Conditional money: Can conditional cash transfers reduce poverty?

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  Quantumrun Foresight
• November 10, 2022

Insight summary

Conditional money or conditional cash transfer (CCT) programs assist people in breaking the cycle of poverty. The government offers cash assistance to low-income individuals provided they fulfill specified requirements. Conditional money also generates flexible ways of controlling who has access to finances and how they are used.

Conditional money context

Governments primarily use conditional cash transfer (CCT) programs to help underprivileged populations. For instance, someone may obtain money only if they agree to keep their children enrolled in school. The CCT programs are designed to prevent intergenerational poverty through improving access to healthcare and education. These programs have been effective in several developing countries, especially in parts of Latin America. One of the main benefits of CCTs is that they help people use welfare payments to meet their specific needs. While other welfare programs provide aid, choices tend to be limited or inconvenient. 

Another advantage of CCTs is that giving money to individuals is less expensive than providing them with items. When the government pays for goods, it must also cover other associated costs, such as storage and delivery. However, while conditional money has been helpful, it does pose some limitations and challenges.

Many critics think that internal conflicts of interest between parents and children can still result in the mismanagement of funds. Others argue that conditional transfers tend to be paternalistic, promoting inequality between genders (e.g., males are often prioritized regarding education). Additionally, CCT programs have high operational costs because governments need to monitor millions of recipients.

Disruptive impact

Even with challenges, several countries have relatively successful CCT programs. One of the oldest CCT programs is Brazil’s Bolsa Familia, established in 2003. Bolsa distributes about USD $19 per month for each child (up to five children) in a family with a monthly income lower than USD $82.

Bolsa Família is the world’s largest CCT program, assisting 11.1 million families. According to the nonprofit Borgen Project, the initiative has helped decrease income disparity and poverty in the country. The Borgen Project estimates, the Bolsa program caused a 12 percent to 21 percent decrease in income inequality.

Similarly, in 2002, the CCT program, Jamaica’s Program of Advancement through Health and Education (PATH), was launched. The Jamaican government offers cash grants to impoverished families as long as their children attend school at least 85 percent of the time. An additional condition is that children younger than six are taken to a scheduled doctor appointment provided by the Ministry of Health.

Another CCT initiative is the Philippines’ Pantawid Pamilyang Pilipino Program. By 2019, the program benefited over 5 million households, increased the delivery of babies in certified health facilities by 20 percent, and raised elementary school enrollment by 5 percent. Meanwhile, Argentina’s Universal Child Allowance for Social Protection (AUH) has a slightly different methodology. The government provides 80 percent of the money to the household and places the remaining 20 percent into a savings account in exchange for regular school attendance and meeting health objectives.

Implications of conditional money

Wider implications of conditional money may include: 

• Conditional money services expanding to non-welfare use, such as parents establishing CCT accounts for their children’s school needs.


• Encouraging the development of more open banking apps that help governments digitize their CCT programs.


• Homeowner insurance providers issuing conditional claim payments to ensure that funds are effectively used to replace damaged or lost items, preventing fraud. 


• Increased investments in digital tools, payment gateways, and digital wallets that create flexible CCT benefits for corporations.


• More governments implementing their own CCT programs as decentralized finance and blockchain platforms make financial transactions more accessible and traceable.


• Conditional money systems leading to stricter consumer spending habits, as transactions are closely monitored and regulated.


• Businesses adopting CCT-inspired models, offering rewards or discounts for specific customer behaviors, influencing purchasing decisions.


• Educational institutions leveraging CCT mechanisms to distribute scholarships or grants, ensuring funds are used for intended educational purposes.

Questions to consider

• How else can conditional money affect shopping habits?


• How might people argue that CCTs are used to implement political agendas (e.g., a person receives CCT if their student receives regular vaccines)?