Understanding and designing a cash transfer programme

1Why cash transfers?

Cash and voucher assistance (CVA) gives people the means to buy what they need on local markets. When well designed, it respects their dignity and choices, supports the local economy and is often cheaper to deliver than in-kind assistance.

It is not suitable everywhere: if markets are not functioning, if prices are soaring or if protection risks are too high, in-kind assistance or a combination of the two may be preferable.

2The modalities

• Unrestricted cash: can be used freely; often in the form of multipurpose cash assistance (MPCA), calculated to cover part of basic needs.
• Vouchers: redeemable with selected traders, as value vouchers (an amount) or commodity vouchers (specific items); they limit choice but make it possible to guarantee the quality or type of products.
• Conditional transfers: paid if an action is carried out (for example "cash for work" or rebuilding a shelter in stages).
• Restriction (what the money can be spent on) and conditionality (what must be done to receive it) are two different things.

3Market analysis and feasibility

Before choosing, check:

• Markets: are essential goods available, in sufficient quantity, at stable prices? Can traders restock if demand increases? Tools exist such as the RAM (rapid assessment for markets) or EMMA.
• Access: can people get to the market safely, including women, older persons and persons with disabilities?
• Delivery mechanisms: mobile money, prepaid cards, banks, payment agents, direct cash distribution.
• Risks: inflation, diversion, theft, tensions within households or with host communities, risks to personal data.
• People's preferences and acceptance by the authorities.

4Setting the transfer value

The value is based on the minimum expenditure basket (MEB): what a household needs to spend per month to cover its basic needs (food, rent, water, hygiene, transport…). It is often set with the country's cash working group so that all organisations use consistent amounts.

You calculate the gap between the MEB and what the household can already cover, then set an amount according to the objective and the budget. Example: an MEB of 250 dollars and a household that covers 100 dollars: a gap of 150 dollars; the programme may cover all or part of this gap. The value is reviewed if prices change significantly.

5Response analysis: the complete method, from assessment to choice of modality

The choice between cash, vouchers, in-kind assistance or a combination is not made on the basis of the organisation's preferences or the donor's habits. It is the result of a documented response analysis that brings together needs, markets, risks, capacities and the preferences of affected people. The Grand Bargain (2016) made increased use of cash transfers a collective commitment, and the question most donors now ask is "why not cash?": if another modality is chosen, it has to be justified. The Sphere Handbook (2018) addresses the issue in its section on delivering assistance through markets, and the CALP Network offers a Programme Quality Toolbox that structures the process.

The seven steps and their timeline

In a response to a sudden-onset crisis, the whole process should take two to four weeks; in a protracted crisis, there are six to ten weeks available and the analysis can be more detailed. The steps below may overlap, but none should be skipped.

1. Gather existing information (days 1 to 3): Humanitarian Needs Overview (HNO), IPC analyses, Cash Working Group (CWG) reports, joint price monitoring, multi-sector needs assessments (MSNA), data from mobile network operators and the central bank on financial inclusion. Much of the information already exists; collecting it avoids repeatedly surveying the same households.
2. Analyse needs and their nature (days 2 to 7): which needs are priorities, which can be met through purchases on the market (food, rent, hygiene, fuel) and which cannot (vaccination, safe water if the network has been destroyed, specialised protection). This distinction determines the share of the response that can, in theory, be delivered through transfers.
3. Assess markets (days 3 to 10): availability, prices, traders' capacity to respond, physical and social access (see the next section).
4. Assess delivery mechanisms (days 3 to 10, in parallel): mobile network coverage, agent density, liquidity, regulatory framework (know-your-customer requirements), banks and microfinance institutions, money transfer operators, experience of other organisations.
5. Analyse risks (days 5 to 12): risks to people (safety, protection, intra-household tensions, exploitation), to the programme (diversion, fraud, inflation) and to the organisation (reputation, sanctions, compliance). Each risk is matched with realistic mitigation measures.
6. Consult affected people (continuously): focus group discussions separated by sex and age, interviews with persons with disabilities, older people, and female-headed or adolescent-headed households. Ask about preferences, but also about the reasons behind them, which are often more informative than the preference itself.
7. Compare options and decide (days 10 to 15): comparison matrix, discussion within a multidisciplinary team (programmes, finance, logistics, security, MEAL), approval by senior management and presentation to the CWG.

