Donations for Refugee Crisis: In-kind Versus Cash Assistance

Problem definition: More than 25 million refugees lived in camps in 2019 due to multiple armed conflicts worldwide. Humanitarian organizations (HOs) help refugees through in-kind (e.g. food) assistance traditionally and, just recently, through cash (monetary assistance) that refugees can spend at local retail stores. However, cash assistance can be exploited by retailers’ market power, which challenges the HOs’ mission of helping both refugees and host communities. Academic/Practical Relevance: Completely informed by field research in three refugee camps in north-western Greece, we analyze the trade-off between in-kind and cash assistance from the perspective of an HO that aims to maximize social welfare of refugees and their host communities — the local retailer and residents. We propose two price intervention policies, implementable by a partnership between the HO and the local government, to curb the retailer’s market power. 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: an HO, refugees, a monopolistic retailer, and local residents. Results: Our research demonstrates the effectiveness of price intervention policies that benefit refugees and residents while ensuring the retailer’s profitability. In particular, a price-dependent cash assistance policy aligns the incentives between the retailer and the HO. This new policy for cash assistance supports the refugees, incentivizes the retailer to set desirable prices, and benefits the host community. Managerial Implications: We provide prescriptions that can guide HOs to improve their budget allocation between in-kind and cash assistance for refugees living in areas where market power exists. Moreover, we clearly outline the roles of HOs and the local government in a partnership for cash assistance to refugees.