Stipends in Youth Development Programs: Incentivising Progress or Fuelling Dependency?

A Deep Dive into Validity, Viability, and Alternatives

In South Africa, various initiatives provide stipends to young people to support their participation in work experience and youth development programs. These programs are often connected to corporate social investment initiatives that target unemployed youth and aim to address both skills shortages and high unemployment rates. 

Stipends are designed to make participation in training and work experience programs more accessible for young people, particularly those from disadvantaged backgrounds. Stipends are typically paid for a fixed period, often aligning with the duration of the training program or work experience opportunity. 

During the launch of the 2025 Research Report on the social, solidarity and impact economies over the last few weeks, the issue of paying stipends to program participants have surfaced repeatedly. The discussions focused on three aspects mainly:

1. The fact that it has now become standard and expected as part of program delivery – and the cost this adds to programs.
2. The fact that very few organisations track and measure the impact of stipends which means we don’t know how valuable or impactful these financial contributions are.
3. Due to low absorption capacity in the economy, meaning even if we skill, train and prepare young people for the world of work, many don’t succeed. As a result, young people go from one program intervention to the next and the cost escalates over time.

The enclosed article interrogates the use of stipends through a comprehensive analysis of their validity, viability, and feasibility. Drawing on real-world case studies and practical experience, it also explores the unintended negative consequences of stipends. Ultimately, the article asks a more controversial, but increasingly relevant question: Should youth development programs charge participants instead of paying them? Could this be the key to building genuine commitment, avoiding dependency, and ensuring long-term transformation?

Introduction: Rethinking Stipends in Development Programming

Across Africa and in South Africa in particular, stipends have become a widely used feature in development programming. They are used as a tool to reduce barriers to participation, incentivise engagement, and promote social inclusion. From public works programs and youth skills initiatives to digital upskilling and green economy projects, stipends are often presented as both necessary and just. But are they truly the most ethical, effective, and sustainable way to support those we seek to uplift?

This article interrogates the use of stipends through a comprehensive analysis of their validity, viability, and feasibility. Drawing on real-world case studies and practical experience, it also explores the unintended negative consequences of stipends. Ultimately, the article asks a more controversial, but increasingly relevant question: Should youth development programs charge participants instead of paying them? Could this be the key to building genuine commitment, avoiding dependency, and ensuring long-term transformation?

Why Are Stipends So Widely Used in Development Programs?

The rationale behind stipends is compelling. They help address structural barriers – like transport costs, lack of internet access, or childcare responsibilities – that would otherwise prevent participation in training or work opportunities. Stipends can also serve as compensation for time spent in unpaid learning environments, recognising the value of the participant’s commitment. In contexts of high unemployment, they provide temporary income relief and help include groups often excluded from economic participation, such as youth, women, and those in rural areas.

For example, South Africa’s Expanded Public Works Programme (EPWP) is designed around the use of stipends. It offers short-term employment in sectors such as infrastructure, environmental care, and community services. While this program does indeed support millions with temporary income and work experience, questions persist about whether it leads to meaningful long-term empowerment.

Validity: Are Stipends Aligned With Development Goals?

Stipends are valid and effective in certain conditions. When used to remove barriers to participation in early childhood development, healthcare access, or basic education, they can be transformative. However, in many development contexts, stipends are misaligned with the intended outcomes.

A key concern is that stipends often incentivise attendance rather than engagement. When people show up primarily for the payout, the deeper goals of learning, transformation, or behaviour change are undermined. 

For example, in Kenya’s Youth Employment Opportunities Project (KYEOP), the provision of stipends helped boost enrolment rates in the short term. But when stipends ended, many participants disengaged, revealing that intrinsic motivation and long-term commitment had not been built.

Furthermore, participants sometimes treat youth development programs as short-term income opportunities rather than stepping stones to economic independence. This not only distorts the purpose of the intervention but also compromises the credibility and impact of development efforts.

Viability: Can Stipends Be Sustained and Scaled?

Even when stipends are well-intentioned and successful in driving participation, they often create financial pressures that limit a program’s viability. Stipends consume a large portion of budgets, reducing the number of participants who can be supported. In many cases, program designers are forced to make trade-offs between scale and depth.

For example, the Youth Environmental Services Programme in South Africa. This initiative attracted large numbers of youth with stipends linked to environmental work. However, once funding ran dry and stipends were suspended, participation fell sharply. The program struggled to retain youth engagement without direct financial incentives, exposing its reliance on external funding and the fragility of its design.

The issue is not only financial but also systemic. Programs built around stipends risk becoming short-term interventions rather than sustainable pathways to empowerment. When stipends end, and nothing substantial remains, no enterprise support, no job placement, no mentorship, then the program ultimately fails its participants.

Feasibility: Practical, Logistical, and Ethical Dimensions

Implementing stipends also involves complex logistics and ethical trade-offs. From monitoring attendance and preventing fraud to navigating payment systems and disbursement delays, administering stipends demands significant resources.

Equity concerns also surface. Who qualifies for a stipend? On what basis? What about volunteers or participants in non-stipended streams? 

There is also a risk that stipends create a perception of handouts, inadvertently reinforcing a narrative of charity rather than empowerment. 

For example, in India’s Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), the use of stipends has achieved some success in poverty alleviation. However, the program is riddled with implementation challenges, including corruption, ghost beneficiaries, and delayed payments.

The Dark Side of Stipends: Unintended Consequences

One of the most concerning issues is the rise of a “stipend culture” among program participants. Instead of seeing participation as a growth opportunity, some individuals now see stipended programs as a form of income – jumping from one program to another purely for the financial benefit. Some even compare stipend values across programs and plan their participation based on which offers the highest amount.