A response analysis does not end with "cash" or "no cash". It ends with a justified combination: which modality, for which need, for which group, through which delivery mechanism, at what value, for how long, and under what review conditions.

Who does what

The modality comparison matrix

A comparison matrix is a decision-support tool, not an automatic calculation. Each criterion is scored (for example from 1 to 3) and accompanied by a written justification. Weightings must be set before scoring, to avoid adjusting the weights to fit the desired result.

Restrictions and conditions: when to justify them

A restriction (a food voucher, for example) or a condition (cash for work, staged payments for reconstruction) reduces households' freedom of choice and increases implementation costs. It must therefore be justified by a specific objective: ensuring the nutritional quality of the diet of pregnant women, ensuring that building materials meet safety standards, preventing the purchase of hazardous products. "We are worried that people will spend the money badly" is not an acceptable justification: the available evaluations, synthesised in particular by the CALP Network and ODI, show that the share of transfers spent on "temptation goods" (alcohol, tobacco) is marginal. If the sole objective is to meet food needs, unrestricted assistance targeted on food security generally produces comparable results in terms of consumption, at a lower cost.

6Assessing markets in the field: tools, sampling and decision thresholds

Market assessment answers a specific question: can the market supply, at reasonable prices and without major negative effects, the goods and services people need, if they are given money to buy them? In 2017 the CALP Network published a Minimum Standard for Market Analysis (MISMA) setting out six standards: preparing the analysis, choosing methods, collecting data, analysis, sharing results and recommendations. The aim is not to be exhaustive, but to be proportionate and explicit about limitations.

Choosing the right tool

Step-by-step method for a rapid assessment

1. Select critical goods and services: those that make up the basket of priority needs (cereals, pulses, oil, soap, fuel, rent, water). Limit yourself to 10 to 20 items, with precise specifications ("maize flour, 25 kg bag, standard quality"), otherwise prices are not comparable.
2. Map the markets: retail markets used by the target population, wholesale markets that supply them, roads and crossing points. Record distances and travel times, including on foot.
3. Sample traders: for price monitoring, at least three to five price readings per item and per market; for a capacity assessment, interviews with the main wholesalers (often few in number, so all of them should be seen) and a sample of retailers of different sizes. The sample of traders should include women traders and traders from displaced communities where they exist.
4. Collect data: current and pre-crisis prices, stocks available in days of sales, restocking lead time, sources of supply, constraints (credit, transport, security, informal taxes), reported capacity to increase volumes by 25%, 50% or 100% and within what timeframe.
5. Interview households: where do they shop, what does the journey cost, do they face obstacles (discrimination, insecurity, opening hours), do they already buy on credit from traders?
6. Analyse: compare the additional demand created by the programme with the market's capacity to respond, analyse competition (a market dominated by two wholesalers is exposed to speculative price increases), and identify bottlenecks.
7. Share the results: share findings with the CWG and the clusters, and make aggregated price data publicly available.

Decision indicators

These thresholds are indicative: they serve to structure the discussion and must be adapted to the context. A market showing warning signals does not rule out transfers: it may call for market support interventions (credit for traders, road rehabilitation, transport support) or a combination with in-kind assistance for certain goods.

Estimating the effect of the cash injection

The calculation is simple and often forgotten. Multiply the number of households by the transfer value and by the share that will be spent in each category (estimated from expenditure data), then compare the result with the market's usual sales volume. If the programme represents a 10 to 20% increase in demand for a commodity and traders report that they can increase their volumes by 50%, the inflationary risk is low. If the injection is equivalent to the entire monthly sales of a small, isolated market, payments should be spread out, the supply area widened or modalities combined.

A market that functioned before the crisis does not necessarily function after it. Always compare the baseline situation with the current situation, and take seasonality into account: a market during the lean season does not have the same capacity as at harvest time.

