During my years with ChildFund Australia, the overseas-development sector, and organizations like ours, were booming. The subject of this brief article is one issue that became a focus of attention during those years: Value For Money. What is it? Is it just a “bumper sticker”? If not, how can we measure it? How can we assure that our organizations deliver it?
I’ve been writing a series of blog posts about climbing each of the 48 mountains in New Hampshire that are at least 4000 feet tall. And, each time, I’ve also been reflecting a bit on the journey since I joined Peace Corps, 33 years ago: on development, social justice, conflict, experiences along the way, etc.
I’ve recently been writing about the six years I was honored to serve as International Program Director at ChildFund Australia. In an earlier post in this series, I introduced, and thanked, the team I worked with in Sydney, the “International Program Team.” And last time I took time to thank the great teams that I worked with in Cambodia, Laos, Myanmar, Papua New Guinea, and Viet Nam.
Before digging into the what “Value For Money” meant for us…
To skip the description of my ascent of North Twin, and go directly to my discussion of Value for Money, click here.
The Climb – North Twin
I climbed North Twin (4761ft, 1451m) on 2 September, 2017, with our grand-daughter V. This would be number 40 of the 48 4000-footers that I hoped to climb, and it would be V’s first hike of this length, first real mountain-top, so she seemed a little bit curious about how it would go … but, as always, enthusiastic about giving it a try! Just in case, our plan was to get to the top of North Twin and then decide if we wanted to continue to South Twin.
It was a perfect, dry, cool, cloud-free day for a hike:
We left Durham fairly early that morning, at around 7:45am. I wanted to leave early, because it seemed like the hike might be a long one, which would normally mean that I’d camp up in the White Mountains the night before, to get an early start; 7:45am wasn’t really early enough, but we headed west on Rt 4 to Concord, and then north on I-93 to Lincoln, where we picked up some sandwiches for lunch.
It was nearly 10:45am when we arrived at the very crowded North Twin trail-head: this was Labor-Day weekend, and the parking area on Haystack Road had overflowed.
The hike up to the top of North Twin was straightforward: at first, up a nearly-flat old railway grade along the Little River, gradually getting a bit steeper, and then crossing the stream once (at 11:41am):
The trail got gradually steeper as we neared the top of North Twin:
We saw very few people on the trail, which was somewhat surprising, especially given the overflow of cars down at the trail-head. As we began to get above tree-line, the views became spectacular, perhaps the clearest and sharpest views I’ve had on all of these climbs:
We arrived at a ledge outlook very near the top of North Twin at around 1:30pm, and had lunch there:
There was a small group of people here, and it got a bit crowded with hikers, mostly coming down from South Twin. We outlasted them, and had lunch pretty much to ourselves.
This video of the view from that ledge outlook illustrates what a spectacular place it was, what a perfect day we had:
We finished lunch and left that ledge at about 2pm, and arrived at the true top of North Twin a few minutes later.
We had reached my 40th of the 48 4000-footers!
V did very well getting up to the top of North Twin, and she was keen to continue. So there was no question in our minds – we would now continue on North Twin Spur towards the summit of South Twin, and then retrace our steps to Haystack Road.
Onward! More on that next time…
Value for Money
I served as International Program Director for ChildFund Australia for over six years, from mid-2009 until October of 2015. Those were exciting and rewarding years for Jean and I, living in Sydney; and they were great years for ChildFund Australia. In fact, generally-speaking, the whole overseas-development sector prospered during those years, because of great support from the Australian public and, in particular, from the Government.
The Rudd Government had been elected in 2007, and one of their stated commitments was to raise the overseas-aid budget up to commitments made by previous governments, with a target of 0.7% of GNP.
As can be seen in this graph, Kevin Rudd delivered a dramatic increase:
In constant (2018) dollar terms, Australia’s ODA budget grew from A$ 3841m in 2008 to A$ 5479m in 2012, an increase of nearly 43%. (To be fair, as can be seen, this increase was actually a continuation, an acceleration, of growth initiated by the Howard government from around 2001.) After 2012, the aid budget stayed fairly constant until 2015, when the Abbott government made dramatic cuts, going to the extent of even closing the government agency responsible for managing the program, AusAID. By then I was nearing the end of my time with ChildFund.
The big ODA increases after 2008 meant that we could do more, reach more people, have more impact. Our programs grew in scale and sophistication – many of the innovations that I’ve described in this series of articles (for example, here and here) were made possible, at least in part, by generous funding from the Australia government.
