On a busy day in his barbershop, Isac Luís cuts as many as 20 people's hair. Customers choose from styles displayed on posters plastered on the wall of the cozy shop. A jukebox plays as he works. On those days, he can earn as much as $10.
That may not sound like much in the U.S., but it's nearly double the estimated living wage of about $6 a day for rural Mozambique, where Luís lives — and way more than he was earning just a year ago. He did odd jobs — working the land in other people's fields or baking bread to sell in the market — and says he struggled to make ends meet.
What changed? Last fall, Luís received $1,000 dollars in cash, no strings attached, from a program funded by USAID — the United States Agency for International Development.
Luís says he "didn't want to receive the money and just see it disappear from his hands," speaking in Emakhuwa, the local language in his village of Muvuruta in northeastern Mozambique. Thinking how he might invest the money, he realized his community didn't have a barbershop. He decided to open one.
And $1,000 goes a long way in his village. He used the cash, delivered via mobile phone by the non-profit GiveDirectly, to erect the small metal-roofed building and fill it with barbershop essentials, like mirrors, chairs and clippers — as well as that jukebox. Less than a year after first receiving the funds, his business is growing.
"If before the barber shop my life weighed one kilogram, now it will be two or three kilograms," he said, speaking through an interpreter. He used some of the funds to improve his house and send his kids to school. "I'm happy."
With funds primarily from USAID, GiveDirectly helped more than 10,000 people like Luís in Mozambique and had plans — and funds — to help more. But the Trump administration cut off funding for the program and others like it earlier this year.
"All of our pure cash USAID programs were ended," says Yolande Wright, vice president of partnerships at GiveDirectly, including $20 million that was to be delivered to the nonprofit from USAID this year. GiveDirectly gets funds from a variety of sources for its programs that give cash to people living in poverty like Luís and also to people at risk of joining violent extremist groups and to victims of natural disasters like earthquakes. "It's hard for anyone to step into the gap that the U.S. cuts have left," she says.
This major blow comes just as cash aid seemed poised to go mainstream. After years of skepticism toward cash, last fall USAID full-throatedly embraced the model, stating it should become "a core element of its development toolkit."
Now, the Trump administration has cast a pall of uncertainty around cash's future. In addition to withdrawing from foreign aid generally, State Department spokesperson Tammy Bruce signaled a shift away from cash in an April press conference, citing deep-rooted worries on the right about misuse and fraud.
Cash assistance advocates aren't going down without a fight. Some are trying to make the case to lawmakers as they hash out next year's budget that cash is a more effective, efficient and transparent way to deliver aid — one that doesn't require the bloated bureaucracy decried by the Trump administration.
"If budgets are shrinking, there's not very many things you can say, well, actually you genuinely can do more with less," says Wright. She says cash fits with conservative sensibilities, too.
"If you're someone who believes in giving people the right to work their way out of poverty, cash really does support that," she says. "And there's evidence to show it, like hundreds of studies."
From underdog to darling
A little over a decade ago, the idea of USAID, or any aid agency, simply giving someone like Luís $1,000 was largely unheard of, says Daniel Handel, policy director at Unlock Aid, a foreign aid think tank.
Instead, the USAID spent its multi-billion dollar budget on programs that provide necessities like food and shelter and on job training. Handel, who got his start in foreign assistance working for USAID in Nicaragua, started wondering if, at least sometimes, it might be better to simply give people cash.
In 2013, Handel led a push for the agency to answer that question by testing traditional programs against direct cash transfers.
"There was an amazing amount of handwringing about the idea," says Handel. Officials worried about people misspending the money, political backlash and even whether the law allowed it, he says. "We had to convince our general counsel that giving cash to individuals was legal."
Eventually, officials relented. By 2018, the agency had run several experiments finding cash worked better in some circumstances. But the agency kept quiet.
"USAID press office wouldn't talk about it," says Handel. "There was kind of a big kerfuffle [over the experiments]. I got forcibly reassigned because of it."
But by fall 2024, USAID was embracing the model, putting out strategy documents arguing cash should be a core element of its developmental toolkit. "It's an amazing story, if you like bureaucratic stories," says Handel. "A real sea change."
