Why is this important?
In certain humanitarian disasters, the supply of goods to markets and shops is sustained, yet the affected population loses the means to buy the goods or to access services. In such cases, cash-based assistance ensures humanitarian aid directly reaches those with the greatest need in a timely manner.
Cash-based assistance is quick to deliver, cost-effective and provides people in need with greater choice. Cash is about dignity, choice and flexibility for beneficiaries; it is about greater efficiency, value for money and ultimately improved effectiveness for donors and taxpayers. Cash-based assistance lays the foundations for recovery and resilience and ensures the maximum impact for those in need.
Cash-based assistance can be spent on a variety of products and services but usually food, non-food items, fuel, blankets and other essentials are the first port of call for those who need support.
How are we helping?
The European Commission's European Civil Protection and Humanitarian Aid Operations department uses cash-based assistance and other alternative forms of humanitarian assistance only after thoroughly evaluating all options. We recognise that all humanitarian assistance has to be carefully planned in order to prevent unintended effects, such as inflation or imbalances in local markets while reaching the most vulnerable groups (women, children and the elderly). Local markets are analysed before a programme is put into action and local governments in disaster-prone areas are always involved when humanitarian assistance is provided. In most cases, a mixture of aid-delivery methods is used to best meet the needs of affected populations.
The use of cash-based-assistance has been increasing in recent years. The fastest increase has come about where cash-based assistance has been provided in place of in-kind food. For 2016, over half of the European Commission's humanitarian food assistance was provided in the form of cash-based responses. However, it is important to note that cash-based assistance can be an appropriate response regardless of the sector. Cash is increasingly provided to meet the basic needs of beneficiaries through a single multi-purpose cash grant.
Depending on the context, assistance can be provided as an unconditional grant; in other cases, where appropriate, beneficiaries may be asked to perform some activities (e.g. community work, training) in order to receive the transfer.
Advances in technology have facilitated the shift to cash-based assistance, which can now be delivered securely, often on the basis of biometric data, through a range of systems such as financial service providers and mobile phones.
10 common principles for multi-purpose cash-based assistance to respond to humanitarian needs
The principles were developed to guide donors and humanitarian partners alike on how best to work with multi-purpose assistance. The principles introduce the notion of a humanitarian response across sectors to address basic needs, with dignity, flexibility and choice for beneficiaries. They stress efficiency and effectiveness and recall key issues such as the need to uphold the humanitarian principles and to ensure accountability. They recognise the importance of context-specific solutions and the need to select the delivery modality that suits best. The principles also make the link with longer term resilience building and national social protection systems.
These principles and the resulting Council Conclusions complement existing guidance on cash-based assistance and policy positions on those thematic areas which lend themselves to a multi-purpose approach. Donors and their partners are encouraged to take these principles into account in designing and implementing their responses to humanitarian crises.
Cash Guidance Note
The Guidance Note on the delivery of cash transfers complements our policy position and existing guidance on the use of cash transfers and is intended to provide clarity to our partners on the selection criteria applied when selecting partners to deliver cash transfers.
This guidance applies principally in cases where the European Commission humanitarian aid is providing large-scale funding to deliver cash transfers in a given country or for a given crisis and where cash transfers make up a significant part of the overall response. The Guidance Note as issued in January 2017 is already being applied progressively to our large-scale cash operations. However, in the light of first experiences, the Guidance is undergoing some clarifications and revisions. Pending these revisions, the Guidance as adopted in January applies and will continue to apply until it is updated.
This approach is fully in line with our Grand Bargain commitments to scale up the use of cash with a view to enhancing the efficiency and effectiveness of operations and providing a better response to those in need.
The Guidance gives us the "rules of the game" when delivering cash at scale.
To further promote the effective use of cash-based interventions, the European Commission has helped strengthen the capacity of humanitarian actors. Since 2011, we have supported the work of the Cash Learning Partnership (CaLP), which has played a strategic role in capacity building with training, research and advocacy material and tools to monitor cash based interventions like the Cash Atlas. We have also supported WFP in developing its own corporate capacity to implement cash-based interventions. Further examples of our support include: the development of a situation and response analysis framework (SRAF), a Cash and Markets Capacity Building Roster (CashCap), and an Operational Guidance and Toolkit for Multipurpose Cash Grants.
The European Commission is actively engaged in evaluations and studies aimed at exploring the effects of various transfer modalities on the efficiency and the effectiveness of humanitarian assistance. These studies demonstrate that cash based interventions are frequently more cost-efficient and cost-effective. These comparative advantages are well described in the recent Evaluation of the use of different Transfer Modalities in EU Humanitarian Aid actions (ADE; 2016), the Value for Money of Cash Transfers in Emergencies study (DFID, 2015) and in the report Doing cash differently, How cash transfers can transform humanitarian aid (ODI, 2015). The EU has also supported other studies, such as the Fit for the Future (HFP and Kings College of London, 2013).