Paul Niehaus is part of a quiet revolution in charitable giving.
The assistant professor of economics in UC San Diego's Division of Social Sciences is a co-founder of GiveDirectly, which does exactly what the name suggests: It sends charitable donations, which average about $1,000 each — no strings attached — directly to the poor in impoverished African villages.
Since its launch in 2011, GiveDirectly has raised roughly $22 million — much of it from Silicon Valley gifts and grants — and is giving more than 90% of donations to those who need it.
The money is not a loan. And several studies show such gifts change lives for recipients as well as communities. "No one is perfect, but the data say that money isn't being systematically misspent when we put it directly into the hands of the poor," Niehaus said.
Getting the money into third-world villages is surprisingly simple. "Payments technology has improved dramatically," Niehaus said. "We can now send money to just about anyone anywhere in Kenya through their mobile phone."
GiveDirectly first targeted Kenya. Then, when the venture secured a $2.4-million Google Global Impact Award in the fall of 2012, the effort moved into neighboring Uganda.
"We know a lot about what people do with the money thanks to a rigorous impact evaluation done by Innovations for Poverty Action at Yale," Niehaus said. "Some people are going into business — one guy bought a motorcycle and started ferrying people around, for example — but many invest in more mundane things like land, livestock or even home improvements like metal roofs."
GiveDirectly evolved while Niehaus and three others — Michael Faye, Rohit Wanchoo and Jeremy Shapiro — were doing their graduate research at Harvard and MIT. They discovered that charitable donations were often more effective when money is placed directly in control of those targeted for aid. But they could not find an established NGO that was doing that.
"We became convinced that if we were going to do this, we would have to do it ourselves," said Niehaus.
Donations are made via the GiveDirectly.org website. GiveDirectly field workers in Kenya and Uganda identify people in need, then the money is deposited in a mobile banking account that can be accessed on a cellphone.
GiveDirectly has drawn a number of backers, including Facebook co-founder Chris Hughes, who has given $130,000.
"We're impressed by the quality of GiveDirectly's team and process and particularly its commitment to transparency, rigorous evaluation and self-reflection," says a review from Good Ventures, a philanthropic foundation and GiveDirectly's largest supporter. The charity evaluator GiveWell rated the ambitious effort as its top charity last year in terms of having the most bang for the buck.
Philanthropy is in Niehaus' blood. Besides his work at UC San Diego, Niehaus is a faculty research fellow at the National Bureau of Economic Research, a junior affiliate at the Bureau of Research and Economic Analysis of Development, an affiliate of the Jameel Poverty Action Lab and an affiliate at the Center for Effective Global Action.
Foreign Policy magazine last year named Niehaus and his co-founders among its leading 100 "Global Thinkers."
Niehaus said Africa is being targeted — for now — because the returns are so dramatic. "You can change someone's life in Africa dramatically just by donating the cost of your morning coffee," he said.