7Building the minimum expenditure basket and calculating the transfer value

The minimum expenditure basket (MEB) is the cornerstone of a multipurpose cash assistance programme. It is usually built collectively within the CWG, with the sector clusters, and then endorsed by the inter-cluster coordination group. An organisation that calculates its own MEB on its own, different from the CWG's, creates disparities between neighbouring households, tensions and coordination difficulties: it must have very good reasons for doing so and document them.

Three approaches to defining the content

• The standards-based or rights-based approach: start from sector standards (Sphere, national standards) to define the quantities required, then value them at market prices. For example, a ration providing 2,100 kilocalories per person per day, 15 litres of water per person per day, 250 grams of bathing soap and 200 grams of laundry soap per person per month, and shelter offering at least 3.5 square metres of covered living space per person.
• The observed expenditure approach: analyse households' actual expenditure (expenditure surveys), identify a reference group (often households that just manage to meet their basic needs without resorting to negative coping strategies) and take their level of expenditure as the benchmark.
• The hybrid approach, the most common: food and hygiene items are calculated using standards, while items such as rent, transport, health or education are calculated from observed expenditure. The method used for each component must be written down.

MEB, SMEB and sector basket

Many countries distinguish between the MEB, which covers all basic needs, and a survival minimum expenditure basket (SMEB), which covers only life-saving needs (food, water, basic hygiene, shelter, energy). The SMEB is often used as the benchmark for setting the transfer value when budgets are limited, or as a threshold for defining extreme vulnerability. Some clusters also calculate a sector basket (for example a shelter basket for rental assistance): a sector transfer and a multipurpose transfer covering the same component should not be combined.

Step-by-step calculation method

1. Define the reference household size: usually the average size of target households (often five to seven people), then plan a scale based on household size.
2. List the components and quantities: for each component, monthly quantity and product specification.
3. Price the items: median price from price monitoring (preferably the JMMI), across several markets, with a clearly stated reference month. The median is preferred to the mean, which is sensitive to outliers.
4. Add up by component, then the full MEB and the SMEB.
5. Estimate household capacity: regular income, remittances from relatives, own production. Anything that comes from negative coping strategies (debt, sale of productive assets, child labour, reducing meals) is not counted as a resource.
6. Calculate the gap: MEB minus average capacity, possibly minus assistance already received through other channels (in-kind rations, rent covered).
7. Set the transfer value: depending on the objective (covering the full gap, part of the gap, the SMEB), the budget and the CWG recommendation. Round to a value that is easy to understand and compatible with available banknotes or withdrawal amounts.
8. Plan for review: trigger threshold, review frequency, price source, approval procedure.

Adjustments not to forget

• Household size: costs do not increase proportionally (rent does not double with the number of people). Brackets are often used (1 to 3 people, 4 to 6, 7 and more), or a fixed value plus an amount per additional person, with a ceiling.
• Access costs: cost of transport to the distribution point, cash-out fees charged by the agent. If the household has to pay them, it does not receive the intended value; these costs are therefore either covered by the programme in the contract with the provider, or added to the value.
• One-off costs: a higher initial transfer can cover non-recurrent needs (utensils, blankets, rent deposit), separate from the monthly transfer.
• Geographic variations: if prices vary by more than 15 to 20% between areas, differentiated values may be justified, at the cost of greater complexity and the risk of tensions.
• Currency: in contexts of high inflation or multiple exchange rates, the currency used for calculation and payment must be decided explicitly (see day 3).

The transfer value is not the MEB. The MEB measures a need; the transfer value is a programme decision that takes into account household capacity, the objective, the budget and coordination. Confusing the two leads either to overestimating needs or to promising coverage that the programme does not provide.

8Worked example: multipurpose programme for 4,800 displaced households in Saraba

Fictional context: following clashes in Mékandi province, some 4,800 displaced households have settled in the town of Saraba, with host families or in rented accommodation in peripheral neighbourhoods. The fictional NGO "Solidarité Mékandi" has funding of 2.1 million dollars for a six-month response. The Saraba CWG has existed for two years and publishes monthly price monitoring.

