Does value for money help or hinder the search for social transformation?

Governments’ obsession with cost-effectiveness is supposed to increase the impact of public spending. In reality it’s used to justify decisions in times of austerity, while pumping scarce resources into an industry of consultants.

Cathy Shutt
11 August 2014

Credit: All rights reserved.

Our bargain with taxpayers is this. In return for contributing your money to help the world’s poorest people, it is our duty to spend every penny of aid effectively. My top priority will be to secure maximum value for money in aid through greater transparency, rigorous independent evaluation and an unremitting focus on results.”

‘Thus spake Zarathrusta,’ or at least Andrew Mitchell, the UK Secretary of State for International Development in 2010 whose grand proclamation set the foreign aid world in a spin.

No one disagrees with the goal of spending aid effectively, but what does the mantra of ‘value for money’ actually mean in practice? How is it measured, and who decides whether any piece of expenditure represents ‘good value,’ especially if the goal is the transformation of society?

The UK government’s take is described in the National Audit Office (NAO) value for money programme. Implemented through studies of “economy, efficiency, effectiveness” and (more rarely) “equity,” the programme makes judgments on whether resources have been used to achieve intended outcomes “optimally” in key areas of government expenditure. And that’s where the problems begin.

Although policy makers are keen to find cost-effective solutions for specific problems, this is methodologically difficult because there are no universally-agreed measures of what’s ‘most valuable’ in the world of social change. Michael Power, an expert on audit and management practices, argues that the criteria used in these calculations are inevitably ambiguous. In addition, significant social change only emerges over decades, whereas most of these efforts focus on the procurement and management practices of contracts which have short-term, measurable results.

As a consequence, governments tend to use value for money to justify rather than inform their policy decisions, especially in times of austerity - while pumping scarce resources into a burgeoning industry of consultants.

As a ‘pracademic’ who plays a role in this industry and dabbles in critical accounting and economics, the value-for-money debate seems to offer both opportunities and risks. It promises a more critical look at how to allocate resources in support of social change, and it provides one way of debating competing interests in systems that are inherently unequal. But it also threatens to reduce the ability of groups to pursue transformational work that is more difficult to quantify in economic terms.

Narrow value for money calculations might push funding towards things like bed nets to protect against malaria whose effects may seem easy to measure and explain, but which aren’t necessarily more cost-effective in promoting longer-term development. Don’t get me wrong, bed nets are important. They reduce the prevalence of a deadly disease. But equally important are solidarity and support for transformational initiatives that are spearheaded by local people whose effects can’t so easily be predicted or assessed.

Take, for example, the Women Reborn initiative that I examined in a recent assessment. No-one could have foreseen the impact of small grants to enable the empowerment of Palestinian women living in Israel that were administered by Shin, the Israeli movement for equal representation. But as they came together and began to imagine new identities beyond their traditional roles as wives and mothers, these women gained more power and influence. By mobilising others in their communities they were able to overthrow an incumbent mayor who had been in power for 25 years or more.

Most supporters of transformational development would consider Women Reborn to be a great example of value for money – at least retrospectively. But what they’ve achieved could never have been predicted or valued in purely monetary terms. One of the reasons they were so successful was that their funder, the JA Clark Charitable Trust, allowed them the flexibility to choose what they valued when setting and changing their priorities.

Despite these challenges, many practitioners I’ve spoken to say that engaging with this debate has actually been useful. Arguing about value for money can encourage more open and transparent conversations about the assumptions that underpin decisions about expenditure. Small organisations, and those working on locally-led transformational initiatives, undoubtedly find it more difficult to meet the reporting requirements of these methodologies, but that doesn’t mean they don’t see any ‘value’ in ‘value for money.’

Take the recent conversation I had with members of Harrassmap, an Egyptian volunteer-based initiative that aims to end the social acceptability of sexual harassment and assault. They see value for money as an important tool that can help them in holding international organisations to account – for example, by questioning the decision to hold meetings in very expensive hotels.

What has not gone down so well among groups funded by the UK’s Department for International Development (DFID)  (and indeed among some DFID staff) is the Department’s narrow focus on economy and efficiency rather than impact and effectiveness. My clients cite many examples of being pushed to make cost savings which actually reduce their impact. One was advised to accept the lowest bid for services on a programme designed to transform the lives of young women even though she knew that the bidders lacked the necessary competencies. Ironically, the selected provider then had to build their capacity to deliver what was necessary, making them more expensive than the original estimates submitted by stronger organizations in the first place.

Particularly troubling is the way in which value for money is represented in DFID’s Annual Reports – at least for those who see engaging the public in more meaningful discussions about global poverty as an important step towards changing the unhealthy dynamics between the North and the South. Claims of DFID providing ‘43.1 million people with access to clean water, better sanitation or improved hygiene conditions ’ and ‘saving over £110 million’ by driving down suppliers’ bids,  convey the idea that the costs and benefits of social change are things that lie within the control of outsiders.

My research found unanimous agreement among respondents that efficiency metrics like ‘cost per beneficiary’ are highly problematic.  Just like the claims in DFID’s reports, they validate rising criticism that NGOs and other donor agencies are treating their supporters like ‘customers’ whose contributions can ‘buy’ quick results, rather than engaging them in relationships that challenge and transform inequities at a much deeper level. They reveal little about the lasting effects of a particular investment on people’s lives, or about how programs are doing when set against key criteria like empowerment.

But all is not lost. In the UK, for example, NGOs have managed to shape the agenda, at least to some extent, by producing their own guidelines on value for money which reject narrow economic calculations. Christian Aid’s recent briefing provides a good example of how organisations can develop strategies that are consistent with transformational values.

Their definition of value for money stresses criteria like equity, and reflects thinking from less mainstream quarters like “multiple criteria analysis.” This approach starts by recognizing that many social and environmental outcomes can’t be valued in monetary terms, but they can be ranked using different scoring methods. It also assumes that investment decisions will generate conflict between different stakeholders about the criteria that are used to assess value for money, and how different projects stack up when they are evaluated against them.

In other words, this approach rejects the idea that there is one, economically optimal solution to any problem. Instead, it embraces the view that different people should debate spending decisions by arguing about the subjective scores they give to criteria like equity and efficiency, and then reach a consensus. Judgments about value for money require a deep understanding of the context, and plenty of space for adaptation to unpredictable events.

Alternative approaches like these could help shift power and enhance accountability between different stakeholders, thus making value for money a help rather than a hindrance in work for social transformation. But they will only work if those at the receiving end of the aid chain are more engaged in conversations about the kinds of ‘value’ that really matter to them. And that poses a fundamental challenge to the unequal power relations that constitute and sustain the world of foreign aid.

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