To Condition or Not to Condition (Grants)?

A relatively new approach in the foreign-aid world involves giving families or individuals cash grants to meet their needs.

The most famous of these grants is the Bolsa Familia program in Brazil that gives families cash grants if they keep their children in school and get them regular medical care. These are "conditional" grants (CCTs) -- the grant is conditioned on meeting the government's to-do list. The results have been mostly positive though, as the article so nicely points out, the program is not a panacea (hope springs eternal for the silver bullet that will slay poverty).

What would happen if governments gave unconditional grants (UCTs) to poor families (via donor funding)? Would families take the money but keep children out of school? This article discusses a recent experiment in a very poor district in Malawi to test out this question. People were broken into three groups: some got conditional grants, others unconditional grants, and the third group got no grant money. Here's the crux of the findings:

"An average of US $10 per month was handed out to a group of girls participating in the study on condition that they attended school 80 percent of the time so to remain eligible for the stipend. It made no difference to the outcome when no conditions were imposed - the girls participating in the study attended school 80 percent of the time, and in both cases the school drop-out rate also fell by 40 percent. The school attendance findings were among others."

The "others" finding was that young women who receive small cash transfers are less likely to trade sex for money and thereby expose themselves to the risk of HIV infection.

Is it paternalistic or demeaning, as one person cited in the IRIN story argues, to condition aid grants? Or, might conditions provide a way to shift social norms that limit girls' access to education or to health care? Do the costs of monitoring conditional programs outweigh the benefits or vice versa? Do these grants create dependency or help people step up the economic ladder towards a more stable and secure life? These are as much moral questions as they are economic ones.

- Karol

(The photo is one I took at an orphanage in Botswana.)