Step 1: response analysis

The rapid market assessment covers four retail markets and two wholesalers. Cereals, pulses and oil are available in 92% of the outlets observed. Prices rose by 11% after the arrival of the displaced population and then stabilised. Wholesalers report that they can increase their volumes by 40% within two weeks. Two mobile network operators cover all neighbourhoods, with 64 mobile money agents; 71% of displaced households own at least one phone, but only 38% of female heads of household have a SIM card registered in their own name. In focus group discussions, 78% of participants prefer to receive cash, mainly to pay rent, which cannot be covered by in-kind assistance.

Decision: multipurpose cash assistance via mobile money, with an alternative (cash payment through a contracted agent) for households without a phone or without an identity document, and support for registering SIM cards in the name of female heads of household.

Step 2: building the MEB (six-person household, median prices for the reference month)

Step 3: calculating the gap and the transfer value

The household survey shows that the targeted displaced households cover on average USD 70 per month from their own resources (daily labour, petty trade), excluding debt. The average gap against the MEB is therefore 185 minus 70, i.e. USD 115. The CWG recommends a transfer value equal to the rounded average gap, with three brackets by household size.

Step 4: budget, duration and efficiency ratio

The available budget is 2.1 million dollars. Implementation costs (staff, registration, post-distribution monitoring, complaints hotline, vehicles, share of support costs) are estimated at USD 330,000. The payment service provider's fees, negotiated at 1.8% of the value transferred and including cash-out fees, are covered by the programme. The possible duration is calculated as follows: amount available for transfers and fees = 2,100,000 minus 330,000 = USD 1,770,000; monthly cost including fees = 550,800 multiplied by 1.018, i.e. USD 560,714; possible duration = 3.16 months.

The team faces a trade-off: three months of full coverage for 4,800 households, or longer coverage for fewer households. Vulnerability data show that 2,900 households have a poor or borderline food consumption score and frequently resort to crisis coping strategies. The team finally proposes three months for all 4,800 households (USD 1,652,400 in transfers, USD 29,743 in fees), followed by three additional months for the 2,900 most vulnerable households if additional funding is secured, while actively seeking such funding from the country-based pooled fund. The remaining USD 87,857 is allocated to a reserve for adjusting values in the event of price increases.

Ratio of value transferred to total cost over three months: 1,652,400 divided by 2,012,143 (transfers, fees and implementation costs), i.e. about 82%. This ratio, presented to the donor, is consistent with comparable programmes in the CWG.

Step 5: review rules

• The MEB is recalculated every month on the basis of joint price monitoring.
• If the cost of the MEB rises by more than 15% compared with the reference month for two consecutive months, the organisation proposes a revision of the value to the CWG; the decision is harmonised across organisations.
• The adjustment reserve can absorb a 10% increase for about one and a half months; beyond that, an amendment to the donor agreement is requested.

The documented reasoning matters as much as the result. An evaluator or auditor must be able to trace, for each figure, the source, the date, the method and the person who approved it.

9Contextual variations, common mistakes and donor expectations

Adapting the design to the context

Common mistakes and how to avoid them

• Choosing the modality before the analysis, then writing an analysis that justifies the choice. Evaluators spot this quickly: the analysis contains no seriously compared options. Remedy: draw up the comparison matrix with the weights set at the outset and have it reviewed by someone outside the project.
• Calculating a stand-alone MEB, different from the CWG's. Remedy: start from the common MEB and document any deviation.
• Forgetting access costs (travel, cash-out fees, exchange losses). Households then receive less than planned, and post-distribution monitoring reveals it too late.
• Ignoring gaps in access to financial services between men and women, or for people without identity documents, older people and persons with disabilities. Remedy: include these data from the analysis stage and plan alternatives.
• Underestimating rent in urban areas and failing to anticipate rent increases caused by the assistance itself.
• Setting a value without a review rule: when inflation hits, the organisation improvises and the gaps between organisations widen.
• Comparing costs that are not comparable: the cost of in-kind assistance must include transport, warehousing, losses and logistics staff, otherwise the efficiency comparison is skewed.

