is implemented as a replacement methodology in an existing aid system. We feel that a transition to cash could lead to more cost-effectiveness if it is integrated in a stronger vision on a digital transformation of aid in general. Additionally, a scale up of cash need also be accompanied by a vision of how “communities’ resilience” at large is strengthened and more systemic aid is provided, a.o. to prepare for and reduce disaster risk.
    Cash and the digital revolution
    You touch on the potential for digital identities and its risks. We have included digital identity as one of the 3 main components of 121. We see there is a risk on data protection if organizations keep on a path of centralizing identity data and integrating databases across organizations. That is why we are exploring a more fundamental route towards a self-sovereign digital identity. Self-sovereign digital identity will be harder to create and scale, and will require lobby and advocacy with governments and regulators, but in the end it puts people at the center of decision making. It keeps them in full control of their identity. The 121’s goal is that aid organizations do not obtain personal identifiable data at any point.
    Linking humanitarian cash transfers to social protection and development
    It would be good to link this discussion to the Principles for Digital Payments in Humanitarian Response (Barcelona Principle), which mentions the pathway to financial inclusion and moving towards open loop systems. The 121 research has found incompatibilities with this ambition and what is currently allowed by regulators. Currently humanitarian organizations do not seem to play by the rules like the financial sector does. The humanitarian cash programs are closed loop, or exception based semi-open loop (e.g. Safaricom transfers for Kenya Red Cross cash programs). If we want to integrate humanitarian cash delivery with social protection, and promote the full range financial inclusion, then we will have to come out of the closed loop programs, and enter into a new area of financial compliance.
    To decide if this is the way to go, we should have a more thorough understanding of risks when it comes to digital cash programming and sharing data with financial service providers and governments. It would be important to start understanding this better in the Red Cross movement, in collaboration with our partners. We apply our data responsibility policy to the 121 project, and this gives already some guidance on what to do, and what not.
    Globalisation and localisation of cash transfers
    You mention the difference between remittances (people already know each other) and humanitarian programs (people don’t know each other). We agree there is a need for local organizations to support the most vulnerable to be able to receive financial assistance. However, we also feel that with the digital revolution, there will be more possibility to let people onboard themselves, and be directly connected to those that are willing to help (121). The question that arises is: why are remittances fast, efficient and lean, and humanitarian (cash) programs quite bulky and slow? Are there too many intermediaries? We want to explore this space, and understand what is really necessary to deliver cash aid fast, safe and fairly. And develop a system that “in-built” ensures cash reaches those most in need (based on our principles).
    We also agree that we should invest in the cash readiness of the Red Cross movement. We should however also invest in the digital literacy of the Red Cross, and the digital inclusion of people affected, to be efficient in how we can deliver aid in the future.
    Dignity for people in crisis
    We fully agree that humanitarian principles, and dignity of people affected should be main drivers. That is why we end our commentary with where we begin with the 121 system, through human centered design (HCD). We move 121 forward through the research and implementation across the three tracks of HCD.
    1: Desirability (human). We co-design together with all humans interfacing with the 121 system to ensure we understand the core needs, behaviors, (digital) literacy and inclusion to give agency when onboarding such a system.
    2: Viability (humanitarian). We are selecting diverse pilot locations to establish both the common & uncommon threads across contexts to establish viability, finding where 121 both aligns and deviates from current processes.
    3: Feasibility (technology). The insights we gain from the first two tracks is what drives the specifications and system design of 121 for each country and context.


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