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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 traction, so I invited Nancy back to update us on recent developments, including a planned pilot program in Ethiopia.

[Listen to the Podcast]

For those new to the concept, I start by asking Nancy to explain the problems with traditional aid approaches, and how COD aid would solve these. Too often, she says, aid is given based on priorities set by funders who care more about how their money is spent than what outcomes it produces. COD Aid focuses on outcomes by making aid transfers contingent on yearly incremental improvements in an agreed indicator, such as the number of kids who complete primary school and take a test. (For much more on COD Aid, see here.)

Can aid donors find a better way to deliver aid? My guest this week is Nancy Birdsall, president of the Center for Global Development. Along with William Savedoff and Ayah Mahgoub, Nancy is working on a potential new way of disbursing foreign assistance called Cash on Delivery Aid. COD Aid seeks to devise simple, results-based contracts that reward developing countries for making progress towards previously agreed goals—such as increased primary school completion rates, vaccination coverage, or access to clean water.

In the podcast, Nancy explains that the traditional mode of giving aid, in which donors often take an active role in prescribing which actions recipient governments should take, can undermine incentives for governments to identify problems and design and implement locally appropriate solutions. "We have to create a system in which outside resources actually help the developing country governments find out what works in their particular setting," says Nancy.