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Multipurpose cash assistance

What is multipurpose cash assistance? We explore what this term means in the context of humanitarian cash and voucher assistance.

21 February 2024

Two hands exchange money against a blue background. On the left, a person holds out yellow banknotes; on the right, another hand reaches out to receive blue banknotes with dollar signs. Above this exchange are colorful icons representing goods and services: a red football, a grey star, a green leaf, a green apple, a blue notification bell, a light blue profile of a person’s head, and a dark blue house.

What is multipurpose cash?

Multipurpose Cash Assistance (MPC or MPCA) is the name given to humanitarian cash transfers which have been designed to address multiple needs, with the transfer value calculated accordingly. MPC might be designed as multiple transfers provided periodically, or as a one-off payment.

MPC is usually intended to address, fully or partially, a household’s basic and/or recovery needs – or at least those needs that can be addressed through purchasing relevant items or services. All MPC transfers are unrestricted – which means people have the flexibility to spend the money as they choose, based on their needs and priorities. It’s good to note that a “multipurpose voucher” is not possible given the inherent restrictions in all vouchers.

Infographic depicting a dialogue between two women discussing what multi-purpose cash is.

 

How does multipurpose cash work?

Multipurpose cash works by providing individuals or households with financial assistance in the form of cash. It is designed to empower individuals and households by giving them the flexibility to make decisions about how to meet their basic needs and improve their well-being.

The extent to which a cash transfer meets basic needs depends on the sufficiency of the transfer value. MPC transfer values are often indexed to expenditure gaps based on a Minimum Expenditure Basket (MEB), or another monetised calculation of the amount required to cover basic needs. Within humanitarian responses, MPC may either be provided as a standalone activity, or in combination with other complementary support, which could potentially incorporate in-kind assistance, access to services, training, or other forms of CVA, for example to address specific sectoral needs.

MPC has been used across a broad range of humanitarian responses in different contexts. Interventions have ranged from small-scale responses targeting a few hundred households, through to large scale programmes reaching tens or even hundreds of thousands of people. While the term ‘multipurpose cash assistance’ is used primarily within the humanitarian sector, functionally it is similar to the types of cash transfers used in social safety net and other poverty alleviation initiatives. In this respect, MPC is the form of humanitarian CVA that is most often used in interventions linking to social protection systems and programmes.

What are some of the pros and cons of multipurpose cash?

Multipurpose cash has distinct advantages and disadvantages.
On the positive side MPC:

  • Offers people flexibility, empowering them to address a range of needs. This approach is particularly valuable in addressing the diverse and evolving needs of recipients.
  • Is an efficient and cost-effective means of assisting people in crisis.
  • Can boost local economies as people spend cash in their communities.
  • Lends itself to a range of payment mechanisms, including physical cash, bank accounts, mobile money, and other digital payment platforms.
  • Depending on programme design (e.g. the duration and value of the assistance, and the payment mechanisms used), MPC can also help support pathways to financial inclusion.

However, there are potential challenges that should be considered during response analysis and programme design:

  • The flexibility and choice that are key benefits of MPC also mean that it is challenging to track how it is used, or to ensure that specific programme objectives defined by the implementing organization are achieved, for example relating to certain sectoral objectives .
  • As with any type of assistance , there is always some risk of theft or loss during the process, but steps can be taken to help mitigate this.
  • In situations of economic volatility, the value of cash can be affected, though this can be managed with careful planning.
  • Provision of MPC, as with all other forms of CVA assistance, requires that safe and accessible payment mechanisms are available to the target population.

Careful consideration of the context, needs, and preferences of recipients is essential in determining the appropriateness of multipurpose cash assistance.

What’s the difference between multipurpose cash and unconditional cash?

“Unconditional cash” refers to cash transfers that are provided without any qualifying conditions, such as undertaking specified tasks or attending a training, needing to be met by recipients.

Most “multipurpose cash” interventions are provided to recipients without conditions, so a given cash transfer can be both multipurpose and unconditional. In principle MPC transfers can be conditional – with conditions attached that need to be fulfilled in advance of receiving a transfer/s. But, in practice, conditional MPC is not common in humanitarian response.

Conditional cash transfers that are fully flexible in terms of use by recipients and designed to support a range of needs (hence sharing many functional similarities with MPC) are more common in social protection programmes.

Sector-specific humanitarian cash transfers (i.e., designed to address particular needs relating to given sectoral outcomes) can be conditional or unconditional.

What are some examples of multipurpose cash in action?

Ukraine

Multipurpose cash assistance (MPC) has been used extensively to support conflict-affected households in Ukraine, particularly since the major escalation in 2022. US$1.18 billion of MPC was disbursed to millions of crisis-affected people in Ukraine in 2022, making it the largest use of MPC in a response globally (at least within a single year). The scale of MPC was driven both by its suitability to the context, and the Humanitarian Country Team’s decision to recommend MPC as the preferred humanitarian response option. Targeting approaches gradually evolved over time from “blanket” and status-based (internally displaced persons (IDPs)/ non-IDPs) towards targeting the most vulnerable people based on needs.

More information is available about the use of MPC in Ukraine.

Lebanon

In Lebanon, which has faced a prolonged refugee crisis due to the influx of Syrian refugees, multipurpose cash assistance (MPC) programs have been used over the past decade to aid vulnerable refugee households. For example, aid organisations and the Lebanese government identify these households based on criteria like family size, income, and housing conditions. Cash is then directly provided to these families, with no restrictions on how it should be spent, allowing them to address their most pressing needs, such as rent, food, and education. Lebanon is often cited as an example of both large-scale and long-term use of MPC.

The impact of MPC on vulnerable refugee households has been positive, leading to improved living conditions, increased resilience in the face of challenges, stimulation of local economies, enhanced social inclusion through better access to education, and a reduction in negative coping mechanisms.

The effectiveness of such programs depends on factors like targeting, transfer values, accountability mechanisms, and coordination among aid organisations and government agencies, and it can vary based on specific circumstances. Detailed case studies offer deeper insights into MPC’s outcomes and challenges.

Studies have been published on this topic by Camealeon – an NGO-led network of partners conducting independent research and analysis in support of WFP’s MPC programming in Lebanon.

Multipurpose cash and the Grand Bargain

The “Grand Bargain” emerged from the 2016 World Humanitarian Summit, comprising a range of commitments made by humanitarian organisations, donors, and aid agencies. Its primary aim is to enhance the effectiveness and efficiency of humanitarian aid during crises. Within the Grand Bargain, there’s a significant focus on cash-based assistance, including multipurpose cash. It recognises the advantages of cash aid, such as flexibility and local market stimulation, and encourages its use in humanitarian responses. Multipurpose cash is highlighted as a tool that offers crisis-affected people more control over meeting their immediate needs. It promotes cost-effectiveness, transparency, and accountability in aid distribution. The Grand Bargain commitments have been reviewed, revised and renewed since the original commitment period came to an end in 2021.

You can learn more about the Grand Bargain on the Cash 101.