Cash transfer programs can be a useful tool for providing support to poor households in developing countries. In fact, they are becoming increasingly widespread. However the potential for mistargeting and leakage of funds away from deserving recipients poses a considerable downside risk, particularly in developing countries. Without the detailed, verifiable and legally enforceable data bases that form part of the tax and welfare systems in industrialized nations, accurate targeting of such transfers in developing nations is very difficult. This paper focuses on the potential social consequences arising from misallocation of resources in close knit communities. We find that the mistargeting of a cash transfer program in Indonesia is significantly associated with increases in crime and declines in social capital within communities. Hence there exists a potentially large negative downside associated with poor targeting performance that extends beyond the pure financial costs that have been the focus of the literature to date.