In-kind donations: who benefits?

When a disaster strikes and images of hungry and destitute women and children appear in the news, many feel compelled to help. Some of this help is in the form of cash, while others opt for in-kind donations of goods and services. In-kind donations can be valuable resources, filling a gap at a crucial time. However, inappropriate, untimely and inefficiently managed donations can hamper relief efforts by impeding the distribution of priority items. While most people have good intentions, some view disasters as opportunities to dump leftover or unwanted items regardless of whether affected populations need them.

This article explores the impact of in-kind donations on both givers and recipients, and suggests some guidelines for individuals and aid agencies when considering whether to give in kind.

Customs and culture

The commodities donated by individuals, companies, governments and organisations and sent to areas affected by disasters or other humanitarian crises are not necessarily compatible with local cultures, customs and preferences. For example, there have been situations where donors have sent jeans to Darfur, where people do not wear trousers, and French soft cheese to Indonesia. In some cases, the sending of such items can cause additional health risks (as with the French cheese, a perishable item usually made with raw milk). Recipients may even see some items – such as bacon sent to Lebanon – as insulting.

In-kind donations which are alien to prevailing customs and cultures may result in changes to the diet and behaviour of the local population, and a corresponding reduction in demand for traditional crops or commodities. One example might be bringing disposable nappies and sanitary towels into communities where women normally use cloth nappies and towels.

Irrelevant aid

Even if an item is really needed, like clothing, it should still be appropriate. For example, during the 2001 flood disaster in China, size 12 sports shoes (far too large for Chinese feet), with a market value of $120 each, were reshipped from the US to China, where they had originally been manufactured. Food and medicines past their expiry dates are routinely sent to disaster zones, and I have seen numerous cases of outdated or discontinued medical equipment such as X-ray machines being sent without spare parts or operating manuals.[1] Once received, these items are often stored unused for months, at considerable cost. In most cases they end up being scrapped, but only after the donor receives a certificate of thanks and in some cases a tax exemption as well.

Costs

One of the main reasons for discouraging in-kind donations relates to the costs associated with collecting, sorting, packing and transporting the items. These costs often outweigh any benefits. A report from the Organisation for Economic Cooperation and Development (OECD) notes that major food aid donors such as the United States still send food from their own surpluses. This is despite the fact that sourcing such food in the affected country can cut costs by half. Even when that is not possible, it is still a third cheaper to buy it from a neighbouring country in the region.[2] Even so, I have seen rice – the country’s major agricultural product – being sent to Indonesia. Free aid, especially food, is also likely to have an adverse impact on local markets, forcing down the price of locally produced items. “Dumping” free food and other relief items which can be produced locally may damage domestic production.

Time

Collecting in-kind items is not only expensive, but also labour-intensive and time-consuming. Large numbers of personnel are needed to sort, clean, pack, send and distribute these items. In many cases, in-kind commodities take many weeks to reach the disaster-affected area, by which time it is too late to meet immediate needs. It is usually much quicker and cheaper to buy food and other relief items in the affected country or in neighbouring countries. This also helps to support local markets.

Logistics

Unwanted goods may clog up air- and seaports and prevent essential supplies from getting through. The American Red Cross [3] reports that transporting donated goods is costly and difficult in the aftermath of a disaster, as roads are often damaged or impassable and easily clogged with shipments of non-priority items. In addition, ill-thought-through donations may need special clearance or do not meet the recipient country’s customs and legal criteria (for instance India [4] and Indonesia do not allow the import of second-hand clothes, to protect their national manufacturers). As a result, goods remain in customs for months, accruing additional costs and paperwork.

Cash – often the better alternative

There is a growing body of evidence and increasing consensus amongst humanitarian actors that cash transfers are more effective and efficient than in-kind donations. The Department for International Development (DFID) and the Disasters Emergency Committee (DEC)[5] have argued that, unless aid agencies specifically request them, donations of food and clothing are less helpful than cash. Oxfam has played a lead role in lobbying against in-kind donations of drugs and other goods and services to the Global Fund to fight AIDS, TB and malaria.[6] The OECD also believes that cash would be a better form of aid in most cases by enabling people to exercise choice, increasing local demand and reducing disruption to local markets.[7]

The main reason why cash is often preferred is because it does not have the disadvantages of in-kind relief: it gives aid agencies greater choice from the beginning to direct resources (and if necessary redirect them at the last moment) in order to meet the most immediate needs of affected people; it is more cost-effective as it is much easier and faster to mobilise and can enable people to purchase goods and services appropriate to their needs. Most importantly, pumping cash into a local market helps economic recovery.

The way forward

As stated above, cash is often a better alternative than in-kind aid. However, if aid agencies are considering in-kind donations, they should ask themselves:

• Why does the donor want to donate these materials?
• What does the donor require in return?
• Do the affected people really need these goods or services?
• Have they clearly requested them?
• Are the items culturally acceptable?
• How long will it take for the goods to reach their destination? Will they arrive too late to do any good?
• Has a proper cost-benefit analysis been done, and have all costs been taken into account, including “hidden” costs such as staff time?
• Who will bear the costs?
• If the donation involves machines or equipment, are they in working order, are spare parts available and does the recipient country have the expertise to operate and maintain them?
• What will be the likely effects on the markets in the recipient country?
  • Is local procurement a better option?
• Do the goods comply with the recipient country’s legal requirements?
• Do regulations in the recipient country allow for the import of the goods?

Moustafa Osman is Visiting Lecturer of Disaster Management at Birmingham University in the UK. He writes here in an independent capacity.

[1] See Nicole Johnson, ‘What a Waste’, Al-Jazeera, 7 August 2010, http://blogs.aljazeera.net/middle-east/2010/08/07/what-waste. According to Johnson, the Ministry of Health in Gaza reports finding 70% of medicines unusable and receiving ten-year-old equipment.

[2] Joint Evaluation of Effectiveness and Impact of the Enabling Development Policy of the World Food Programme (WFP), February 2005, http://www.oecd.org/dataoecd/62/14/37336432.pdf.

[3] See http://www.redcross.org/article/0,1072,0_332_4498,00.html.

[4] Karen Tranberg Hansen, ‘Helping or Hindering? Controversies Around the International Second-hand Clothing Trade’, Anthropology Today, vol. 20, no. 4, August 2004, http://www3.interscience.wiley.com.

[5] See http://www.dfid.gov.uk/emergencies/dec.pdf.

[6] See http://www.oxfam.org.uk/what_we_do/issues/health/pir2005_globalfund.htm.

[7] John Farrington, Paul Harvey and Rachel Slater, Cash Transfers in the Context of Pro-poor Growth, Hot Topic paper for OECD/DAC Povnet Risk and Vulnerability Task Group, ODI, July 2005, http://www.oecd.org/dataoecd/33/58/36570713.pdf.