Because of the name, and because a few comments within your post, I thought your idea was that local individuals (many, most or all needy, themselves) would effectively prioritize where philanthropic dollars were directed, by choosing the non-profits to receive their dollars.

That, I think, is an interesting idea. Not sure that it would actually improve outcomes, but it’s at least an interesting idea to think about.

However, I expect any such benefit is undermined if the vouchers are effectively used as coupons to purchase goods or service for personal benefit. Then I think it is similar to cash (and we can argue over the pros and cons in terms of efficiency at achieving intended purposes).

What you are describing sounds to me like a broader version of food stamps. In practice, I don’t think food stamps have proven terribly effective at preventing people from using welfare grants for unintended/prohibited goods, like tobacco and alcohol. So I’m a bit skeptical that they would prove more successful in this context. Perhaps they can be marginally more successful than food stamps, if the volume of vouchers is large relative to the local economy, but I wouldn’t be incredibly optimistic that they wouldn’t become tradable for any purpose, at some discount that people are willing to give up, to get what they desire.

1. Possibly not. As I mentioned in my response to David, if the project is done at a small scale it may be necessary to subsidize startup costs for something so experimental.
2. Vouchers are less fungible and flexible than cash. Therefore, the incentives to stockpile them - especially for those in less need - are reduced (not eliminated). (In an extreme case - vouchers that can be used only for tuition - incentives to stockpile are very low. As the options go up, the incentives to stockpile go up, but they never reach what they are for cash.)

J.S.,

• I don’t understand your proposal to use vouchers that can’t be used for “direct, personal benefit.” The idea here is to replace/improve current modes of distributing things like food, water, agricultural supplies, tuition, etc., all of which are currently often distributed by nonprofits with no feedback mechanism from recipients that is nearly as direct. What sort of services would you rather see people purchase with their vouchers?
• Your comment mostly seems to be comparing the vouchers idea to cash transfers (unfavorably). But the proposal is mostly intended to replace/change services currently provided entirely by nonprofits, and therefore subject to all the issues (lack of for-profit participants; bureaucracy) you describe. The advantage of this program over cash transfers is that it may reduce the likelihood of vouchers’ being used on unhelpful things like alcohol, and also of vouchers’ being stockpiled/stolen (since they are less valuable to a random person than cash).
• A couple of details: the “nonprofit” criterion is just one example of a criterion the funder could use - it isn’t central to the idea. For-profits providing appropriate services could participate. And enforcement is an issue, but I think that spot interviews regarding what was purchased could go a long way toward addressing this.

The idea this proposal is closest to is cash transfers. When people have money, organizations willingly take on risk and startup costs in order to serve them.

In the model you describe, the vouchers are basically coupons for purchasing goods or services, but the “stores” where one can use them are significantly limited. This limitation will inherently reduce efficiency, and therefore, reduce the aggregate good/benefit generated. For example, private, for profit entities often provide goods and services better and cheaper than

governmental or non-profit entities do. By making for-profit entities ineligible as recipients, you both reduce competition (which inherently increases prices), and eliminate what are likely to be low cost options.

It’s likely that the authorized governmental and non-profit entities will frequently subcontract out to for-profit entities to provide goods and services people want. In this case, the governmental or non-profit entity adds an expensive layer of bureaucracy.

The question then becomes, do you get something valuable in exchange for that layer of bureaucracy?

I believe the answer is very unlikely to be affirmative. Presumably what you hope to get is significantly improved accountability and efficiency in directing funds to good uses. But I fail to see how anything in the proposal guarantees, or even suggests, that result. In fact, I would expect that, as a large-scale program, a program like this, without extensive, high-cost oversight, is likely to be no less subject to abuse than a program that just hands out $50 in cash to recipients. In fact, it may be more subject to abuse, because of the fact that individuals don’t have cash that they can use for any purpose.

There’s every reason to expect that corrupt entities and corrupt individuals within entities will appear to provide voucher-holders the opportunity to exchange their voucher for (something significantly less than $50 in) cash, that they can use for any unrestricted purpose they choose. And there’s certainly no intrinsic mechanism created to ensure that the vouchers are directed only to the poorest or otherwise neediest recipients.

So I think at best, you have pre-selected some charitable domains, and merely allowed the local population to choose among them (so it’s not clear to me that you’re really getting a significant benefit of on-the-ground insight). At worst, you’ve recreated cash distribution programs, in an even less efficient fashion.

If the fundamental idea is to leverage the knowledge, insight and wisdom of the local population, as a substitute for outsider evaluation of the efficacy of charitable alternatives, that would seem an interesting thought, but I don’t believe the proposed approach achieves that.

If you want to leverage that local insight, then it seems to me that what you’d want to do is truly make the vouchers philanthropy vouchers. i.e., the local individual recipients — let’s call them delegates — can give their voucher to a charitable or governmental institution, for any purpose they choose, whatsoever, EXCEPT as an exchange for goods or services or for any other direct, personal benefit. Then you are actually delegating some of your philanthropic responsibilities to the local individuals.

In this model, a delegate may choose to give to entities that will subsequently use the proceeds in ways that benefit the delegate personally (indirectly, as a result of putting their voucher donation to work), but the decision is, at least, not biased by the inducement of a direct quid-pro-quo for personal benefit. Accordingly, in this model, it seems much more likely that a delegate’s choice will take into account the aggregate good/benefit an entity is likely to create using the voucher. And if the charities are legitimate, then a high percentage of the benefit should go to those who most need it.

Of course, this still wouldn’t eliminate the need for oversight, because there would still be strong incentives for corruption. But your immediate oversight becomes focused purely on detecting and preventing corrupt inducement, as opposed to attempting to directly evaluate the efficacy of the charitable ventures.

Still, I don’t have a high level of confidence that this variation would produce efficient and effective results, either. I suspect that just as most educated donors have difficulty evaluating charitable efficiency and effectiveness, poorly educated local delegates aren’t likely to do much better, despite their on-the-ground perspective.

•With such a small scale project, would there really be sufficient incentive for “philanthropic organizations” to develop the infrastructure to accept and process vouchers?

•I understand how this idea partially mitigates the concern of “poor/irresponsible use of the money,” but I don’t see how this idea does anything to address the concern of “fraud/manipulation by less poor locals.” In this regard, how is distributing $50 vouchers with a goal of allocating one per individual different from giving away cash with a goal of allocating $50 per individual? Is the idea that the people who have their basic necessities met are less likely to try to aggressively seek extra such vouchers than they would be to seek extra cash?