Improving the efficiency and effectiveness of humanitarian cash assistance

The IRC has been providing life-saving support to conflict-affected communities in Yemen since 2012, and is currently delivering health, protection, nutrition, food security, and WASH (Water, Sanitation and Hygiene) services. Currently, the IRC has a cash assistance program in five villages in the Khanfer district of the Abyan Governorate of Yemen. Khanfer is one of the worst affected districts by the crisis, and the most recent Integrated Food Security Phase Classification (IPC) analysis estimates that people in Abyan would be experiencing catastrophic food conditions without humanitarian food assistance.

While cash assistance as a means to manage immediate food needs is now well established, its potential to simultaneously support longer-term outcomes has not yet been harnessed. Notably, two of the most beneficial and potentially game-changing characteristics of cash assistance—its fungibility (adaptability) and ability to potentially alleviate a scarcity mindset by reducing financial scarcity—are not fully leveraged in current cash delivery models. Furthermore, there is little examination of whether key economic behaviors, such as investing in productive assets or a business or putting money towards savings, can be influenced if introduced at a point in time that coincides with a cash injection. We hypothesize that simple innovations in how cash assistance is designed could unlock the potential to achieve longer lasting impact in programs addressing basic needs.

The standard model of delivering humanitarian cash assistance includes regular monthly cash assistance based on the Minimum Expenditure Basket (MEB)—meant to cover basic needs, like food—for a period of six months. This small-scale pilot will test the standard model against a revised design:

1. Cash assistance based on the MEB for two months will be distributed
2. Followed by a lumpsum amount, labeled for use on a productive asset (although with no condition that it must be spent on one)
3. Followed again by an unlabeled one-month transfer for basic needs.

Some research has suggested that labeling a cash transfer is sufficient to convince people to use it for that specific purpose, thus labeling the transfer for use on a productive asset is a light-touch design change that encourages receivers to use that transfer for such purposes.

Due to COVID-19 and the accompanying lockdowns, our design was altered to maintain the Do No Harm Principle. We decided to do a lumpsum transfer for both groups, however, the value of the lumpsum transfer was different for the two groups, and one group still received a labeled transfer. Overall, our hypothesis still holds given these differences, though we recognize that this might be a substantial enough difference to detect a change. We, therefore, will aim to capture the overall experience with the different cash transfer frequency and more intermediate measures such as cash spending, COVID-specific spending, and strategies used by households, and investments in productive assets or livelihoods.