Posts Tagged ‘accountability


Foreign Aid – Does it work or not?

In my recent readings, I came across two extreme contradicting views on the issue of foreign aid and its efficiency. Here, I wish to list just two distinct examples which argue against and for foreign aid.

Leading economists Daren Acemoglu and James A. Robinson in their book, “Why Nations Fail?” write that —

“Many studies estimate that only about 10 or at most 20 percent of aid ever reaches its target. There are dozens of ongoing fraud investigations into charges of UN and local officials siphoning off aid money. But most of the waste resulting from foreign aid is not fraud, just incompetence or even worse: simply business as usual for aid organizations. Throughout the last five decades, hundreds of billions of dollars have been paid to governments around the world as ‘development’ aid. Much of it has been wasted in overhead and corruption. Worse, a lot of it went to dictators. And, of course, the cycle of the failure of foreign aid repeats itself over and over again. The idea that rich Western countries should provide large amounts of ‘developmental aid’ in order to solve the problem of poverty is based on an incorrect understanding of what causes poverty.”

In their “2014 Annual Letter”, Bill Gates and Melinda Gates explain three myths that block progress for the poor. One of those myths is ~ ‘Foreign aid is a big waste’. Bill asserts that —

“I worry about the myth that aid doesn’t work. Aid is only one of the tools for fighting poverty and disease. Aid is a fantastic investment, and we should be doing more. It saves and improves lives very effectively, laying the groundwork for the long term economic progress (which in turn helps countries stop depending on aid). Through foreign aid, taxpayers around the world invest in development organizations that are saving lives in the poorest countries. We do know that aid drives improvements in health, agriculture, and infrastructure that correlate strongly with growth in the long run.”

Being part of a Non Governmental Organization, I might be biased arriving at a conclusion in this debate of foreign aid. Before taking sides, I personally think that development aid (be it from the State or non-State funders) will become more demanding and conditional in the future. It will no longer blindly be – give, give, give, give, give and take, take, take, take, take between the partners without any concern for performance.

In this era of uncertain economic cycle, when the resources are becoming scarce, the donors will be more likely to ask for measurable results from the recipients. For example, the Global Fund uses the approach of ‘performance-based funding’ to disburse its grants to various recipient countries. This may become the norm in the future. Measuring the results through evaluation, performance review may no longer be a luxury. It will become a necessity. Assessment approaches adopted by the recipients will become more rigorous and analytical. The funders will start insisting that — every penny goes to “eradicate the poverty” through funding for programs; that – “overheads” do not water down their donation. Metrics closely tied to their vision and mission will be guiding the recipient organizations in their exercise of “assessment”, and “accountability”.

In today’s world, the combination of reduced funding and increased need will force every Not-for-Profits and Non Governmental Organizations to reinvent themselves literally. They will be compelled to foster performance culture as their way of functioning. It is no longer going to business as usual. It will be subject to the culture of – perform or perish.

I would like to share the thoughts of former CEO of Honeywell Larry Bossidy.  Bossidy explains that – ‘accountability is one of the real keys to effective transformation.’ Bossidy also espouses his deep-seated belief in measurement which played a decisive role in his success throughout his thirty four year career.

“Change can’t occur without laser-like accountability and metrics to measure how you are doing. I encourage organization to measure their performance against their plans.”

– Larry Bossidy

I believe that what Bossidy has prescribed for corporates will be the way forward for the Not-For-Profits too.


Question: How can we make recipients in the humanitarian industry like the State, Not-For-Profits, Non Governmental Organizations, etc using foreign aid more accountable and performing? Please share them by leaving a comment to this post. I welcome your thoughts.



[1] “Why Nations Fail? The Origins of Power, Prosperity and Poverty” by ‘Daren Acemoglu’ and ‘James A. Robinson’, Profile Books, 2012.
[2] “2014 Gates Annual Letter: 3 Myths that Block Progress for the Poor” by ‘Bill Gates’ and ‘Melinda Gates’, Bill and Melinda Gates Foundation, January 2014.
[3] “Leap of Reason: Managing to Outcomes in an Era of Scarcity” by ‘Mario Morino’, Venture Philanthropy Partners, 2011.
[4] “Jack Welch and the 4 E’s of Leadership” by ‘Jeffrey A. Krames’, The McGraw-Hill Companies, 2005.