But it turned out that this growth in official development assistance wasn’t politically sustainable. As other areas of government budget were tightened, political pressure grew to reign in ODA spending. The Rudd and Gillard governments addressed this pressure in several ways, one of which was to emphasize “value for money.” Agencies such as ChildFund began to be asked to demonstrate that they were delivering good value for the taxpayer’s dollar. (The Abbott government didn’t resist the pressure at all, which is another story.)
Fair enough: nobody can be against delivering value for money. But it was never clear what, exactly, “value for money” really was. In fact, one quite-senior AusAID official once referred to it in a meeting that I attended as a “bumper sticker”! Despite this, all INGOs in Australia that received government funding came under pressure to demonstrate their approach…
I’ve written about this topic in an earlier article. Here I want to extend that discussion and update it with later work we did in ChildFund Australia to respond to the (correct, but vague) pressure we began to receive from AusAID staff.
I began to think about the concept, and started circulating drafts to our staff in Sydney and overseas. Here are some of the results of that process of reflection.
All reputable organizations working to overcome poverty seek to ensure that they provide “value for money.” Because our work is of the highest importance to people living in poverty, we must make best use of all resource we have. And, at the same time, because we are entrusted with valuable resources, we must be careful stewards of this trust.
But it is challenging to articulate a definition of “value for money” for work in the development sector. Some large agencies have taken an econometric approach, using concepts of social return on investment and cost-benefit analysis. These tools are very suitable, and represent a rigorous approach to assessing “value for money,” but they are much too complex for most development agencies to consider, and are very costly to implement. Other agencies use randomised control trial methods, adapted in part from the pharmaceutical industry, where an intervention is tested and compared with a carefully-selected control population where the intervention doesn’t take place. While such methods are increasingly accepted in our sector, for most INGOs like ChildFund (generalists, that don’t have the funds to hire the specialised staff and undertake the extensive reviews required), these methods are not yet fit for purpose.
And yet, the notion of “value for money” was important to us. So how would we approach it?
A Definition of “Value For Money”
The first step we took was to clarify our definition of “value for money,” and to indicate the mechanisms through which we could ensure that we achieve good value for the resources we manage.
After extensive research and reflection, and many drafts, we settled on this simple definition: For ChildFund Australia, “value for money” had three elements:
- Firstly, we use resources effectively;
- Secondly, we use resources efficiently;
- Thirdly, we are accountable about our use of resources to our stakeholders and ourselves.
Using resources effectively, efficiently, and accountably – that was how ChildFund Australia intended to ensure “value for money.” But for this definition to be operational, we needed to define what those terms meant!
For ChildFund Australia, when we worked on this issue, we decided that “effectiveness” meant working on the causes of child poverty, according to our understanding of child poverty. And it meant having a systematic approach to achieving development effectiveness, embedded in our programmatic work processes.
In terms of causes, we had learned that children are poor because they lack assets such as health, education, and income. Assets such as clean air and water and access to productive land. Assets such as the bonds of trust and solidarity in their communities and across cultures. They experience poverty as being excluded from having voice and agency in processes that affect them. They are poor also because they, and their families and communities (and even nations) are relatively less powerful than other (children, families, communities, nations…) And they are poor because they face increasing risks – from other people, from civil conflict, from climate change, and so forth.
So our programs were designed to build human, financial, social assets; stimulate opportunities for people living in poverty to express their opinions and exercise their personal agency; enhance the power of poor people to take collective action in the interests of their children; and strengthen protective networks around children.
But to be effective, we also needed to establish and maintain systems and procedures that keep us focused on these causes of child poverty. Our “Development Effectiveness Framework” (DEF) provided that operational focus, making sure that all our programmatic efforts were aligned towards a defined purpose that was clearly embedded in each particular context in which we worked.
The DEF also supported a learning, adaptive approach, because the work we did was complex and only rarely could external models be put into place in the range of contexts where we work without extensive adaptation. This means that a tolerance for the risk that comes with innovation was also required to ensure effectiveness.
For us, that was effectiveness in a nutshell – understanding and addressing the causes of the phenomenon we sought to change, striving to understand the mechanisms through which those causes act, and taking deliberate action aligned to achieve our purpose.
Using resources efficiently meant that we put in place appropriate systems and procedures to ensure that we allocated our human and financial resources explicitly, clearly, for the purposes that are agreed, and according to good business practices. Not being wasteful.
