Julian Gore-Booth

The Department for International Development (DFID) today published its Annual Report for 2011/12. DFID and the coalition government are to be congratulated for protecting the UK’s spend on overseas aid, and for the commitment to reach the goal of 0.7% of Gross National Income to be spent on aid for developing countries from next year.

While the report gives good examples of how aid money can have a real and positive impact on communities and countries where assistance is much needed, there are difficulties in DFID’s approach – not only around the broadly acknowledged conclusion that government aid on its own will not solve many of the problems faced in the developing world but also around value for money.

In response to the myriad of challenges that it faces, DFID has introduced a new Independent Commission for Aid Impact and a Quality Assurance Unit to add to the already significant bureaucracy which seeks to track money spent by the department across the globe. This is laudable in intent and it is easy to understand the rationale behind it. DFID is spending taxpayers’ money, and with stories of aid funding producing limited results or being siphoned off into the pockets of corrupt officials proper monitoring of how aid is spent is of course essential. But is this allocation of our money the right one?

There is a danger that the bureaucracy and form filling involved in deciding where DFID’s money will be spent, and the monitoring of spending once it has been allocated, not only starts to use up too many of the pence in each UK aid pound, but also serves to stifle development efforts and exclude many worthy and effective initiatives where the systems are not in place to provide the information needed to satisfy DFID’s criteria. This is where charities and philanthropic foundations funded by businesses and individuals can add value, both by complementing official government aid and by encouraging new approaches to development that go beyond traditional models.

At the STARS foundation, an independent grant-giving organization, we give grants of up to $100,000 to local NGOs in Africa, the Middle East and the Asia-Pacific as unrestricted funding together with a package of consultancy and media support. We carefully vet these organizations during the application process and ensure that they have a proven track record of delivering programmes and spending money wisely, and we work with them to plan how they will use their award if they are successful. Weighting our efforts and costs towards due diligence prior to making investment decisions offers an alternative to costly monitoring later and promotes a more equal relationship between donor and grantee once the investment decision is made.

Crucially we believe that local organizations are best placed to meet the needs of the communities that they serve and to decide how funding should be allocated to achieve maximum impact. Should they wish to invest in organizational capacity then they can choose to do so. So while funds can be spent on improving the quality and quantity of activities (the more typical donor grant), they can also be spent on training, allocated to reserves, invested to generate income, applied to staff costs or organizational infrastructure and so on. Financial accountability is of course a key part of our monitoring and evaluation process but we don’t need to see every receipt or trace every transaction.

Akhil, Director of Sense International India, working with Meena

This approach has reaped dividends. An award from the STARS Foundation often leads to small organizations growing, becoming more resilient and ultimately helping more people. Examples include ACE Africa, a 2010 recipient, who invested their award in financial management training as well as in the eradication of jiggers (a parasitic flea that burrows into the skin); Sense International India, a 2009 recipient, who invested part of their award in high-yield bonds, thereby covering the salaries of two community-based workers for deafblind children; or Child Welfare Scheme Nepal, another 2009 recipient, who used the award to establish a fundraising department as well as to buy a plot of land to expand their health clinic.

So, while DFID’s work over the past year is to be applauded, it is as important as ever that this be complemented by investment in a strong, vibrant and local development sector and that the needs of local communities are weighed up against the spiralling requirements (and costs) of reporting. The STARS Foundation, and organizations like us, will continue to seek out organisations in the South that can be trusted to help the poorest people in their own communities.

DFID will do well to keep asking of itself whether the increased spend on compliance might be better directed towards a development model that empowers southern actors whose quality and impact is already proven.

Julian Gore-Booth is interim CEO of the STARS Foundation.