CGD's work on Cash on Delivery aid is highlighted in a piece in Foreign Policy on small ideas with big potential.
For all the laments we heard this year about inequality and calls to Occupy this or that, very little was actually done to close a wealth gap that, in some countries, has reached Gilded Age proportions. In the United States, the economy sputtered along and the presidential horse race soaked up most of the oxygen, while Europe spent most of 2012 peering into the abyss. In short, it was a year sorely in need of big ideas.
A look behind the headlines, however, finds an abundance of seemingly small ideas that are quietly changing the world in big ways.
In foreign aid: Ethiopia wants more of its children to stay in school. The Department for International Development (DFID) wants to help. Normally, the British aid agency would give Ethiopia money for building schools, hiring teachers, or taking other specific steps. Ethiopia would have to provide regular reports about how the money was used. Would the program work? No one would ever know.
This year something different is happening: DFID has decided to pay only when something good comes out.
The idea, in the early days of a pilot, comes out of the Washington-based Center for Global Development, which calls it "cash on delivery." Cash on delivery could make foreign aid work better, allowing countries to do what they think works, rather than following rules made by a faraway donor. It also could raise political support for foreign aid in wealthy countries. Under cash on delivery, foreign aid is never wasted; if a program doesn't work, taxpayers don't pay.