• Cash transfers: Fast & flexible disaster assistance

In the early months of 2017, heavy wind and rains fed by an El Niño weather pattern battered Peru, triggering devastating flooding and mudslides.

The storms affected more than 1 million people, killing more than 100 and leaving houses and crops damaged and destroyed.

The heavy damage destroyed local infrastructure and disrupted local economies, causing sudden mass unemployment that left families  badly in need of income. They needed help and they needed it quickly. It was a situation tailor-made for a solution increasingly favored by humanitarian organizations responding to emergencies:

Cash transfers.

Cash transfers have proven to be an effective and quick way to respond to the needs of those affected by sudden-onset emergencies, both giving people much-needed cash, while also injecting money into local economies.

Cash is the most flexible and efficient way to help those affected by disasters,” says Umer Khan, Lutheran World Relief’s senior director of emergency operations. “It gives communities the flexibility to address a broad range of needs, the power and dignity to control their own finances, and it helps revive and support local businesses — often small street shops ­— that have been affected by the disaster.

Cash transfer programs are increasingly becoming a go-to tool for humanitarian organizations. According to the Cash Learning Partnership, a global community of practice of more than 150 humanitarian organizations involved in cash transfer programming, approximately $2.8 billion in humanitarian assistance was disbursed through cash transfers and vouchers in 2016, an increase of 40 percent from 2015 and a boost of about 100 percent from 2014. Still, cash transfers accounted for just 10 percent of humanitarian assistance in 2016, up by 2.5 percent from 2015.

There are several methods of cash transfer available to humanitarian organizations responding to emergencies:

  • Vouchers
  • e-Wallet
  • Cash For Work

Distribution of cash vouchers is often the safest and most effective form of cash distribution, Khan says. Vouchers are either accepted by local businesses through a prior arrangement, or can be taken to the local bank and exchanged for cash. Delivery of actual cash is also used in instances where security isn’t a major concern.  

Lutheran World Relief also uses e-wallet, or digital cash payments, in contexts where better communications infrastructure allow people to receive and transfer cash through text messaging on their cell phones. “The use of digital cash payments is something we have started to explore and we hope to expand the use of this method in more emergencies in the future,” says Khan.

In the case of Peru, Lutheran World Relief partnered with a local NGO, Cedepas Norte, to provide temporary employment to people who were paid to clear rubble from public spaces and clean  irrigation channels choked with debris. an arrangement commonly known as Cash for Work. They received payment for their work in one of three ways: by check, by a direct deposit in a bank account, or through a cash transfer via mobile phone.

Like any other intervention, distribution of cash has its own challenges, but these can be managed, Khan says. One of the most common pitfalls is the risk of theft, and precautions must be taken to ensure the safety of individuals and communities. Practitioners must also ensure that the local market is functioning so that the products that community members want and need are available. And it is important to put safeguards in place.

"We try to make sure that the cash is received and used by a responsible person within the family,” Khan says. “If it is not properly managed, it can create conflict within the family based on who keeps or manages the cash and for what purpose. We always take extra measures to make sure that the cash, regardless of the method of its distribution, is used for items of necessity and not for gambling, drinking, or the purchase of luxury items."

The Impact of Cash

Lutheran World Relief has used cash transfers in several recent emergency responses:

  • PUERTO RICO
  • PHILIPPINES
  • NEPAL
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In Puerto Rico, Lutheran World Relief responded in the interior mountain community of Adjuntas, where its remote location led to a lack of aid and a long delay in restoring basic services like electricity and running water. We distributed cash vouchers to more than 300 families they used to address immediate needs, such as covering rent payments for transitional housing, purchasing medication or buying building materials for home repair.
 

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In the Philippines, Lutheran World Relief and our local partner, MARADECA, reached more than 1,000 families affected by the twin disasters of armed conflict and Typhoon Tembin in Marawi, Philippines, distributing cash to help families purchase food, personal care items and household necessities.

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The powerful 7.8-magnitude earthquake that struck Nepal in April 2015 killed nearly 9,000 people and destroyed or severely damaged hundreds of thousands of homes and municipal buildings, many located in small, remote communities in difficult-to-reach mountain locales. Lutheran World Relief worked with local farmers groups to implement a cash-for-work program, which included clearing  debris from main roads, schools and irrigation canals. We also distributed corrugated iron sheets, or an equivalent cash value, to be used to construct temporary shelter, which as critical as the monsoon season approached.

Contacts
Noah Steinberg-DiStefano,Program Associate for Emergency Operations & Logistics email

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