The Approach

The Center for Global Development has developed a design for a new form of aid called Cash on Delivery Aid, under which donors would pay for measurable progress on specific outcomes pre-agreed with recipient governments.  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. 

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. It can also be applied by governments to their own transfers to states or districts.  Once an outcome indicator has been identified and the basic contract has been negotiated, any number of donors – whether public or private – can pool funds without creating additional reporting requirements or changing the structure of the aid arrangement. The clarity of the disbursement against outcomes may reduce aid volatility that often results from domestic policy disputes in donor countries or changes in foreign policy priorities. Most of all, recipient countries have the opportunity to focus on what they need to do to make progress rather than to spend time documenting expenditures or focusing on strategies that are most likely to please their funders.

This page includes research, analysis, discussion and reactions to the idea by CGD staff, external researchers and practitioners.

Cash on Delivery Aid book
In March 2010, CGD released the book Cash on Delivery: A new approach to foreign aid with an application to primary schooling. The book explains the Cash on Delivery approach in detail and investigates its application to the primary education sector. The example of primary education illustrates how funders and governments of aid recipient countries can deal with potential challenges of the approach – challenges that are no greater than those of traditional aid – and includes model term sheets for contracts that could be used for any COD Aid agreement. More information on the launch event can be found here.

Cash on Delivery Aid brief
This seven-page brief summarizes the features of COD Aid and discusses issues related to applying the approach in primary education and other sectors.

Cash on Delivery Aid wonkcasts
Nancy Birdsall describes Cash on Delivery Aid and several potential applications of the approach inthis CGD wonkcast with Lawrence MacDonald.  Ayah Mahgoub discusses with Lawrence the application of the approach to education and CGD recommendations for how it can be piloted in Malawi, Ethiopia or other countries in this wonkcast.

Payments for Progress: A Hands-Off Approach to Foreign Aid
Cash on Delivery (or progress-based) Aid was first proposed in this paper by Owen Barder and Nancy Birdsall.  The paper makes the case that this new, less intrusive form of aid would avoid undermining recipient-country institutions, and thus better assist long-term development.

Cash on Delivery Aid for Education: Experiences of Incentive-Based Approaches
In this note, Kate Vyborny overviews a range of other incentive-based approaches in aid, explains how Cash on Delivery Aid differs from them, and outlines how it can learn from these experiences.

Learning from Cash on Delivery: Research to Accompany a Pilot
Merilee Grindle explores the methodology for the research to accompany a pilot.  This note was prepared as input into the book Cash on Delivery: A new approach to foreign aid with an application to primary schooling.  The COD Aid approach described in the book incorporates changes to resolve issues raised by this note.

Assessing the Efficacy and Institutional Impacts of Cash on Delivery Aid: The Necessity but Insufficiency of a Demand-Side Emphasis
Michael Woolcock argues that research to assess the effects of a Cash on Delivery Aid pilot must take into account the likely trajectory over time of impact of interventions in education--when the payoffs begin and end, and how that affects the recipient's use of the funds.  This note was prepared as input into the book Cash on Delivery: A new approach to foreign aid with an application to primary schooling.  The COD Aid approach described in the book incorporates changes to resolve issues raised by this note. 

The Trouble with Cash on Delivery Aid: A Note on its Potential Effects on Recipient Country Institutions
Ngaire Woods and Paolo de Renzio explore the conditions that might lead to changes in how institutions behave in recipient countries, and thus to progress in education and development.  This note was prepared as input into the book Cash on Delivery: A new approach to foreign aid with an application to primary schooling.  The COD Aid approach described in the book incorporates changes to resolve issues raised by this note. 

Where can Cash on Delivery Aid work?
In this note, CGD staff briefly describes why they think Cash on Delivery Aid can be tried in a range of different types of countries, including fragile states.

The Aid System: Does 'Mutual Accountability' Encourage Outcomes?
CGD hosted a panel discussion at the 2009 World Bank and IMF Fall Meetings on ways development assistance can help foster, rather than undermine, linkages between governments and their people.  Cash on Delivery Aid was discussed as one among several methods for increasing accountability to developing country citizens through development assistance.

COD Aid