The Trouble with Aid
 Critics of foreign aid argue that much of it is ineffective or even hinders development. Too often, money is spent on inputs that fail to achieve the desired outcomes. While many aid programs are successful, others fail for any number of reasons. A primary flaw in current aid programs is that they tend to strengthen accountability from recipient countries to donors rather than to their own citizens. This donor-recipient relationship often focuses more on disbursements and verifying expenditures than it does on achieving results. It also frequently has high transaction costs and undervalues local experimentation and learning.
Cash on Delivery Aid
The Center for Global Development has developed Cash on Delivery Aid (COD Aid) as an approach to help overcome these problems. It builds on existing initiatives that strive to disburse aid against results, but it takes the idea further by linking payments more directly to a single specific outcome; giving the recipient increased authority to achieve progress however it sees fit; and assuring that the recipient country’s progress is transparent and visible to its own citizens. These features could rebalance accountability, reduce transaction costs, and encourage local innovation and learning.
Recent News
- Bill Savedoff recently presented COD Aid and its application to the water and sanitation sector for a workshop organized by the Gates Foundation. You can read more about COD Aid for water in this concept note.
- During an event at the Center for Strategic and International Studies, Thomas Frieden, director of the Center for Disease Control, said that COD Aid is a model “well worth exploring” for tobacco control.
COD Aid is a practical mechanism for making aid more effective and achieving the goals set out in the Paris Declaration and Accra Agenda for Action, including a greater focus on country ownership and on results, more predictable aid, improved accountability, and increased harmonization of foreign assistance approaches.
The approach can be applied to any sector in which there is a shared, measurable outcome toward which governments and donors are committed to making progress. To learn more, please take a look at our book chapters or book brief, or visit our pages about the approach and its application to education, health, and other sectors. You can also listen to Nancy Birdsall describe COD Aid and several potential applications in these CGD wonkcasts, or Ayah Mahgoub discuss the application to education and recommendations for how COD Aid can be piloted in Malawi, Ethiopia or other countries in this wonkcast.
Work in Progress
CGD is currently working with technical experts, potential official and private donors, and partner countries to design pilots of COD Aid, and to design research programs to accompany the pilots. While we have good reasons to think that COD Aid would be effective, we recognize that development is complex and that only by evaluating its implementation can we learn if COD Aid is effective relative to traditional projects and under which circumstances it can be helpful. This research would also enhance our understanding of how aid can strengthen, rather than burden, local institutions and provide insights about institutional change and good practices in different settings.
Contact
This initiative is led by CGD president Nancy Birdsall and William D Savedoff, with the support at CGD of Rita Perakis, program coordinator. Please send feedback to rperakis@cgdev.org.
Newest
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Selected Works
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This paper assesses the challenges of applying COD Aid in the health sector. After clarifying how COD Aid differs from results-based financing approaches, the paper presents four key characteristics for designing a successful agreement. It discusses features of the health sector and foreign aid...
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This brief examines options for a COD Aid contract in Pakistan’s education sector and its potential benefits for improving the relationship between official donors and the government of Pakistan, and for increasing the effectiveness of aid spending in Pakistan.
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Traditional donor financing mechanisms tend to track inputs instead of results, lack transparency, accountability, and country ownership. These inefficiencies waste resources, erode the trust of aid constituencies, and fail to improve the lives of the poor. TrAid+ is a new mechanism that aims to...
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Nancy Birdsall on Cash on Delivery (COD) Aid
- Mar 28, 2011
A little over a year ago, I invited Nancy Birdsall, founding president of the Center for Global Development, to join me on the Wonkcast to talk about her big new idea, Cash on Delivery Aid (COD Aid), an innovative approach to the delivery of foreign assistance. COD Aid has since gained a lot of...
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In a presentation delivered at the UK Department for International Development on March 9, 2011, CGD president Nancy Birdsall spoke about opportunities and challenges for the implementation of Cash on Delivery Aid, an approach that allows aid agencies to address both short-term and long-term...
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In this two-minute clip from 2010, Ayah Mahgoub, former CGD special assistant to the president, discusses Cash on Delivery Aid (COD Aid), a CGD initiative for making aid more effective. COD Aid builds on existing initiatives to disburse aid against results but links payments more ...
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This brief describes a new approach, Cash on Delivery Aid, which gives recipients full responsibility and authority over funds paid in proportion to verified measures of progress.
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In this short essay, senior fellow David Wheeler compares the world’s foreign assistance architecture to how the rest of the world operates in the digital age. He suggests that multilateral and bilateral transactions from one behemoth to another may be stuck in the past now that technology can...
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This paper proposes a cash-on-delivery approach to reward AIDS programs in accordance with the number of verifiable HIV infections they avert.
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Donor countries have committed to major increases in development assistance but doubts remain over how effective this aid is. At this launch of their new book, authors Nancy Birdsall, William Savedoff, and Ayah Mahgoub present Cash on Delivery Aid, an approach that links aid directly to outcomes...
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Cash on Delivery (COD) Aid proposes serious reform to make aid work well by forcing accountability, aligning the objectives of funders and recipients, and sharing information about what works.
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This paper assesses the challenges of applying COD Aid in the health sector. After clarifying how COD Aid differs from results-based financing approaches, the paper presents four key characteristics for designing a successful agreement. It discusses features of the health sector and foreign aid...
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In this paper, part of the Innovations in Aid series, Jean-Michel Severino and Olivier Ray describe shifts in the objectives of overseas development assistance (ODA) over time and conclude that it is time to put the concept itself to bed—in favor of what they propose should be called “Global...
