Rod Dubitsky and Sadna Samaranayake

Cash Versus Cows (Part 2): What’s more scalable – cash transfers or in-kind transfers?

In a space dominated by important ideals – sustainability, social and financial returns, and market-based avenues to help the poor out of poverty – we sometimes tend to overlook a glaring reality. There remain vast populations around the world that are simply unable to benefit from the most diligent efforts toward these ideals.

The ultra-poor populations that fall into the bottom half of those considered in extreme poverty (in some cases living on less than 70-80 US cents a day) by definition lack the basic resilience to engage in more mainstream development solutions. These individuals are too poor, too sick, too devoid of basic skills and social capital to engage successfully in microfinance or market-based BoP businesses – or even to benefit from NGO interventions.

Successfully catapulting these households over the extreme poverty line is incredibly hard work, and it requires philanthropic capital and grant-based approaches. In this second part of a two-part series (post one is available here) we pose a seemingly simple question: Is it better to give a cow or cash to seed sustainable livelihoods for these individuals, the poorest of the poor?

As mentioned in the first article, ultra-poor “Graduation” is an approach first pioneered by BRAC in Bangladesh that has provided strong impact results as measured by external (RCT) evaluations. Meanwhile, with the increased attention on cash-only transfer programs such as GiveDirectly, important questions are surfacing about whether it is best to provide assets (such as cows, other livestock and productive assets in-kind) or straightforward cash transfers to ultra-poor households. Also explored in part one, the Consultative Group to Assist the Poor (CGAP) recently published a post on Graduation Transfers: In Cash or In Kind, noting that all CGAP Ford Foundation Graduation pilots transferred physical assets.

Are cash transfers or in-kind transfers easier to scale?

The CGAP piece mentions that when Graduation programs scale, as a pragmatic matter they likely will need to choose cash over in-kind. As our prior post mentions, and given BRAC’s experience with achieving scale (1.4 million households graduated) through both physical assets and the provision of soft loans, we know that each approach has value. Which approach – cash or in-kind – is easier to scale is predicated on several considerations, including who implements the program, the availability of technological innovation in local markets, and of course, the quality of long-term outcomes sought. Let’s explore this in more detail:

Governments as agents of scale, and the preferred cash option

Where governments are the drivers of graduation programs, existing cash transfer systems, mobile banking infrastructure and regulatory environments could be harnessed to create scaled up graduation programs based on cash transfers. It is important to note however that scaling up through the use of cash transfers for these actors may not necessarily mean low-cost scale. Reliable data on the all-in cost per household of government social cash transfer programs, including administrative costs, are hard to come by. It is understood that partnership, procurement and administrative costs are often significant.

Cash may not be king for governments committed to quality, sustained outcomes for their poorest citizens

A critical starting point includes the question: “what outcomes are being sought?”

Government cash transfers are not all geared at seeding livelihoods (some are cash transfers to seniors, the disabled, etc). Programs focused on livelihoods are typically less cost-intensive than physically procuring and distributing assets. At the same time, they also likely encounter greater difficulties when disseminating critical livelihood training when cash is fungible and livelihood activities are not clearly identified up front. If we assume that long-term, high-quality livelihood outcomes are the goal for cash transfer programs, then it becomes evident that cash transfers may incur greater training costs to successfully seed a diverse array of livelihoods compared with asset transfers.

In a cash transfer scenario, where a strong link to livelihood training is missing, there are many choices for a household receiving money. The link between the transfer and training is often tenuous at best. Some cash transfer programs are attempting to tackle this issue by splitting cash transfers into two parts, with the second requiring participation in livelihood training and the successful intended use of the first installment. Comparing cash to in-kind transfers, Fafchampset al. (2011) find that the latter are more effective at increasing profits as “self-control” issues often prevent cash transfers from being invested in small businesses.

Technology matters

Apart from government implementation, smaller, more nimble organizations implementing graduation programs may be better poised to scale cost effectively through cash rather than assets, particularly when leveraging the benefits of technology. Here as well, it’s a question of goals and overall outcomes sought. Whether cash transfers are the pragmatic choice for scale largely depends on where programs are implemented. Leveraging the benefits of mobile and technology-mediated cash transfers requires developed mobile and electronic infrastructures, and a healthy, competitive marketplace of actors including banks, banking agents and mobile service providers. In addition, while the use of technology may be applicable for the poor at large, the same solution may not work for the ultra-poor, who by definition are less likely to have access to the technology.

The glide path of technology-enabled cash transfers may unlock scale for small nimble organizations in contexts where the mobile payment technology already exists and has a fairly high adoption rate. In contexts where mobile payment systems aren’t well developed, very likely only large scale organizations will be able to make the up-front investment necessary to create the technology platform. In other words, the scalability of cash transfers also depends on the local technology context as well as the size and strengths of the organization.

We welcome your thoughts. Please comment below or get in touch with us at

Rod Dubitsky is Senior Advisor and Chief Knowledge Officer for BRAC USA.

Sadna Samaranayake is the Program Manager of BRAC USA’s Ultra-Poor Graduation Advocacy Initiative.

cash transfers, poverty alleviation