The Value for Money Agenda and NGOs

Aid effectiveness, at the micro level

Dr Patrick Kilby

Australian National University

Value for Money Agenda

Part of aid effectiveness debates since the late 1980s;

Focus is on whether aid objectives have been met; or if there has been an impact,

has the aid has been well spent; has there been no waste; and has it all been worth the investment?

Now put into a rubric of: economy, efficiency and effectiveness, to which some may add equity (or fairness);

Issue of it being cost exercises where comparative costs are made.

The Abbott Government now shifted the rhetoric to ‘benchmarking’, but some of the issues are still common

Value for Money in NGO programs

early work on VfM in DFAT has been done with NGO programs - they are relatively small and lay outsides the complexity of intergovernmental bilateral relationship or multilateral organisations;

The focus has been on the processes involved: is there adequate cost control, awareness of alternatives, and the like.

Danger is that if metrics are attempted, lead to league tables, and measures of alternatives, then a whole host of questions emerge.

Example is GiveWell criteria versus OAGDS/Accredation/Code criteria. The former is on metrics the latter on processes.

Questions: VfM for whom, what, and when

For Whom: the donor or the recipient? Most think of the donor, but for effective aid it must be the recipient. This raises questions (Paris Declaration): of impositions on the recipient;

recipient control;

Tied aid;

For What: Is it the outputs or outcomes that should represent Value for Money:

Outcomes but often gets reduced to outputs due to time lags.

For When: the life of the project, or the life or the change – how sustainable is what is proposed.

NGO Programs usually about micro level (sub-district) social change;

Issues:

Social change takes time e.g Ragpicker program in Pune over 20 years was transformed, but the change was not predictable;

socialising change is a slow process;

the unexpected and unknowable: programs evolve and so what was known at the start is built upon with new knowledge as change occurs (causal connections not clear);

how can meaningful comparisons be made across programs. Context, if not everything, is nearly everything in development.

Ways Forward

For NGO programs value for money might mean:

Strong partnership processes; clear, and mutually accountable;

In-built flexibility – a possible move away from rigid frameworks;

Aiming for longer-term change, with possible intermediate way points;

A different way in accounting for money: less prescriptive budgets to perhaps a budget framework but with more rigorous audits and detailed annual reports, which justify decisions made;

This implies a move away from traditional projects modes

Implications

It puts the VfM (benchmarking?) agenda more in the hands of the partner (in line with Paris Principles etc); but:

Might not accord with government/parliamentary risk averse approaches;

Moves into the ‘unknowns’ when development has always been about the predictable and known;

Has a longer time horizon, much longer than the average program or project cycle;

My have to have intermediate process steps;

Doesn’t provide easy metrics in many, if not most, cases

How to balance efficiency, economy, (equity) and effectiveness considerations, what weighting should be given to each;

From civil society framework – ‘that CSOs make optimal use of resources in achieving intended outcomes (value for money) …[and[ results achieved are commensurate with resources allocated in differing operating environments’ is vague but with sting in there.

Davis notes: ‘ issues in capturing the adverse effects of political and

social contexts on delivery costs’. the dilemma of clashing rationalities (world views) between

donors, NGOs and partners; Time frames (3-5 years) but why?

Thank you