Cash Transfers or Reparations?

Exploring how two approaches aim to repair a broken world

When it comes to fighting global poverty, two ideas often come up: direct cash transfers and reparations. One is framed as charity, the other as justice. But are they really that different?

Reparations

Many critics of global inequality argue that our current system isn’t just broken, it’s historically unjust. Decolonial thinkers say that combating this inequality isn’t just about helping the poor; it’s about repairing centuries of exploitation. They argue that reparations, not just aid, should be at the heart of our response.

Why? Because Western nations built vast amounts of wealth through colonial slavery and the exploitation of Sub-Saharan Africa. And the legacy of that exploitation hasn’t disappeared. It lives on today through unfair trade deals, crushing debt burdens, and subsidies that distort global markets to the disadvantage of African farmers.

In this view, justice is about paying back what was taken, and thus reparations are a form of compensatory justice: if you benefit from someone else’s suffering, you owe them something. It’s not about victimhood; it’s about taking responsibility.

As some scholars in development studies put it:

[In order] to redistribute global wealth and end growing inequality reparations have to be made. The North has to take responsibility for the wealth it has built over centuries at the expense of the South. These reparations are not about compensating victimhood, rather they constitute the radical claim of a growing number of individuals and movements globally for social justice.

Targeting tax havens and striving towards a just taxation worldwide would be a first, although still very modest, step towards a financial model for reparations. Thus, if we abolish [the position of European Union Commissioner for Development], why not replace it with a commissioner for reparations?

Reparations are, in theory, not just about handing over money. If other kinds of policy can meaningfully undo the harms of colonialism, they count too. Still, in practice, financial compensation is by far the most popular proposal.

Writers like Ta-Nehisi Coates and philosophers like Olúfẹ́mi Táíwò have argued for concrete reparation payments. Closer to home, activists in the Netherlands calculated how much a single enslaved woman would be owed by a modern-day foundation, and Belgian politicians discuss compensating for the legacy of colonization in Congo. Although small steps have been taken, full reparations remain largely unrealized. Both because there’s extreme political resistance, and because the idea raises complex questions:

• Who pays: governments, or also complicit companies/organizations?

• Who receives: citizens, or also the state?

• What about countries like Ethiopia that weren’t colonized¹ but are still deeply impoverished?

• Should reparations be a one-time transfer or a recurring payment?

• How do we calculate the right amount?

• Should they replace traditional development aid?

These questions don’t have easy answers, but that doesn’t mean we shouldn’t ask them.

What about just giving people money?

While calls for reparations often get bogged down in political controversy, there's another approach that's been gaining traction: direct cash transfers. No conditions, no strings attached, just money sent straight to people in extreme poverty.

This idea isn’t just theoretical. Organizations like GiveDirectly have been putting it into practice for years, transferring money directly to mobile banking accounts in countries like Kenya, Liberia, Uganda, Rwanda, and Malawi. Recipients can spend it however they like, there’s no micromanagement, just trust.

GiveDirectly runs multiple programs, including:

• Poverty Relief: one-time, unconditional cash transfers (~$1,000) to households in extreme poverty (e.g. Kenya, Malawi, Rwanda).

• Universal Basic Income: long-term daily cash payments, and the world’s largest UBI experiment in Kenya (also programs in Malawi, Mozambique, Liberia).

• Emergency Relief: rapid cash support after disasters (earthquakes, floods, conflicts: e.g. Morocco, Turkey, DRC).

• Climate Relief Fund: cash transfers to communities affected by climate-related disasters (e.g. Uganda, Mozambique, Nigeria).

• Refugee Programs: large cash transfers to refugees to support self-reliance (e.g. Uganda, Kenya, Rwanda).

• U.S. Poverty Relief: unconditional cash aid for low-income Americans (over $270 million distributed since 2017).

While GiveDirectly is the largest, they’re not the only charity that does this. For example, a smaller initiative is Eight, which provides monthly cash transfers over two years to villages in Uganda and the Democratic Republic of Congo.

However, whether it’s for charity or for reparations, giving money directly to the poor does raise some questions: Does it actually work? Won’t the money get wasted? Won’t people become dependent on it?
It’s fair to ask these questions, and researchers have been asking them too. But the data tells a surprisingly optimistic story.

What the Research Shows

According to GiveDirectly and a large body of independent studies, cash transfers generally lead to positive outcomes. People use the money wisely, not wastefully. Corruption is rare, thanks to rigorous auditing, identity checks, and follow-up calls. In fact, around 90% of donated dollars go directly to recipients (with practically everything else going to operational expenses).

Typical spending includes:

• Food and medicine

• School fees

• Durable goods like furniture and livestock

• Home improvements (such as installing a metal roof)

Instead of creating dependency, they can increase independence by funding businesses, education, or healthcare that reduce future need.

Direct cash transfers have been praised by many independent experts. From 2012 to 2022, GiveDirectly was even listed as a “top charity” by GiveWell (a leading charity evaluator) and they still considers cash transfers to be one of the most effective poverty interventions available.

What’s the difference?

These two approaches have many things in common. At their core, they both aim to shift wealth from the Global North to the Global South. And both respect the autonomy and dignity of those receiving support. Whether through justice or generosity, these approaches say: “You know best what to do with this money.”

No conditions. No paternalism. No requirements to attend a workshop or follow a government-approved plan. Just trust. That in itself is powerful. It avoids the “white savior” dynamic that has often plagued development aid and centers the dignity of those who have long been marginalized.

There are also differences. Reparations are, as mentioned, often rooted in compensatory justice, whereas cash transfers are typically justified through a utilitarian lens (the idea that we should do the most good for the most people). The latter is less about guilt or responsibility and more about reducing suffering efficiently; so cash should go to poor people regardless of whether the cause of their poverty was (neo)colonialism.

At first glance, that’s a big divergence. One sounds like justice, the other like charity. But in practice, there’s not much of a difference.
Many decolonial critics argue that almost all extreme poverty today is tied, directly or indirectly, to colonialism or its modern offshoots like structural adjustment, trade imbalances, or climate injustice. Even countries that weren’t colonized, like Ethiopia, have suffered from the ripple effects of imperialism. So while the philosophies may be different, the recipients will be nearly identical.

A Shared Vision

Both approaches, at their best, are motivated by moral outrage. Not pity. They’re responses to a world where billions suffer needlessly while others thrive off inherited advantages.
The desired outcome is the same: an end to extreme poverty, global inequality, and neocolonial control over poor countries' futures.

The biggest difference isn’t the goal, it’s how we get there.

• Reparations would require formal, political action: governments negotiating, apologizing, and transferring funds.

• Cash transfers are mostly handled by NGOs and funded by private donors.

Although even here change is coming. Rory Stewart (Former UK cabinet minister and former CEO of GiveDirectly), has suggested that governments should include direct transfers in official development programs. That would make them only one apology away from becoming reparations.

And of course, there’s no reason we can’t do both. I’d love to see more conversations between advocates of reparations and champions of cash transfers. I think it could lead to very fruitful dialogue and coordination. These approaches aren’t mutually exclusive, they’re potentially complementary.

In the meantime, please consider sending some reparations yourself via GiveDirectly.

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A huge thanks to Maxim Vandaele for his tremendous help with this post. All opinions and mistakes are my own.

1. Although Ethiopia was very briefly occupied under Mussolini, from 1935 to 1941