Directorate-General for
European Civil Protection and
Humanitarian Aid Operations
March 2022<\/p>\n\n\n\n
Introduction<\/strong>
Thematic policy document on cash transfers
5
Developments in cash transfers and
synergies with broader humanitarian reform
Since the publication of DG ECHO\u2019s previous
thematic policy document on cash transfers in
2013, there have been significant global developments at a policy and technical level, alongside a significant increase in the volume of cash
transferred. The use of cash transfers is now
widely recognised as the most efficient and
effective way of getting humanitarian assistance to people affected by conflicts or disasters, whenever possible and appropriate. Above
all, it has proven to be transformative by conferring choice and a sense of dignity and by
empowering people to tailor the assistance to
meet their own priorities through transfers designed to meet multiple needs. Cash is a compelling tool that can make limited resources
go further and have a multiplier effect on local
economies, while making DG ECHO more accountable to affected populations and taxpayers. For these reasons, DG ECHO\u2019s policy
states a preference for cash over vouchers.
Another major shift since 2013 is the role that
cash has played as a catalyst for innovation,
driving market-based approaches, the increased
digitalisation of humanitarian assistance and
linkages with social protection systems. Cash
is strongly associated with other reforms in humanitarian assistance, such as ensuring a people-centred approach, accountability to affected
populations (AAP) and the drive for localisation.
Meanwhile, the evidence base on cash assistance \u2013 in terms of its effectiveness, efficiency
and accountability \u2013 is continuously becoming
stronger within the humanitarian sector.
DG ECHO\u2019s use of cash transfers in
humanitarian action
In line with humanitarian principles and the European Consensus on Humanitarian Aid (2007),
DG ECHO is committed to providing a needsbased emergency response aimed at preserving life, preventing and alleviating human
3 – Basic needs are the essential goods, utilities, services or resources required on a regular or seasonal basis by households to ensure long-term survival and
minimum living standards, without resorting to negative coping mechanisms or compromising people\u2019s health, dignity and essential livelihood assets.
suffering and maintaining human dignity. This
thematic policy document clarifies DG ECHO\u2019s
cash policy as part of a basic needs3
approach,
which seeks to address people\u2019s needs in a coordinated and demand-driven way by putting them
at the centre of interventions. DG ECHO systematically considers the use of multi-purpose
cash (MPC) as a basis for meeting a range
of basic needs, according to the risk analysis
and context specificities, complemented by other
modalities where relevant to meet specific sectoral outcomes. This policy therefore clarifies DG
ECHO\u2019s expectations in terms of (1) the design
and monitoring of MPC and (2) cash transfers designed to meet specific sectoral outcomes (see topic 3.1). More detail on DG ECHO\u2019s
position regarding the use of cash (as well as
vouchers) in each sector can be found in Annex 3,
including in situations in which DG ECHO will support conditionality.
For DG ECHO, cash is primarily a tool to respond to a range of humanitarian needs. Cash
can also play a central role in a variety of response mechanisms supported by DG ECHO,
which can be used individually, in combination or
in sequence. In line with its DG ECHO Guidance
Note \u2013 Disaster preparedness (2021), DG ECHO
actively encourages the use of cash within anticipatory action, based on robust risk assessment, and supports the necessary investments in
forecast-based financing and cash preparedness
to enable this to happen. In response to sudden
onset shocks, DG ECHO supports the use of cash
within rapid response mechanisms, whether
standalone as MPC, or embedded in existing sectoral programmes or crisis modifiers to rapidly respond to short-term crises (see topic 3.3).
Where appropriate, DG ECHO encourages linkages between humanitarian cash and long-term
solutions and linkages between humanitarian
cash and social protection systems. This includes
supporting the shock responsiveness of systems (see topic 1.2), which in turn may facilitate
anticipatory or early action.
6
Thematic policy document on cash transfers
Overview of the document
The guidance within this policy document is structured according to the desired outcomes of humanitarian assistance rather than the project
cycle, to reinforce DG ECHO\u2019s policy commitments
and better reflect cross-cutting issues. Operationalising the humanitarian\u2013peace\u2013development
nexus is the first outcome, to underline the EU\u2019s
commitment to the nexus and to encourage users
of the policy to consider these opportunities upfront, where possible, and in line with humanitarian principles.
