Donations for Refugee Crises: In-kind vs. Cash Assistance

Abstract

Problem definition: Six million refugees have been living in camps in 2021 due to multiple armed conflicts worldwide. Regulations often impede refugees’ integration into host countries; thus, refugees have to seek help from humanitarian organizations (HOs). HOs traditionally provide in-kind (e.g., food) assistance and now offer cash (monetary assistance) that refugees can spend at local retail stores. However, cash assistance can be exploited by local retailers’ market power, which challenges HOs’ mission of helping refugees while doing no harm to host communities. Practical relevance: Completely informed by field research in three refugee camps in northwestern Greece, we analyze the trade-off between in-kind and cash assistance from the perspective of an HO. We propose two cash assistance policies, implementable by a partnership between the HO and the local government, to curb the retailer’s market power and ensure that the refugees, the local residents, and the retailer are better off than if only in-kind assistance is provided. Methodology: We use field research to define our research setting and support our main modeling assumptions and parameters. Then, we use a game-theoretical model to analyze the interactions among multiple stakeholders in an ecosystem consisting of an HO, refugees, a monopolistic retailer, local residents, and a local government. Results: We demonstrate the effectiveness of our proposed cash assistance policies that benefit refugees and local residents while ensuring the retailer’s profitability. In particular, a price-dependent cash assistance (PDCA) policy aligns the incentives between the retailer and the HO-government partnership. This new policy for cash assistance acts as a lever for the retailer to voluntarily set desirable prices, which benefit both refugees and their host community. Managerial implications: We provide tools and implementable policies that guide HOs to improve their budget allocation between in-kind and cash assistance for refugees living in areas where local market power exists. Moreover, we clearly outline the roles of HOs and the local government in a partnership for cash assistance to refugees.