Results reporting: Momentum for Non-profits to Demonstrate Effectiveness

These last few years, watchdog agencies and donors have increasingly created demand and interest in results reporting for Non-profits.  In January, 2013, Charity Navigator released its final rating approach for results.The focus is on a charity’s design, monitoring, and evaluation with the idea charities who design and evaluate programs transparently will be more accountable and more effective.  CN’s new rating approach is not an A vs. B rating, comparing one charity to another, but rather rating the individual charity to a yard stick and assessing how they measure up to CN’s expectation.  This has the potential to push charities towards more effective methods, and also draw out evidence which, until now, was not provided publically.

Recently World Vision released its own Impact reporting 1.0 – a first version of webpages which publish impact in terms of outputs, outcomes, and its unique approach to programming.  It’s a step in a direction to provide visibility to the public not only on what it recently did, but also how it has evolved over 60+ years of ministry.  These webpages are not perfect, but it’s a large step in a new direction, and one I hope empowers greater effectiveness in the future.


Outcome reporting and Failure Reports

Is the future of non-profit reporting changing?

Historically, non-profit reporting made available to the public includes among other requirements: a mix of financial results; significant accounting assumptions and disclosures; governance and accountability; and program outputs. Non-profit watchdogs and accountability organizations like the BBB and the IRS typically have their own reporting requirements. However, these requirements tend to focus on financial results rather than outcome reporting.

Outcomes differ from outputs in that outputs represent products or services produced. Outcomes are the achievements or effects and changes resulting from the outputs. For example, a child’s attendance at school is the output of an education program. Children learning reading skills are the outcome which results from school attendance.

More and more, I hear discussions about how non-profits should be assessing and reporting outcomes. Charity Navigator is implementing several phases to revise its charity rating system (CN 2.0). The last phase expects charities to disclose information about their results. Not their financial results, but their programmatic results. In this video Ken Berger talks about the continuum charities are on, the evolutionary process that makes for high impact organizations. The sense that I get is that it’s not about being perfect; rather it’s about moving past yesterday’s errors and learning from past shortcomings.

Taken a step further, I’ve recently seen several non-profit organizations preparing “failure” reports. These reports openly describe a few instances when an organization has not done well on a project, or even failed at it, as well as lessons learned from these experiences. These reports go as far as identifying several changes to be made in the future.

Both Engineers without Borders Canada and the Robert Wood Johnson Foundation publish “failure” reports. Even though it exposes some of their failures, I come away believing their next dollar raised will be used even better because they have learned from their mistakes. They are moving down a continuum to not only gather data and assess outcomes, but also incorporate their outcome assessments into their next strategy.

Are failure reports the latest trend in non-profit reporting or a useful tool for meaningful learning and innovation? If failure reports are not done with the right motivation, in the right way, they could have negative effects. Here are several opportunities, advantages pitfalls and disadvantages to consider about whether or not to prepare a failure report:

• The biggest opportunity is to learn, then invest, then develop new programs which are more successful long-term. Improvements and innovation can become part of routine assessments instead of incidental happenstance.
• Reflection, a process so often overlooked in the tyranny of the urgent, is instead prioritized. Resources are invested to intentionally assess and evaluate outcomes and failures.
• Organizations have an opportunity to learn from each other’s mistakes through increased visibility of past failures and lessons learned.
• Organizations have a better opportunity to avoid recurring failures.
• Donors have an opportunity to see which organizations are making improvements and moving down a positive continuum.
• Publishing failures and planned changes creates a public accountability partner to push an organization to prioritize the necessary follow-through.

• If the report is created out of the wrong motivation, it may be easy to fall in the trap of surface level, cleansed, or “PR friendly” assessments. (kind of like in a job interview when you say your biggest weakness is working too much…)
• Donors who can not maturely accept failure or who do not see enough improvement may not give to the charity again.
• Current donor perception is often driven solely by financial results. In order for failure reports to be successful, the public perception of charities and their values must be changed to value innovation and effectiveness.
• Many non-profit industries are typically expected to spend all of their donated funds immediately. This expectation must be bucked to allow time for innovation and investment in newer, more successful project models.

It’s always been important for donors to get assurance about financial results, but the interest in reports on organizational programmatic effectiveness, or its lack thereof, is increasing. If we can’t honestly measure, report and analyze program effectiveness, we won’t gain the important lessons that provide for the greatest success.


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