This dissertation research informs our understanding of the social cost of HIV/AIDS as it relates to children. Specifically, I examine orphan status and poverty as potential sources of vulnerability in the development of human capital, and alternative strategies to mitigate their effects. Deficits in human capital among children can lead to reduced productivity as adults, and human capital deficits may transmit intergenerationally; hence, human capital is an important aspect of the social cost of HIV/AIDS. Cash transfers are one form of intervention that may mitigate the social cost of AIDS. My analysis compares nutritional status and school enrolment, as measures of vulnerability, between orphans and non-orphans using OLS, fixed-effect and probit regressions. Micro-simulations are employed to compare the effects of alternative targeting strategies for cash transfer programs on consumption and school enrolment. The findings indicate that poverty is a more important source of vulnerability than orphan status and that targeting households with children explicitly offers greater benefits for the poorest children than targeting households that host elderly residents or households with labor constraints. Collectively, these findings suggest that presumptive targeting of orphans may not be warranted.