Question

TUILULICO 1. Discuss the advantages and disadvantages of using In-kind Aid rather than cash assistance.

Answer 1

A debate rages over whether cash or in-kind benefits are best when it comes to helping those in need. It's exactly what cash transfers sound like. The beneficiaries get money or a pre-loaded credit card they can use to buy the goods and services they need. In-kind benefits work differently in that individuals receive a particular good or service, such as food or health care. In this case, the provider determines the benefit instead of the recipient

There is also an increased risk of fraud of cash transfers. Instead of giving it to intended beneficiaries, corrupt governments and volunteers may take some of the money. There is also a convenience issue with cash transfers. In some situations, to get their money, cash receivers may not have access to a bank or other safe depot. It is possible to bring the cash to those who need it, but it is risky to transport money.

In-kind benefits allow governments and donors much more control over what types of benefits they give. An individual or organization may choose to provide food, shelter, medical assistance, tax preparation aid or any number of services and can do so knowing that recipients got exactly the type of support the donor meant to give. In-kind services are also adept at meeting a need or demand by increasing the supply without causing price increases. In fact, a 2017 in-kind transfer study found that prices in a given community were decreasing by 4 percent.

Logistical problems produce one of the biggest in-kind benefits negatives. Delivery of tangible goods requires payment for the goods themselves (except for donations) and then payment for transportation. Goods also require storage while waiting for distribution and may spoil or expire before distribution in some cases, such as food or medicine.

In-kind incentives also set recipients limitations. While providers of assistance see benefit control as positive, recipients often disagree. For example, a needy family may choose to forget to buy food and instead choose to buy a sick child's medication. For these types of decisions, cash transfers allow, but in-kind benefits do not.