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Cash on Delivery is an approach to foreign aid that focuses on results, encourages innovation, and strengthens government accountability to citizens rather than donors. Under COD Aid, donors would pay for measurable and verifiable progress on specific outcomes, such as $100 dollars for every child above baseline expectations who completes primary school and takes a test. CGD is working with technical experts and potential donors and partner countries to design COD Aid pilots and research programs.
Cash on Delivery Aid is designed to overcome the problems of traditional aid, which often focuses more on disbursements and verifying expenditures than on results, undermines a government’s accountability to its citizens, and undervalues local experimentation and learning. COD Aid’s advantage is in linking payments directly to a single specific outcome, allowing the recipient to reach the outcome however it sees fit, and assuring that progress is transparent and visible to the recipient’s own citizens. These features rebalance accountability, reduce transaction costs, and encourage innovation.
COD Aid can be applied to any sector in which donors and recipients can agree upon measurable, verifiable outcomes and commit to making progress toward those shared goals. The approach is fully explained in Cash on Delivery: A New Approach to Foreign Aid (CGD, 2010). Listen to more about COD Aid in these Wonkcasts. Explore the links to the right for more information on specific sectors and countries.
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Results-based aid (RBA) is a form of foreign assistance in which one government disburses funds to another for achieving an outcome. This paper distinguishes four different theories used to justify RBA programs and analyzes four case studies – from GAVI, the Amazon Fund, Ethiopian Secondary Education and Salud Mesoamérica.
In recent years, donors have been making greater use of performance-based payment approaches to fund development programs. The UK Department for International Development, using the broader term being used across the UK government, has added “Payment by Results” (PbR) to the development lexicon.
Human capital and its relation to poverty are central areas of study in development economics. The Mexican conditional cash transfer (CCT) program Progresa/Oportunidades is a particularly innovative human capital development program that was rigorously evaluated using a randomized design. In a time when randomized evaluations of social policy were still rare, a large-scale randomized evaluation was carried out that demonstrated important effects of the program on human capital accumulation and on poverty alleviation.
The program’s novelty and the finding of positive initial impacts contributed to both a large scaling up within Mexico and an impressive spreading of the program’s key features to new programs around the world. Susan Parker will review the academic literature on the development, evaluation and findings of the Progresa/Oportunidades program from her work with co-author Petra E. Todd.
The President’s Budget Request for FY 2015 proposes flat funding for international affairs but it contains priorities and policy reversals that have led at least one observer to describe it as edgy! And indeed, it is edgy on a number of fronts, including a proposal by the Millennium Challenge Corporation (MCC) to pilot Cash on Delivery Aid (COD Aid).
This introductory note is for funders that are considering the Cash on Delivery Aid approach for their operations. It offers answers to the most common questions that staff from government agencies and foundations have posed to the Center about testing this outcomes-focused approach. It provides specific sector examples and offers references to other resources and FAQs on the Center’s website that have more detailed information about designing and implementing Cash on Delivery Aid programs.
It would be strange to try learning how to play music without listening to musicians. Similarly, learning about results-based aid programs requires listening to people who design and implement them. That is just what we did last week in a set of workshops about implementing programs that pay for results – programs which apply some or all of the principles that we’ve discussed here at the Center as Cash on Delivery Aid. As a result of discussing real experiences, we discovered that some of the challenges are quite different than we had anticipated while a number of common concerns have simply failed to materialize.
Politicians and agency officials are always morally indignant when it comes to corruption in foreign aid, pointing to elaborate procedures and investigative offices to prove that they are “tough” and calling for zero tolerance (most recently here and here). However, for most governments and agencies, corruption is only a problem when it is discovered. That is when it becomes an obstacle to disbursing funds and keeping business moving.
Over the last few months, in the context of my new affiliation with CGD, I’ve been making a transition from “Forestry World” — which I inhabited for six years at the Center for International Forestry Research in Indonesia — to “Development Finance World,” headquartered here in Washington with the World Bank, the IMF, and myriad think tanks and advocacy groups interested in development.