What donors and evaluators look for

• ECHO: DG ECHO's thematic policy on cash transfers and its guidance note on large-scale cash transfers require a justification of the modality based on a response analysis, a preference for unrestricted multipurpose assistance where relevant, a focus on efficiency, and a clear separation between the value transferred and implementation costs. Large programmes are encouraged to pool registration, the delivery mechanism and monitoring.
• BHA (United States government): the emergency application guidelines require a justification of the modality, a market analysis, the method used to calculate the transfer value and risk management measures.
• FCDO: focus on value for money, accountability and anti-fraud measures.
• United Nations agencies and country-based pooled funds: alignment with CWG guidance and the response plan, harmonised transfer values, contribution to joint monitoring databases.
• Evaluators (OECD DAC criteria and ALNAP guides): relevance of the modality to needs and preferences, documented efficiency, coordination, consideration of gender and inclusion, effects on markets.

A solid response analysis file contains: the comparison matrix with its justifications, the market assessment report, the provider mapping, the risk register, the summary of consultations, the calculation of the MEB and the transfer value, and the signed decision memo.

10Interview questions and key references

Interview questions

1. "How do you decide whether cash transfers are appropriate in a given context?"

A good answer describes a structured response analysis: needs and their nature, market functionality and traders' capacity to respond, available delivery mechanisms, risks and mitigation measures, people's preferences, comparative costs. It specifies that the result may be a combination of modalities and that the decision is coordinated with the CWG. It mentions a concrete example drawn from the candidate's experience.

2. "What is the difference between the MEB, the SMEB and the transfer value?"

The candidate explains that the MEB measures the cost of basic needs, that the SMEB is limited to life-saving needs, and that the transfer value is a decision that takes into account household capacity, the objective, the budget and harmonisation. They cite the approaches to building the basket (standards, observed expenditure, hybrid) and the importance of review rules.

3. "Prices rose by 25% during your assessment. What do you do?"

A strong answer distinguishes a one-off spike from a trend, recommends more frequent price monitoring, analyses the causes (supply disruption, speculation, currency depreciation), considers market support interventions, a combination of modalities or spreading payments over time, and provides for a rule to review the value, discussed with the CWG.

4. "Why not use food vouchers everywhere, since the objective is food security?"

The candidate explains that a restriction must be justified by a specific objective, that households also have other basic needs that they would meet by reselling or exchanging the vouchers, and that vouchers are more costly to manage and limit competition between traders. They acknowledge the situations in which vouchers are justified (nutritional quality, specific products, a market dominated by a few actors).

5. "How do you take gender into account when designing a cash transfer programme?"

A good answer refers to the analysis of gaps in access to phones, SIM cards and identity documents, the question of the designated recipient within the household, the risks of intra-household tensions, separate consultations, the choice of distribution points and times, and monitoring disaggregated by sex, age and disability.

6. "The budget does not allow you to cover the gap for all households. How do you decide?"

The candidate presents the options (reducing coverage, reducing the value, reducing the duration, prioritising the most vulnerable) and their consequences for effectiveness, and points out that a value too low to change households' situation is rarely a good choice. They propose a transparent decision, discussed with the CWG and the donor, and a search for additional funding.

Key references

• Sphere Handbook (2018): section on delivering assistance through markets, sector standards used to build the MEB.
• Core Humanitarian Standard on Quality and Accountability (CHS), commitments on relevance and participation.
• CALP Network: Programme Quality Toolbox, glossary of cash and voucher assistance, Minimum Standard for Market Analysis (MISMA), The State of the World's Cash reports.
• ICRC: RAM (Rapid Assessment for Markets) and MAG (Market Analysis Guidance).
• EMMA toolkit (Oxfam, IRC, Practical Action and partners).
• Joint guidance on the minimum expenditure basket (UNHCR, WFP, CALP Network and partners).
• DG ECHO: thematic policy document on cash transfers and guidance note on large-scale cash transfers.
• BHA: emergency application guidelines.
• Grand Bargain (2016) commitments on cash transfers.
• Cash coordination model endorsed by the IASC (2022).