In-Kind Transfers

Published Jan 1, 2023

Definition of In-Kind Transfers

In-kind transfers are a type of government assistance program in which the government provides goods or services directly to individuals or households in need. That means instead of providing cash, the government provides the needy with goods or services that they need.

Example

To illustrate this, let’s look at the Supplemental Nutrition Assistance Program (SNAP) in the United States. This program, run by the U. S. Department of Agriculture, provides low-income households with food stamps that can be used to purchase fresh and healthy food at participating stores in an attempt to support the families on their way to self-sufficiency. The SNAP food stamps can only be used to get certain types of food, such as fresh vegetables or fruits, but not for things like alcohol or tobacco. Thus, the SNAP stamps are an example of an in-kind transfer because they provide the needy with food directly instead of providing them with cash.

Why In-Kind Transfers Matter

In-kind transfers are an important tool for governments to help those in need. They provide the needy with goods or services that they need without having to worry about how to use the money. This is especially important for those who are not familiar with the financial system or do not have access to banking services. In addition, in-kind transfers are often more efficient than cash transfers because they reduce the risk of fraud and abuse. Finally, in-kind transfers can also help to stimulate the economy because they increase the demand for goods and services.