Value for money – part one

I just posted this blog in response to Steve Tibbett’s piece on value for money.

Thanks very much for the post, Steve. I agree with a lot of what you say about how difficult it is to work out value for money in NGO work. A lot of what matters most is hard to measure and doesn’t happen in a simple way. Results can take years to emerge.

But I think we have to be more sympathetic to Minouche’s predicament at DFID. Like other donor officials, she has to show that limited funds are being used to very good effect. That’s something we’d surely all sign up to. Particularly as you point out that we all know examples of some projects that have been badly planned or badly carried out, and just haven’t delivered much for all the money spent on them.

We need something constructive to help demonstrate that, as a sector, we’re using funds effectively. As we discussed at the Big Push Back meeting you mention, we really need a Big Push Forward that engages with donors and senior decision makers.

For me, the starting point is being realistic about what kind of ‘value’ and results we are trying to measure. We could get a lot further by focusing on the contribution we make to other people’s efforts, rather than trying to measure changes in long term poverty.

This makes it much easier to compare different approaches, for instance to contributing to policy change or providing clean water. NEF’s Sept 2010 position paper on value for money suggests coming up with standard approaches for measuring results that are specific to different sectors. I think there’s real promise down that route. Though I’m unsure about Social Return on Investment.

Secondly, as development activists, we need to think about who judges ‘value’. Feedback systems can help make sure that intended beneficiaries and other local people have a real voice in these judgements – so they can hold us to account, along with other authorities.

Earlier this month, Bond held a meeting on Value for Money. Jo Abott, Deputy Head of DFID’s Civil Society Department, said that they wanted to work with NGOs tackling the issue. She said that their approach was more about continual improvement and building an organisational culture of using money effectively than using one standard method or coming to a single figure.

It’s very encouraging to hear. But will it be enough to convince the Public Accounts Committee? And is it good enough for us, to ensure we make best use of all the funds we are entrusted with as a sector?

Effective management systems can get us a long way, based on a commitment to maximising results and a realistic understanding of how NGOs contribute to tackling poverty. But there’s more to be done in collaborating to develop practical ways of measuring performance better.

3 Responses

  1. Hi, good to see this discussion. As an evaluator that has to tackle such issues all the time, the value for money analysis revolves around comparision of activities and the associated costs. Effectively this means benchmarking what you achieve with the amount of money spent with the work of others. It also centres around what you said you would do, whether you acheived this and for how much. Value for money intuitively means deciding how to allocate limited resources (money) to the best performers. It allows those institutions or individuals who have money to decide amongst various options. Value for money means looking at the returns on that investment and how well those institutions receiving financial support do. We take this approach time and time again and the results are rather surprising. I look forward to further debate on this.

  2. Alex,
    Thanks for your post. Your comment about NGOs being realistic about value is so important. Likewise, the message to funders/donors should be that authenticity is accountability. I am a funder of a NGO in Asia, and I would much rather the NGO give an honest account of what they’ve learned and how they are adapting as a result, than a report on impact or value for money.

  3. Hello,

    Yes we (the International HIV/AIDS Alliance) were involved in the BOND VfM meeting earlier this month and presented a case study of SROI in the field. I must admit I was a little surprised that SROI seemed to be one of the few methods that people were talking about. Our NGO community is quite divided about this method – we just wanted to test it out – to see it’s applicability in developing country contexts. It was an interesting experience. I know that people keep saying the important thing is not to get to focused on the SROI ratio at the end i.e. for every $1 you invest you generate $10 equivalent in social /health related value… but the pressure from other parts of the organisation to show case this type of message is high. More importantly I found was the debate it created amongst programme team members about the relative value (or not) that was generated by different programme components. There’s much to be said about the method – definite pros and cons. We certainly have a concern about the need for more robust ways of capturing attribution, deadweight etc – surprisingly not so much on the financial proxies (which I thought would be the most challenging). Also doing this in developing countries is difficult due mostly to insufficient M&E systems in place, and lack of secondary data in-country (for example in the UK there’s a registry of indicator + financial proxies that are well researched and well used – nothing like that in Zambia for example…) . But we are likely to further test and refine the method for our programmes over the course of this year. We are happy to share this experience with anyone interested.

    What I would really be interested in is experiences of other methods out there beyond SROI. E.g. has anyone experimented with cost effectiveness and DALYs, QALYs?

    Cheers

    Liza Tong

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