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This brief describes a new approach, Cash on Delivery Aid, which gives recipients full responsibility and authority over funds paid in proportion to verified measures of progress.
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This brief examines options for a COD Aid contract in Pakistan’s education sector and its potential benefits for improving the relationship between official donors and the government of Pakistan, and for increasing the effectiveness of aid spending in Pakistan.
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In a presentation delivered at the UK Department for International Development on March 9, 2011, CGD president Nancy Birdsall spoke about opportunities and challenges for the implementation of Cash on Delivery Aid, an approach that allows aid agencies to address both short-term and long-term...
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Improving education has been a central goal of international development for decades, and the best indicators of improvement measure student performance. But can such measurements be used as incentives to stimulate more rapid improvement in education? There are no simple answers to this question...
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Traditional donor financing mechanisms tend to track inputs instead of results, lack transparency, accountability, and country ownership. These inefficiencies waste resources, erode the trust of aid constituencies, and fail to improve the lives of the poor. TrAid+ is a new mechanism that aims to...
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In Reinventing Foreign Aid, CGD non-resident fellow William Easterly has gathered top scholars in the field to discuss how to improve foreign aid. These authors, Easterly points out, are not claiming that their ideas will (to invoke a current slogan) Make Poverty History. Rather, they take on...
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In this short essay, senior fellow David Wheeler compares the world’s foreign assistance architecture to how the rest of the world operates in the digital age. He suggests that multilateral and bilateral transactions from one behemoth to another may be stuck in the past now that technology can...
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Owen Barder, Senior Fellow and Director for Europe As director for Europe, Owen Barder is leading CGD's effort to internationalize its policy outreach. His research focuses on transparency and accountability in aid and the political economy of development policies. He was a British civil servant for more than 20 years and is the former director of...
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Nancy Birdsall, President Nancy Birdsall is the Center for Global Development's founding president. From 1993 to 1998, she was executive vice president of the Inter-American Development Bank, the largest of the regional development banks, where she oversaw a $30 billion public and private loan portfolio. Before that she...
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Mead Over, Senior Fellow Mead Over applies economics and statistics in the search for more effective, efficient, and pro-poor health policies in developing countries. His newest book is Achieving an AIDS Transition: Preventing Infections to Sustain Treatment.
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William Savedoff, Senior Fellow Bill Savedoff has been working for more than 20 years on economic and social development issues. His work is focused on finding ways to improve the quality of social services in developing countries, with particular attention to incentives, institutions, and political economy. His most recent book...
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TrAid+ Channeling Development Assistance to Results - Working Paper 247
- Mar 29, 2011
Traditional donor financing mechanisms tend to track inputs instead of results, lack transparency, accountability, and country ownership. These inefficiencies waste resources, erode the trust of aid constituencies, and fail to improve the lives of the poor. TrAid+ is a new mechanism that aims to...
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COD Aid: Transfers for Transformation (Presentation)
- Mar 14, 2011
In a presentation delivered at the UK Department for International Development on March 9, 2011, CGD president Nancy Birdsall spoke about opportunities and challenges for the implementation of Cash on Delivery Aid, an approach that allows aid agencies to address both short-term and long-term...
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Tailored Aid for a Tailored Age?
- Jun 24, 2010
In this short essay, senior fellow David Wheeler compares the world’s foreign assistance architecture to how the rest of the world operates in the digital age. He suggests that multilateral and bilateral transactions from one behemoth to another may be stuck in the past now that technology can...
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Cash on Delivery: A New Approach to Foreign Aid
- Mar 16, 2010
Cash on Delivery (COD) Aid proposes serious reform to make aid work well by forcing accountability, aligning the objectives of funders and recipients, and sharing information about what works.
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A Little Less Talk: Six Steps to Get Some Action from the Accra Agenda
- Aug 21, 2008
In September 2008 official aid donors and recipients will meet in Accra, Ghana, to discuss how to make development assistance more effective. CGD president Nancy Birdsall and co-author Kate Vyborny suggest that advocates of better aid who really want a win at Accra forget haggling over broad...
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Reinventing Foreign Aid
- Jul 31, 2008
In Reinventing Foreign Aid, CGD non-resident fellow William Easterly has gathered top scholars in the field to discuss how to improve foreign aid. These authors, Easterly points out, are not claiming that their ideas will (to invoke a current slogan) Make Poverty History. Rather, they take on...
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Cash on Delivery: A New Approach to Foreign Aid
- Mar 23, 2010
Donor countries have committed to major increases in development assistance but doubts remain over how effective this aid is. At this launch of their new book, authors Nancy Birdsall, William Savedoff, and Ayah Mahgoub present Cash on Delivery Aid, an approach that links aid directly to outcomes...
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Aid Effectiveness: How Well is EU Aid Spent?
- May 16, 2008
In the run up to Accra High Level Forum on Aid Effectives, Koos Richelle, Director General for EuropeAid, the European Commission's development implementation entity, will talk about the EU's commitment to Aid Effectiveness (European Consensus). Richelle will examine whether Europe is delivering on...
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Donor Politics and the Channels and Effectiveness of Foreign Aid
- Mar 1, 2007
The literature on aid effectiveness has focused more on recipient policies than the determinants of aid allocation yet a consistent result is that political allies obtain more aid from donors than non-allies. In the first of two papers, we show that aid allocated to political allies is ineffective...
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