Small Cash Transfers and Alumni Support Study (Working Paper)

Introduction

The development sector has utilized various approaches to address poverty, including microfinance and conditional and unconditional cash transfers (United Nations, 2009), yet these interventions often lack comprehensive scope. The Graduation approach offers a holistic poverty reduction strategy, typically spanning two years and combining training, coaching, and large capital transfers. Studies have demonstrated its significant positive effects on income, consumption, and psychological outcomes, with sustained impacts seven to eight years post-intervention (Banerjee et al., 2015, 2017).

Several organizations have adapted the Graduation model with modifications to address contextual needs while preserving core elements. Village Enterprise condensed the traditional model to one year with small group cash transfers of USD 45 per individual, achieving a 4% increase in household consumption, an increase in productive cash inflows, and improvements in psychological outlook (Sedlmayr et al., 2020). In Ghana, Innovations for Poverty Action (IPA) and Presbyterian Agriculture Services (PAS) implemented a program with consumption support of at least USD 30 per month, generating significant increases in expenditures (11%) and food consumption (12%) (Innovations for Poverty Action, 2014; Banerjee et al., 2018). A Nicaraguan study compared interventions, including a USD 200 productive investment grant program, which outperformed standard Conditional Cash Transfer and vocational training approaches in economic outcomes and resilience (Marcours et al., 2012). While transfer-based approaches have proven effective in many low-income countries, evidence in the Philippine context remained limited until the 2020 BRAC pilot program, which showed positive impacts on consumption, food security, productive assets ownership, and financial management, with 69% of participants repaying all or part of their debt (Schelzig & Jilani, 2020). These integrated approaches align with International Care Ministries’ (ICM) existing initiatives. However, many require substantial grants (at least USD 24 per household and USD 300 worth of assets) in addition to government cash transfers, highlighting the need for more cost-effective alternatives.

ICM focuses on empowering families living in extreme poverty or families living with less than USD 2.15 per person per day. Through its primary program, Transform, ICM seeks to provide a low-cost, scalable poverty alleviation program that maximizes impact on poverty reduction. Continuous program evaluation is central to ICM’s strategy, ensuring ongoing innovations and lasting impact.

Since conducting two Randomized Controlled Trials (RCTs) with IPA in 2014 and 2016, ICM has refined Transform’s design to better serve households in extreme poverty. Building on encouraging results from Graduation studies and previous work with IPA (Bryan et al., 2020), this RCT aims to evaluate whether Transform, which shares fundamental components with the Graduation approach but at a lower cost, offers a more effective poverty alleviation strategy, and whether integrating small capital cash transfers meaningfully enhances these outcomes.

This RCT was funded by the Global Innovation Fund.