Major NGOs Comment on COD Aid

November 6, 2009

This is a joint post with Nancy Birdsall and Bill Savedoff.

During a panel discussion we hosted at the World Bank and IMF annual meetings in Istanbul last month on mutual accountability and outcomes in aid, Max Lawson from Oxfam, in referring to COD Aid, said that CGD appears to have more effective publicity strategies and reach than the European Commission. While we do have a (small but) stellar communications team, our ideas spread far primarily because other organizations are seriously engaged in exploring and debating new ideas like the ones we have proposed (otherwise our tiny team would be sleepless, to say the least!).

One case in point is the recent COD Aid briefing paper issued by the Catholic Agency for Overseas Development (CAFOD) – a large international development organization based in the UK which raises about 75% of its funds from individual supporters. CAFOD’s attention to the idea of COD Aid is a helpful contribution to the ongoing discussion about how to improve foreign aid, especially because COD Aid is a form of foreign assistance that can easily accommodate joint collaboration between official and private funders.

CAFOD’s briefing paper provides a good overview of the advantages of COD Aid and raises some legitimate concerns. Our forthcoming book, Cash on Delivery: A New Approach to Foreign Aid with an Application to Primary Schooling, and responses to comments we’ve received in a variety of workshops and interviews address many of these concerns. However, more importantly, we have found that many of the anticipated problems are easier to resolve when the discussion moves away from the general concept toward the opportunities it presents in the specific context of a given country or sector. That’s why we’ve been supportive of government-led dialogue on exploring the approach in interested countries.

The briefing ends by recommending that:

1. COD Aid should be used to complement, not substitute, existing development support. We agree, and believe that a COD Aid agreement could actually make existing technical assistance and education investments more effective because COD Aid provides different incentives and opportunities than existing forms of foreign aid.
2. Funders should offer COD Aid payments of varying levels that are calibrated to social and economic factors that may change the cost of achieving the desired outcome. In offering this recommendation, CAFOD is voicing a legitimate concern that governments might respond to a single incentive (such as a fixed payment per child completing primary school) by focusing on those who are easiest to reach and neglecting those who are more vulnerable. This concern arises from the reasonable assumption that the marginal cost is higher of reaching the more vulnerable. However, one of the things that we learned through our consultations is that setting the appropriate amount of the COD Aid payment has less to do with the cost of schooling (and the relatively different costs for different regions or groups) than it does with relaxing constraints that hold back progress. While offering COD Aid with more complex formulas is certainly worth considering, our conclusion from our consultations is that a single clear simple and transparent outcome indicator is more likely to succeed at getting the political and social attention needed to mobilize policy changes. Furthermore, by assuring a long-term commitment to reaching universal completion, the COD Aid incentive would not disappear once a certain “threshold” is achieved.
3. Measurement of the impact of COD Aid should take qualitative as well as quantitative targets into account. This recommendation addresses another important issue related to unintended and potentially negative consequences (a problem for all forms of aid and not just COD!). For example, in proposing a workable COD Aid agreement for education, we showed how COD Aid payments can be linked to a quantitative indicator while simultaneously strengthening civil society’s ability to monitor school quality.

The CAFOD policy brief not only puts important concerns on the table, but also opens further space for feedback and thoughtful consideration on how to move COD Aid forward in a positive way.

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1. Stephen Says:
   November 11th, 2009 at 12:09 am

   A lot of NGOs get government funding, it’s pretty normal, actually. Ideally, an NGO can fundraise from a number of sources and government is one of them, especially for infrastructure and running projects of interest to the government. NGOs can fill gaps in government services and meet the special needs of certain target groups. They can also pilot ideas and projects on a small scale that, if successful, can later become government policy and become more broadly implemented. If there is enough public awareness and support, then the politicians make sure the money is there and let the NGOs get on with what they’re doing. But there is always the danger of funding being cut off when government budgets get too tight and certainly, under some administrations in some countries, government funded NGOs are definitely restricted, explicitly or implicitly, from engaging in partisan politics or criticizing the current administration.

2. max lawson Says:
   November 22nd, 2009 at 7:38 am

   I of course agree that this topic deserves serious debate- my point was that the European Commission is already delivering large amounts of its budget support with an incentive tranche tied to exactly the kinds of indicators that the COD ideas are discussing and this is virtually unknown outside of a esoteric Brussels circles.

   Most recently in their innovative MDG contracts which guarantee budget support for six years, but have an incentive tranche linked to MDG outcomes, which are reviewed once after three years, in the middle of the contract. http://ec.europa.eu/development/how/aid/mdg-contract_en.cfm

   I think this is part of a broader problem that the EC is appalling at its own publicity and in highlighting the innovative and rapidly improving ways in which it gives aid. Perhaps CGD could second one of their brilliant communications people to Brussels for a few months!

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