The following statements summarise DG ECHO\u2019s
policy position in relation to each outcome:
Overall statement for each outcome<\/p>\n\n\n\n\n
development nexus. As far as the context
allows, DG ECHO-funded humanitarian cash
should link, preferably at the outset, to
a systems approach that strengthens
local capacity and links to durable
solutions. Such linkages can be part of
longer-term strategies to provide better
services to vulnerable people in crisis contexts and initiatives that foster their self-reliance. This may involve linking with social
protection systems, and\/or contributing to
improving the preparedness and shock
responsiveness of systems, to reduce
the need for humanitarian aid.<\/li>\n\n\n\n
of the humanitarian principle of impartiality,
DG ECHO supports cash assistance that targets the most vulnerable people based
on needs alone, making no distinctions on
the basis of nationality, race, gender, religious belief, class or political opinions. All humanitarian programmes are based on an
assessment and understanding of the
risks (contextual, programmatic and organisational) and are implemented to respond
to and possibly reduce these risks, including
those related to protection. Targeting criteria for cash assistance funded by DG
ECHO should include socioeconomic
vulnerability and the protection concerns of individuals and groups.<\/li>\n\n\n\n
a way that does not increase risks and that
upholds the safety of, participation of
and accountability to affected communities and individuals. It should be sufficient to cover or contribute to recurrent
basic needs or other sector-specific
needs that are not recurrent basic needs,
and it should be complemented by other
relevant sectoral interventions. Transfers
should seek to be timely and anticipatory where possible in order to meet needs
with optimal efficiency and effectiveness.<\/li>\n\n\n\n
that cash assistance can substantially
contribute to increasing the efficiency,
effectiveness and strategic impact of
its humanitarian funding. Better harmonisation of tools and approaches for cash
assistance can drive efficiency and effectiveness gains while upholding data
protection principles. DG ECHO promotes a
common programming approach to reduce fragmentation, with streamlined systems created to avoid duplication and parallel ways of working.<\/li>\n\n\n\n
and that seek, share and act upon their
feedback. Accountability, transparency, independence and governance need to be of
the highest standards, in line with the UN
Inter-Agency Standing Committee commitments on AAP and protection from sexual
exploitation and abuse. DG ECHO\u2019s cash
programmes should also minimise financial risk while safeguarding beneficiary
data.<\/li>\n\n\n\n
should be monitored against internationally
accepted norms in a consistent way that allows comparisons over time and space. Systematic monitoring of outputs, through participatory process monitoring, should allow
Thematic policy document on cash transfers
7
for timely adaptation of programmes,
including responding to changes in inflation
and the depreciation of currencies and to potential risks that might arise. In line with the
principle of segregation of functions DG
ECHO encourages third-party arrangements.
Each outcome is broken down into topics, as presented in Figure 1. Each topic is structured as
follows:
DG ECHO expectations: a policy statement of what DG ECHO expects from
partners.
What does this mean? Unpacking the expectations in practice, based on technical
best practice and the evidence base.
Key considerations for partners: a set
of questions to help DG ECHO staff and
partners to meet the expectations. This
does not identify mandatory considerations, but the checklist does.
How does this relate to other related
topics\/expectations? Cross-referencing
to other relevant areas of the policy.
Each outcome also has a \u2018What resources
are available?\u2019 section containing a
non-exhaustive selection of hyperlinked resources, focusing particularly on the Cash
Learning Partnership (CaLP) Programme quality
toolbox, which is a continuously updated repository of resources.
The following cross-cutting issues are mainstreamed in, or integrated with, the narratives for
each topic:
\u2022 the centrality of protection and age mainstreaming, disability inclusion and risk-informed approaches and the importance
of participation and decision-making (see
topics 2.1, 2.3 and 5.1 in particular), in line with
DG ECHO\u2019s protection policy (2016), gender
policy (2013) and operational guidance on the
inclusion of people with disabilities (2019),
4 – The term \u2018social protection\u2019 refers to a system of contributory and non-contributory components that aim to tackle poverty and vulnerability over the life cycle
and strengthen pro-poor and inclusive economic growth and social development (see glossary (Annex 2)). It is referred to here in the narrow sense of non-contributory social assistance and specifically social transfers.
\u2022 disaster preparedness and considerations for linking cash and social protection,
4
which are presented as text boxes
throughout the policy,
\u2022 greening humanitarian assistance, aspiring to make full use of the low environmental impact of cash and the benefits of
supporting local production, but also including ways to address any unintended environmental impacts of cash transfers, and
further developing DG ECHO\u2019s overall guidance on greening,
\u2022 opportunities for cash assistance to
strengthen localisation, which will be complemented by guidance from DG ECHO on
promoting equal partnerships with local
responders.
The policy also encourages innovation through
digitalisation and interoperability, different operational models and initiatives that encourage
self-reliance (e.g. group cash transfers, links with
financial inclusion). The document is intentionally exhaustive so that all the guidance is in one
place, while recognising that much of the policy
content can apply to a range of modalities.
The checklist (Section 7) summarises key considerations for partners according to a programme cycle structure, mirroring DG ECHO\u2019s
single form. It is intended to be a practical tool,
distinguishing mandatory elements and recommendations. The annexes provide more detail on
specific topics, and will evolve over time.<\/li>\n<\/ol>\n\n\n\n