So we had budgets which were reviewed and approved; our expenditures and activities were authorized and controlled and monitored according to agreed protocols and standards. We supported and trained our staff so they had the tools and competencies they needed. We reviewed the use of these resources frequently with an eye towards ensuring that our costs were in line with good practice. And we had clear procurement and tendering procedures, and robust policies and procedures (including independent audits) to deter fraud.
These systems and procedures were set out clearly in our finance and HR documentation. All our team members were trained in their use as appropriate to their functions, and our management teams in Sydney and in our Country Offices rigorously followed up operations to ensure that these guidelines were followed and that they in fact resulted in “efficient” use of resources.
In addition, we carefully managed the use of foreign staff in our programs, because we firmly believed that local people had the knowledge, skills, and capacities that were needed. Our local staff were central to our program approach, which relied on long-term, positive relationships with communities and local partners. And external resources were always somewhat more expensive and should therefore be used judiciously.
Finally, we couldn’t deliver value for money unless our stakeholders knew what we were doing and were able to influence us. So we strived to be accountable – transparent and responsive – by developing our programs together with local communities and partners; by reporting periodically and fully about what we do with, and accomplish with, funds to a wide range of publics; and by responding to concerns, questions, suggestions from our stakeholders and the public.
We had a range of processes and procedures to enhance our accountability, transparency, and responsiveness, but this was not a destination – it was a journey, through which we sought to continually be more accountable.
Operationalizing the approach
That all sounded good, and correct, so then we had to put these measure in place, working operationally in the different places we worked.
In terms of effectiveness, ChildFund’s “Development Effectiveness Framework” (the “DEF”) was contained in Chapter 3 of our Program Handbook, and was mandatory for all ChildFund Australia offices. The DEF established how ChildFund’s Vision, Mission, Program Approach, and program policies were implemented in each particular country context.
The DEF contained procedures, formats, and guidelines for:
- designing and improving holistic, evidence-based programs;
- preparing, assessing, approving, monitoring, and evaluating projects that contribute to the goals of each program;
- learning from project implementation;
- contributing to community planning of projects;
- assessing the impact of our work on the causes of child poverty.
When thinking about how to make sure that our operations were efficient, we had policies, procedures, resources, and systems in place, from the collection of funds through to delivery of quality programs pursuant to our Mission. There were financial systems to control funds, administration systems to ensure appropriate use of funds in procurement and day-to-day administration, and people and organisational systems to support the people who work for us.
We were committed to minimising the risk of funds being misappropriated, wasted or used to fund terrorism and had policies for fraud, procurement and counter-terrorism. Our staff and partners to whom we entrust funds were regularly trained on the importance of complying with these policies and how to apply them. Our financial reports were audited by an international audit firm annually and we conducted internal audits in the field on a regular basis. The learning gained from these exercises was used to improve our financial, administration, and human-resources systems.
These systems and policies were documented in the Sydney Finance Manual, HR Manual, and policies and procedures maintained centrally and mandatory for all ChildFund Australia offices, including policies on Fraud Awareness and Prevention, and Procurement.
In addition, Country Offices had their own local procedures, consistent with central, organisation-wide policies and procedures that, together, ensured that our operations were efficient.
Finally, in terms of accountability, our DEF mandated several moments in the project cycle where key stakeholders (children, youth, caregivers, local partners, local government) were informed and were given authentic opportunities to influence decisions, and to help reflect on our performance.
Consistent with legal requirements, accreditation with the Australia government, and the code of conduct that was agreed by nearly all Australian INGOs (the ACFID Code), ChildFund Australia put in place a range of communication systems to inform our stakeholders (such as the reporting of financial and programmatic results) and to enable them to provide comments about our work, including complaints.
We instituted regular monitoring and evaluation processes, yearly financial audits and Annual Reports, yearly reporting to sponsors, and annual Country Office Reports – all of which were available publically on the ChildFund Australia website. A range of programmatic results were also published on our website, in the “Development Practitioners” section.
In summary, during those years we took up the challenge of ensuring “value for money” by creating and implementing a Development Effectiveness Framework that was based on our understanding of the causes of child poverty, and which gave us the tools to measure and improve the impact of our work. We created and followed a set of good business practices to ensure that we worked efficiently. And we took measures to communicate the results of our work, and reported on our financial results, to be accountable to donors and community partners.
