Cash Transfers

	Cash transfers are defined as the provision of assistance in the form of cash to the poor or to those who face a probable risk of falling into poverty in the absence of the transfer.  The main objective of these programs is to increase poor and vulnerable households' real income.
	Types of Cash Transfer Program
	Two commonly used cash transfer programs are the general needs-based social assistance and the more specific family allowance.  These programs exist in various forms in different countries.

Social assistance is a means-tested benefit which may either be a regular or an occasional transfer and may either be flat or can vary depending on the beneficiary's resources.  Family allowance may be a categorical or a means-tested benefit paid to families with children under a certain age, and may be a regular or an occasional transfer. 

 Another variety of this type of intervention is Conditional Cash Transfers.  These programs are cash transfer programs in which payment of the transfer is made conditional upon certain behaviors of the beneficiaries, such as regular school attendance of their children or regular health center visits. For more information, please refer to our section on Conditional Cash Transfers.

Needs based social assistance and family allowance programs are common in countries of the Organization for Economic Cooperation and Development (OECD), Eastern Europe and the former Soviet Union.  In recent times needs based income transfer programs have also emerged in low income contexts, with cash transfers also being used as a flexible instrument in emergency and disaster contexts

The growing use of cash transfers is driven significantly by improvements in their design and implementation. Some of the most critical design issues include the method used to select beneficiaries, the payment modalities chosen, as well as the implementing institutions.

The most commonly cited advantage of cash transfer programs is the amount of choice given to beneficiaries in using additional income compared to other transfers.  Cash transfers also tend to reduce administration requirements since they do have lower operating costs. In crisis contexts they also afford great flexibility in reaching beneficiaries in a timely and targeted manner.

Typical challenges include establishing appropriate benefit levels and ensuring appropriate targeting, particularly so that any adverse work incentive effects on the part of the recipient.  Because of the nature of cash transfers, checks and balances need to be in place to avoid elite capture and ensure efficient use of the funds.