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Philanthropic Arm of eBay Founder Conducts Experiment Giving Close to $500,000 Free Money

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Philanthropic Arm of eBay Founder Conducts Experiment Giving Close to $500,000 Free Money
PHOTOGRAPH: Joi Ito | Photo shows French-born Iranian-American entrepreneur and philanthropist Pierre Omidyar.

The philanthropic investment arm of French-born Iranian-American philanthropist and eBay founder Pierre  Omidyar just conducted an experiment that has raised some eyebrows.  Through a charity dubbed GiveDirectly, Omidyar Network has funneled $493,000 in a pilot experiment in Kenya that takes a close look at a possible solution to poverty.

Deemed as the largest basic income experiment, the proponents of the experimental study surmised that giving individuals free money to cover basic needs — whether in lump sum or spread out in two year or 12 years — will yield to something good.

The experiment debunks a commonly held notion that `the worst harm may come from the best intentions.’ On the contrary, Omidyar Network seems to believe in the positive side of people and has sought to empower them by freeing them from stressful financial concerns.

For an entrepreneur who recently tweeted “Fake jobs, fake trade, fake national security experts, fake terror attacks, fake President,” the move comes as a very trusting and liberal one. At the heart of the novel experiment is the foundational belief of Omidyar Network.

Cash Transfer Benefits

Omidyar Manager Tracy Williams and Intellectual Capital Partner Mike Kubzansly opined that individuals from low-income families who receive cash benefits are led to improve their circumstances in life. They are empowered to disentangle themselves from the vicious cycle of poverty.

The philanthropic arm has adopted a forward-looking stance when it comes to seeing improvements in nutrition, household income, the status of women, school attendance, and a range of other positive indicators. Unlike past studies, the thrust of the philanthropic arm is to provide evidence-based arguments that may shed light on discussions revolving around the future of work and poverty alleviation policies.

The Fundraising Status

GiveDirectly has so far raised $23.7 million of the target $30 million.  Over 26,000 people in Kenya stand to benefit from the experiment that has gotten the nod of approval of eBay founder Pierre Omidyar.

In most other impoverished communities that have received livelihood/financial support for struggling individuals or families, it is not pure cash but rather microfinancing programs that have aided people in starting businesses, making essential home repairs, and sending children to school on basic income.

Related Research

Interestingly, related research points to some decline in drug and alcohol use, possibly because they have fewer reasons to be stressed. Cash transfer studies are being carried out in other parts of the world.

One such study unearthed that consumption of so-called `temptation goods’ decreases in certain cases when people from underdeveloped nations receive free cash.  That was what World Bank researchers David Evans and Anna Popova found out.  Evans noted, “If you tell people money is for a certain thing, then they’re much more likely to spend that money on that thing.”

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