“Value for money,” in those days, was a vague concept, which nevertheless was important to us and to the whole sector. Our approach to defining and delivering “value for money” was relatively straightforward, befitting the nature of our agency, but at the same time it was internally consistent and complete. Other than the two agencies that I know of that tried to implement “randomized control trials” in a few test projects, I am not aware of any other Australian INGO that had as comprehensive and complete approach to this issue as we did at ChildFund Australia.
I am proud of what we achieved, how we took up the challenge to ensure that we were providing “value for money.”
Here are links to all the blogs in this series. There are 48 articles, including this one, each one about climbing one of New Hampshire’s 4000-footers, and also reflecting on a career in international development:
- Mt Tom (1) – A New Journey;
- Mt Field (2) – Potable Water in Ecuador;
- Mt Moosilauke (3) – A Water System for San Rafael (part 1);
- Mt Flume (4) – A Windmill for San Rafael (part 2);
- Mt Liberty (5) – Onward to Colombia, Plan International in Tuluá;
- Mt Osceola (6) – Three Years in Tuluá;
- East Osceola (7) – Potable Water for Cienegueta;
- Mt Passaconaway (8) – The South America Regional Office;
- Mt Whiteface (9) – Empowerment!;
- North Tripyramid (10) – Total Quality Management for Plan International;
- Middle Tripyramid (11) – To International Headquarters!;
- North Kinsman (12) – Fighting Fragmentation and Building Unity: New Program Goals and Principles for Plan International;
- South Kinsman (13) – A Growth Plan for Plan International;
- Mt Carrigain (14) – Restructuring Plan International;
- Mt Eisenhower (15) – A Guest Blog: Max van der Schalk Reflects on 5 Years at Plan’s International Headquarters;
- Mt Pierce (16) – Four Years At Plan’s International Headquarters;
- Mt Hancock (17) – Hanoi, 1998;
- South Hancock (18) – Plan’s Team in Viet Nam (1998-2002);
- Wildcat “D” Peak (19) – Plan’s Work in Viet Nam;
- Wildcat Mountain (20) – The Large Grants Implementation Unit in Viet Nam;
- Middle Carter (21) – Things Had Changed;
- South Carter (22) – CCF’s Organizational Capacity Assessment and Child Poverty Study;
- Mt Tecumseh (23) – Researching CCF’s New Program Approach;
- Mt Jackson (24) – The Bright Futures Program Approach;
- Mt Isolation (25) – Pilot Testing Bright Futures;
- Mt Lincoln (26) – Change, Strategy and Culture: Bright Futures 101;
- Mt Lafayette (27) – Collective Action for Human Rights;
- Mt Willey (28) – Navigating Principle and Pragmatism, Working With UUSC’s Bargaining Unit;
- Cannon Mountain (29) – UUSC Just Democracy;
- Carter Dome (30) – A (Failed) Merger In the INGO Sector (1997);
- Galehead Mountain (31) – What We Think About When We Think About A Great INGO Program;
- Mt Garfield (32) – Building Strong INGO Teams: Clarity, Trust, Inspiration;
- Mt Moriah (33) – Putting It All Together (Part 1): the ChildFund Australia International Program Team;
- Owls’ Head (34) – Putting It All Together (Part 2): ChildFund Australia’s Theory of Change;
- Bondcliff (35) – ChildFund Australia’s Development Effectiveness System;
- West Bond (36) – “Case Studies” in ChildFund Australia’s Development Effectiveness System;
- Mt Bond (37) – Impact Assessment in ChildFund Australia’s Development Effectiveness System;
- Mt Waumbek (38) – “Building the Power of Poor People and Poor Children…”
- Mt Cabot (39) – ChildFund Australia’s Teams In Cambodia, Laos, Myanmar, Papua New Guinea, and Viet Nam;
- North Twin (40) – Value for Money;
- South Twin (41) – Disaster Risk Reduction;
- Mt Hale (42) – A “Golden Age” for INGOs Has Passed. What Next?;
- Zealand Mountain (43) – Conflict: Five Key Insights;
- Mt Washington (44) – Understanding Conflicts;
- Mt Monroe (45) – Culture, Conflict;
- Mt Madison (46) – A Case Study Of Culture And Conflict;
- Mt Adams (47) – As I Near the End of This Journey;
- Mt Jefferson (48) – A Journey Ends…