Distributing aid efficiently: How the Red Cross is getting financial help to those who need it most
As the world's largest humanitarian organisation, the Red Cross has long been associated with providing medical assistance during major crises. But as the charity faces one of its biggest ever global challenges, it is not the widespread health impact of the coronavirus pandemic that is the greatest worry.
"For many countries, it's the secondary economic impact of this devastating crisis that's causing concern – I've heard many times local partners say it's not COVID they’re frightened of, it's the loss of income,” said David Peppiatt, Director of Humanitarian Cash Assistance at British Red Cross.
As a result, across the world Red Cross and Red Crescent Societies have mobilised their biggest global response in a generation, covering 120 countries. In the past, this has generally meant distributing material goods, from hygiene kits to sacks of rice. But the movement is now increasingly giving financial aid in various forms to make sure that recipients are able to access the goods and services they really need.
To illustrate this, Peppiatt cites a conversation earlier this year with a Syrian refugee, during which he asked whether her food parcel gave her what she needed. "She said that as soon as she receives the parcel, she hands it to her son, who walks over to the market and sells it – and then she has cash, and can go and buy what she really wants," he said.
Financial aid, by contrast, allow recipients to spend their money how they wish. And as well as helping the recipients themselves, cash can also help support neighbourhood businesses and keep the economy going through troubled times, without the disruption to local markets that physical aid parcels can sometimes cause.
"But it's amazing how markets can, even in the midst of crisis, still recover if you can put a little injection of finances in," he added.
Choice & dignity
Different distribution methods are used in different territories. In Turkey, for example, a partnership with a local bank has allowed the Turkish Red Crescent to hand out ATM cards to 1.6 million Syrian refugees.
"It enables them to have a monthly transfer that helps them pay rent, helps them access basic services, education, health services, water, and gives them a basic level of choice and dignity in the midst of a chronic displacement crisis," said Peppiatt. "It shows you can do this at incredible scale."
In Kenya, by contrast, where few people have bank accounts, but mobile banking is common, cash is uploaded to recipients' phones using M-Pesa, the local mobile phone-based money transfer service.
"We are able to transfer funds directly to their mobile wallets and they are able to respond locally to their own crisis," said Peppiatt.
However, different markets are in different stages and in some cases – such as North Nigeria, where the banking infrastructure has been destroyed by the conflict with Boko Haram – cash in envelopes is the preferred method.
Image courtesy of the Red Cross
Identifying those in need
The British Red Cross has for some time been distributing pre-paid cards, produced by banking-as-a-service company Bankable. These can be loaded with funds as and when needed, allowing the recipient to choose how they spend the money. And when the pandemic struck, these pre-paid cards allowed it to respond swiftly, and on a huge scale.
Jon Pewtner, UK Operations Cash Development Manager at British Red Cross said: "We set up a central operations team who process applications to the hardship fund and mail out cards from the operations centre. We were able to scale up very quickly from a standing start to having the card operations team ready to post the first cards in just a couple of days."
The Red Cross is working with community-based charities, local authority partners and national charities to identify those most in need – people who were in precarious positions pre-coronavirus and are now facing chronic financial difficulties.
"Some people will receive a one-off payment of £120; some people will get three monthly payments of £120. We're currently issuing about 2,000 cards a month, and we can scale that up," said Pewtner.
With many retailers increasingly accepting contactless payments, cards can sometimes be the only way to buy food in store, as well as allowing recipients to shop online.
Greater efficiency
Disbursing funds rather than aid in-kind enables a much faster response, and cuts logistics costs. And another big advantage of digital payments is that it allows the Red Cross to see exactly where money is being spent – information that can be fed back to corporate donors who are keen to know how their donations are helping those in need.
Bankable’s CEO Eric Mouilleron said: "When you give cash, you have no analytics on how it is being spent, whereas with digital financial aid we can provide donors with data on the usage of the funds. This enables us to better support the communities we are trying to help as we understand their needs better.”
And further improving traceability and accountability, Bankable has developed ways of establishing the identity of recipients – many of whom will have lost all their ID.
"If the ID verification requirements are too strict, you may not be able to provide aid to the right person, and if they are not strict enough you may be giving money to someone who doesn't need it," says Mouilleron. "We have managed to build something bespoke, where we create a profile through what we call simplified due diligence."
More than 50 countries receiving aid from the Red Cross and Red Crescent Societies are using digital payments as part of their coronavirus response. And the British Red Cross says it expects to see the proportion of monetary aid worldwide increase from its current 16 per cent up to 40 per cent in the next few years.
"We see financial aid as a huge part of our humanitarian toolkit," added Pewtner. "It just fits the bill, it gives choice and dignity, and allows people to start their recovery straight away.”
Visit https://www.cash-hub.org/ to find out more about the British Red Cross cash assistance programme.
Visa is a funding partner for the Red Cross financial aid disbursements programme.
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