What sparked that new outlook?
The tides were pushed toward cash aid, in part, by research.
"There's now a substantial evidence base supporting the fact that unconditional cash transfer programs improve the well-being of the transfer recipients and their family," says Alison Fahey, director of partnerships and strategic initiatives at The Abdul Latif Jameel Poverty Action Lab at MIT. "Across an accumulation of studies, we see people increasing their spending, improved food security, higher income, higher savings, better mental wellbeing, their kids are more likely to be in school."
Those benefits, Fahey says, come because cash gives people power — they can buy the things they know they need or invest in things they'd previously only dreamed of.
"People are able to make good decisions for themselves, like we need to make improvements to our house or get the kids shoes," she says. "There's consistent evidence that people don't use cash transfers to buy things like alcohol or tobacco."
Cash transfers to individuals can benefit the broader community, too. One study in Kenya found that every dollar in cash aid boosted total economic activity in the area by $2.60, as recipients spent the money they received.
Still, cash aid has its critics.
"I think once you dig into the literature, you find that there are some gaping holes," says Heath Henderson, an economist at Drake University. The biggest, he says, is that it's unclear whether cash transfers have truly long-term effects. Not many studies look beyond the first several years. Those that do often find benefits wane over time (with some exceptions). He also says that cash can't necessarily address some of the structural problems that can perpetuate poverty, like poor schools and health care or sanitation infrastructure.
Those uncertainties and limitations haven't stopped a surge in cash aid, about half of which came from U.S. sources, including USAID.
From 2017 to 2022, cash aid's slice of total humanitarian assistance went from about 15% to about 24% — more than $10 billion — according to an analysis by the CALP Network, a group of over 90 organizations involved in cash assistance. That share has dipped slightly since then. Where it goes now depends largely on the Trump administration and Congress.
The future of cash
In this new foreign aid reality, much of the U.S. budget has disappeared with the gutting of USAID. Is there anything left for cash programs? The State Department, which took over the remains of USAID programs this summer, did not respond to a request from NPR for that information.
And the Trump administration has given conflicting signals. In the April press briefing, State Department spokesperson Tammy Bruce said that some cash aid programs were cancelled "because they provided cash-based assistance, which the administration is moving away from," citing concerns about misuse and fraud. The State Department reaffirmed this position in a statement to NPR in July.
Those misgivings likely come "out of Reagan-era, welfare queen ideas that are so deeply ingrained," says Fahey. But she says the data does not bear out long-standing worries of people misspending or not working because of aid. "Consistently and overwhelmingly, we find that cash transfers, as they're designed in low- and middle-income countries, don't discourage work."
Still, fraud can happen. In 2023, some GiveDirectly staff in the Democratic Republic of Congo stole over $1 million intended for families in extreme poverty, roughly 1% of the total cash dispensed by GiveDirectly that year. GiveDirectly says that's a lower fraud rate than traditional forms of aid.
Despite the State Department's anti-cash stance, advocates see some reason for hope. In May, Secretary of State Marco Rubio seemed to express some support for cash transfers over traditional USAID programs in a congressional hearing when discussing why some programs got cancelled.
"Some of these projects had a prime contractor who had a sub[-contractor], who had a sub, who had a sub, who had a local provider. That's crazy. That's lunacy," he said. "Why do I need six subs to pass one to the other to ultimately get down to the ground? … In some cases, [aid should go] directly to the person, the group on the ground."
Advocates see the cash transfer model, which doesn't require that money move through layers of bureaucracy, as one that could resonate with the administration. "Government bureaucrats aren't always the best at making decisions," says Handel, of Unlock Aid.
It's not yet clear how much traction these arguments are making with lawmakers and administration officials. Budget negotiations are ongoing, and the State Department's restructuring is far from over. "This is an amazingly in-flux moment for foreign assistance, so we'll see where cash lands," says Handel.
If the administration does move away from cash, "it'll be a blow," says Wright, of GiveDirectly, and the overall volume of cash transfers is likely to seriously contract. "But I don't feel it'll be the death of the cash movement. It wouldn't stop us from doing the work, because I think it is still really important."
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