Use the links above to see all the cross-references and discussions about cash & voucher assistance (CVA) across all the sections

Additional background

Cash First & Cash Plus

In NRC, we use Cash First. We provide resources transfers in cash rather than in-kind wherever it is relevant, feasible and appropriate. We use our Modality Decision tool to determine these three parameters of relevance, feasibility and appropriateness. The Modality Decision analysis brings together information held by our program, support and field teams.

In NRC, we also try to always use a Cash Plus approach. We recognize that it is not the cash component in and by itself in a program that matters, but all the information and services that we provide together with it. As such we strive to combine the specific design of our cash components with broader service and information provision that will contribute to increasing the impact of the transfer, in particular by addressing additional demand-side or supply-side constraints within key market systems.

Relevance, appropriateness and feasibility of cash in the response

When making specific modality decisions, it is important to always use NRC's modality decision tool. Yet, there is suggestive evidence (e.g. in terms of needs, delivery mechanisms and marketplace functionality) that the use of CVA will be relevant, feasible, and appropriate in this response. See Impact Analysis > … > Delivery mechanisms for more details

Based on our impact analysis, we expect high levels and severity of needs as well as variation in needs both across households, across locations, and over time. In turn, this means that NRC will need to use flexible programming options in order to be able to adjust the depth and breadth of its targeting within its budget constraints and as the situation evolves. (See Impact Analysis > Needs). The choice of cash as a modality can provide flexibility in program design to adjusting the relative depth and breadth of programming in a way than service provision or in-kind aid cannot.

From our analysis of delivery mechanisms, we have also identified not only challenges but opportunities for money transfers and cash delivery. Needs and delivery mechanisms are but two out of the ten dimensions included in NRC’s modality decision tool. Yet, pending a full modality decision analysis, there is other suggestive evidence (see below on marketplace functionality) that together point towards the possibility that there will be instance where it will be relevant, feasible and appropriate to increase the use of CVA in the response.

Possible scale-up & change in design of cash components

The main assumption here is that, pending a modality decision analysis case by case, in the short or medium term, we expect a shift of modalities from service & information provision towards resource transfer, as well as within options for resource transfer from in-kind towards cash where relevant, feasible and appropriate.

Overall, it is likely at least in short/medium term to see a rapid scale-up of the cash response by all agencies that are able to do so. Already a large part of the in-kind had shifted to cash pre-conflict. Humanitarian food assistance for example had become digitalised pre-conflict (mostly through the use of both e-vouchers and debit-like cards and banking agents visiting displacement camps).

<aside> 💡 Vouchers or cash? The difference between vouchers and cash in terms of CVA design was typically framed as restricted and unrestricted transfers. However, that denomination ended up creating a fundamental confusion that led to misuse of voucher as a design option. The ‘restriction’ of a voucher is not about what you can buy with it (in fact you can design a value voucher that allows you to buy any good or service available). The ‘restriction’ is in where you can spend your money! Cash is what you can spend everywhere while vouchers is money you can only spend with pre-selected vendors. Once that distinction is clarified, it then becomes clear that the reason for using vouchers lies in secondary objectives for leveraging the contractual relationship with vendors it implies. Having a contract with specific vendors can be helpful operationally because it creates a closed-loop where there is only a need to make payments to vendors: it sometimes simplifies the delivery mechanism. There are also ways to leverage the contract with vendors programmatically through market support or market change interventions (vendors themselves or broader value chains are affected, and the contract is a way to smooth the system). In short, vouchers are not meant to be used as a way to control what people buy with their money. It also simply doesn’t work (and typically poorly designed voucher programs simply end up with large reselling of items).

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NRC favors the distribution of cash rather than vouchers wherever possible. If vouchers are used, aid agencies should set as little restriction as possible + only to leverage relationship with vendors (supply side support, other forms of market support). There are other very specific cases in which vouchers can be more appropriate than cash, typically if quality is an important factor or if there is a high volatility in market prices for a commodity (e.g. fuel, water, etc.). In all other contexts, vouchers should generally be considered a second-best option. ****If vouchers are used, consider piloting small cash-outs distributed to beneficiaries directly by vendors.

NRC also favors the use of multipurpose cash over labelled designs wherever appropriate. If strong secondary programmatic objective, can use PDM to have info about it and Labelled designs through Information provision if need correction (bot not restriction in what can buy with vouchers), or simply adaptive programming and change programmatic assumptions about what people need most / prioritize. The programmatic use of labelling what can vouchers be used for is not meant to control what people do but rather to facilitate market flows - anticipate quantities needed by vendors so that they can plan their procurement.