Cash on Delivery: A New Approach to Foreign Aid


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The Cash on Delivery Aid approach proposed in this book could breathe new life into donor commitments to the education Millennium Development Goals and could serve as a vehicle for serious additional funding.
—Kofi Annan, Secretary-General of the United Nations, 1997–2006

Foreign aid has no shortage of critics. Some argue that it undermines development and inherently does more harm than good; others insist that aid must be seriously reformed to work properly. 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.

Public and private aid can improve lives in poor countries, but the willingness of taxpayers and private funders to finance aid programs depends more than ever on showing results. COD Aid is a funding mechanism that hinges on results. At its core is a contract between funders and recipients that stipulates a fixed payment for each unit of confirmed progress toward an agreed-upon goal. Once the contract is struck, the funder takes a hands-off approach, allowing the recipient the freedom and responsibility to achieve the goal on its own. Payment is made only after progress toward the goal is independently verified by a third party. At all steps, a COD Aid program is remarkably transparent: the contract, the amount of progress made, and the payment are disseminated publicly to highlight the credibility of the arrangement and improve accountability to the public. COD Aid is a new approach to foreign aid, but one that complements other aid programs and would ultimately encourage funders and recipients to use existing resources more efficiently.

Cash On Delivery Aid: A New Approach to Foreign Aid explains the approach in detail and investigates its application in one sector: education. More specifically, the authors show how foreign aid agencies could use COD Aid to help developing countries achieve universal primary school education. The example illustrates how to 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.

The authors deserve a serious hearing for their very creative Cash on Delivery proposal. It would change aid in two welcome directions: emphasizing outcomes rather than inputs and giving recipient governments freedom to choose how to reach their goals.
—William Easterly, Professor of Economics, New York University

No one who follows the contentious debate about foreign aid can afford to overlook this book.
—Ashraf Ghani, Finance Minister of Afghanistan, 2002–2004

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