Giving with accountability

Donor countries give funds each year to governments of developing countries. But what about accountability? Donors give over $135 billion each year across the globe with some measures for government accountability, but not a lot.

For example, the World Bank has revealed that reports from managing firms in developing countries say that to build roads and infrastructure they often have to pay 2% of the value of the contract in bribes to governments to get the job finished. If they didn’t pay, the recipient government often makes it difficult for them to get the job done – by blocking access, calling strikes, imposing taxes, etc.

Some donors have tried, or are in the process of exploring, another scheme called ‘giving cash-on-delivery’ or ‘giving with accountability’. It is money given only when recipient governments in developing countries improve their expected outcomes. In other words, donors set targets for recipient governments, such as reducing the malaria death rate by 20% over 5 years. The target is usually specific, measurable, achievable, relevant, and time-bound. In addition to targets, budgets are allocated annually depending on performance.

By setting and monitoring targets, cash-on-delivery donors hope to encourage governments to become more sustainable and take ownership of the projects.

Most funding is still given conventionally (an annual allocation of funds and governments provide a report on the spending), but the United Kingdom, Norway, and the private donor Bill and Melinda Gates Foundation, have introduced a cash-on-delivery accountability system (‘giving with accountablity’). This means that recipient governments can set the conditions for receiving funds in collaboration with the donor.

How does cash-on-delivery work? Governments from developing countries use the existing aid money for a specific project and contribute some of their own funds. If the project is achieving its targets on time and on budget the donor country pays them cash on delivery of the performance evaluation. Governments can choose whether to add the money to the existing project or create a new project, which the government also contributes funding to. This virtuous circle is the new model that is being piloted, particularly in health, education, and environmental projects.

Norway, for example, funds different developing countries to preserve their forests. Since 2008 Norway has paid Brazil $5 for each tonne of carbon it has not emitted by not chopping down trees. Brazil chose how they would cut carbone emissions, such as by expanding forests, not cutting down trees in unspecified areas, and not planting invasive species of plants. Norway uses satellite images for monitoring the forests – this tests the Brazilian government’s performance.

Other donor governments and private funders are watching this model closely, as they too are thinking of supplementing the conventional funding models with this new funding model. By setting and monitoring targets, cash-on-delivery donors hope to encourage governments to become more sustainable and take ownership of the projects, if not whole projects then components of projects.

So if you are considering donating money to a international project, check to see if the donor country is giving cash-on-delivery (evaluation reports should be posted online). This may take a bit of research initially, but afterwards you can be more confident that both the donor country and the recipient country are mutually accountable for the project’s funds.