For example, in one Cape Town-based program, facilitators reported that youth openly strategise which programs to attend based on stipend size. Attendance dropped by 70% when a stipend was temporarily delayed, revealing a consumer mindset rather than a developmental one. This behaviour undermines the integrity of efforts and creates a parallel, informal labour market based on program stipends.

Moreover, the high cost of stipends often means fewer people are served, and less funding is available for meaningful interventions such as job placements, enterprise development, or mentorship support. 

Then there is also the issue of market distortion. Some youth development programs provide such a high stipend, it distorts and competes with or undermines entry-level wages in local labour markets as well as real-world entrepreneurship experiences.

This raises a difficult but necessary question: Are we rewarding attendance instead of enabling transformation?

A Radical Proposition: Should We Charge Program Participants?

This may seem controversial – if not outright unethical at first glance – but there is growing interest in exploring whether participants should, in some way, pay to access development programs. Even symbolic or subsidised payments could build commitment, reinforce the value of the program, and prevent opportunistic participation.

Supporters of this approach argue that financial contribution creates ownership. When people pay, even a small amount, they are more likely to engage fully, take the opportunity seriously, and pursue tangible outcomes. This approach has been tested in various contexts. 

For example, the Akilah Institute in Rwanda charges low-income young women subsidised tuition fees. As a result, it boasts high retention, completion, and post-graduation employment rates.

Another model is Generation Kenya, which requires a refundable deposit from participants. The fee is returned upon program completion, providing both a commitment mechanism and a reward for persistence.

Critics of this model rightly point out that charging for participation could exclude the most vulnerable. It risks shifting the burden of upliftment onto those who can least afford it. In many contexts, even a modest fee could be a real barrier. However, hybrid approaches – such as sliding scale fees, pay-it-forward models, or outcome-based payments – can offer a balanced path forward.

Exploring Viable Alternatives to Stipends

Instead of paying stipends, youth development programs can remove barriers and encourage participation through alternative, often more sustainable, mechanisms. In-kind support such as daily meals, transport vouchers, or data access can ensure participation without turning programs into income streams. Performance-based incentives, such as rewards for completing modules or achieving placement milestones, can motivate progress.

For example, the Harambee Youth Employment Accelerator in South Africa. While not offering direct stipends, Harambee partners with employers to offer transport or food subsidies and work-readiness stipends linked to job outcomes. This incentivizes both completion and transition to employment.

Seed funding, starter kits, and tool provision are more aligned with long-term outcomes, especially in entrepreneurship and vocational training contexts. Matched savings programs can also instil financial discipline and help participants build assets.

For example, the Aflatoun Financial Education Programs (Africa-wide) purposefully support youth to open savings accounts and they receive matching funds for specific economic or educational purposes. Their research indicates that when people invest financially, even a little, they value the experience more, show up consistently, and apply themselves more seriously.

For example, Umuzi Academy in South Africa. Whilst the organisation originally offered stipends, they later shifted to a “learn-and-earn” model with phased employer support and performance-linked benefits, rather than flat payments. 

This correlates with research studies in Kenya and South Africa which show that performance-based financial aid (where participants earn rewards or loans are forgiven upon completion) is more effective than free entry or flat stipends.

For example, the Timbali Technology Incubator in Mpumalanga, equips participants with agricultural inputs, market access, and technical support, without offering direct stipends. This builds genuine value and promotes productive engagement.

Pricing Strategies for Inclusive Participation

Charging participants does not need to be an all-or-nothing proposition. Many strategies can be adapted to ensure affordability and equity:

• Sliding scale fees based on income or employment status
• Commitment deposits that are refunded upon completion
• Pay-it-forward contributions from alumni to support future cohorts
• Outcome-based payment models, where fees are only charged if participants are successfully placed in jobs
• Scholarships and bursaries to ensure no one is excluded

A Decision Framework: To Pay, To Charge, or To Support?

To help programs determine the right approach, the following guiding questions can be considered:

1. Are participants facing real structural barriers to participation (e.g., transport, data, meals)? If so, in-kind support may be more effective than cash stipends.
2. Is the goal to change behaviour, build skills, or simply meet attendance quotas? If it’s the former, financial contributions or performance-based incentives may be more appropriate.
3. Is the program short-term or long-term? Shorter programs may justify stipends; longer-term initiatives may require a phased or tapered model.
4. Are participants economically active or completely marginalised? Targeted support may be needed for the most vulnerable, while others can co-invest in their development.

Conclusion: From Paying to Participate, to Paying to Progress

Stipends are not inherently bad. In many cases, they have opened doors for people who would otherwise be excluded. But we must ask hard questions: Are we building sustainable livelihoods or reinforcing dependency? Are we valuing people’s time or commodifying their participation?

It is time to rethink how we design youth development programs. Instead of focusing solely on attendance, we must prioritise progress. This requires exploring creative, inclusive, and sustainable models of support – whether through alternative incentives, performance-linked rewards, or co-investment models. It also demands honesty and courage to ask: are our good intentions inadvertently doing harm?

As funders, practitioners, and policymakers, particularly those engaged in corporate social investment, we must be willing to disrupt the status quo in favour of long-term empowerment. Let’s move beyond stipends – not out of austerity, but in pursuit of dignity, sustainability, and real impact.

“If we are to truly empower participants, we must treat them not as passive recipients, but as active co-investors in their futures. A carefully calibrated contribution model — even a small one — could help build dignity, reduce dependency, and strengthen the culture of accountability in development programs.”

About the Author

Reana Rossouw is the owner of Next Generation Consultants a specialist impact advisory company that focuses extensively on social innovation, sustainable development and investment as well as impact management and measurement. For evidence of our work please visit our website, or download our latest research report on trends and insights for the social, solidarity and impact economies in South Africa.