Bad Donor Advice Perpetuates Bad Aid Practices

The following is a copy of the comment I posted in response to the Wall Street Journal’s article Charities: Tough Times Call for Smarter Giving.

While proposing to provide information on smarter giving, your article will, unfortunately, only perpetuate poor donor practices. I’ve addressed some of the problems with the advice given in Ask Before You Give.

Question 1 – What portion of spending goes to programming (versus operational costs)?

The reason this question doesn’t work:

Although it seems to make sense that the higher percentage of money spent on programming the more money goes directly to those it is meant to help. However, this has not been proven to be true. Operational costs are needed to ensure the money gets where it is most needed. Needs assessment, which are an expensive operational cost, ensure that money is not wasted on building orphanages without any orphans, as happened more than once after the tsunami.

Additionally, what constitutes “program” spending versus “operational” spending is rather fungible. Aid agencies know they are being rated on this, so they quickly learn how to massage the numbers.

Request this instead:

Ask for a copy of last year’s audit findings. Even if you do not understand the audit this will tell you whether the aid agency does yearly audits and whether they are willing to share financial information. A step further would be to request evidence that the aid agency is financially transparent about their expenditures to both donors and aid recipients

Question 2 – What have its accomplishment been? What challenges does face?

The reason this question doesn’t work:

We all know these as classic interview questions, and we all know how to answer them. Aid agencies are essentially applying to you for money, so any answer they give would gloss over their failures. Instead you would likely be told about mild problem that has already been solved.

Request this instead:

It would be far better to request the results of several independent evaluations of the aid agency’s work. Look at the dates and frequency of the evaluations to ensure that the aid agency is actively trying to evaluate and improve their practices (evaluations are, of course, operational expenditures).  Look for evidence that senior management has developed ways to address whatever negative findings were in the report, and that the solutions have been implemented in the field.

Question 3 – Can I direct my gift to one of the charity’s particular programs if I want?

The reason this question doesn’t work:

Earmarking funds for specific projects leads to far more wasted funding than the average donor realizes. Earmarking means that “sexy” programs, such as houses, boats, or orphanages, receive far more funding than non “sexy” programs such as legal aid to help people get the documentation they need to access government services. Earmarks may also require aid agencies to provide aid far in excess of the actual need.

After the tsunami, “mini-mansions” were built by some aid agencies because they had to spend all the money earmarked for housing. Not only did this waste donations, but it also caused a lot of acrimony between the aid recipients that received these houses and those that received houses built to the minimum Sphere standards. Boats were also “sexy” programs which received too much money. Due to the glut of boats being built in Thailand one international aid agency decided to halt their boat making project until it could be determined whether or not more boats were actually needed. The program was forced to restart by headquarters because donors wanted boats and so boats had to be built.

Request This Instead:

Request the results of the agency’s needs assessment. This will tell you if a needs assessment has actually been done, as well as whether it has covered a wide enough area and took into account the assistance provided by other aid agencies and the government (so as not to duplicate assistance). If the aid agency has not yet completed a needs assessment then they should not be developing programs and requesting funding.

Aid practices cannot improve until donor practices improve

Everyone has heard of aid agency waste and poorly implemented programs, but few people understand the underlying causes. Attempts from within the aid world to improve the quality and professionalism of aid have thus far had minimal impact because donors continue to prioritize their funding based on recommendations such as those just provided by WSJ. Aid cannot improve until donors have a greater understanding of good aid practices and donate their money accordingly.

For readers that are interested in learning more I’d suggest the following four resources:

1.    MANGO (Management Accounting for Non Governmental Organizations)
2.    The Listening Project country and issue reports on the CDA website
3.    Lessons learned, evaluations, and meta-evaluations on ALNAP’s website
4.    My blog on the impact of aid at