21 Jul

The basic problem with international aid is that nobody in the mix has real incentive to get it right.

Regardless of what aid agency or donor or UN propaganda might say, the Humanitarian Aid Industrial Complex as a whole is structured to deliver a product that is lukewarm. I’ve written before that the primary architecture of the Aid Industry is around leveraging and tracking the flow of massive quantities of resources. This, rather than ensuring solid outcomes that benefit the objects of aid: the “beneficiaries”, “The Poor”, survivors of disaster and conflict.

Donors – whether we’re talking about governmental donors like USAID or DFID, large charitable foundations like Ford or the Bill & Melinda Gates Foundation, or individuals – have hopelessly conflicted agendas when it comes to what they fund, where, and how. Agendas that run the gamut from foreign policy objectives to market share to “laying up treasure in Heaven.”

INGOs may do many good things, but they are basically not structured to deliver effective aid to the poor. They are structured achieve and maintain their own existence. And while it is easy to want to point at the large household charities as examples, it is no less true of the smaller ones.

Governments very often have multiple, sometimes conflicting priorities that distract from helping their own impoverished citizens.

For all of it’s insistence on “fact” and “Truth”, even mass media lacks incentive to promote truly appropriate, effective aid, rather than bad aid.

I am not blind to the fact of many, many highly committed, often exceptionally capable, and perhaps genuinely altruistic people in all of these categories who continue to dedicate their lives to alleviating human suffering, to addressing the plights of those far less fortunate. But we must not be naïve to the reality that Humanitarian Aid as we currently know it is set up to achieve – at best – modest gains on behalf of the world’s poor. Sometimes incentives run the other way, and those same actors actually benefit more by delivering less.

There is no one in the Aid equation right now who gains if and only if, and when and only when the poor also gain. Even more pointedly, besides the poor themselves, there is no one in the Aid equation who loses when the poor lose.

Until we resolve this basic problem, Aid successes will never get better than one-off, incremental, marginal, equivocal.

11 Responses to “Incentive”

  1. Chika Umeadi 21 July, 2010 at 3:12 pm #

    I know that the U.S financial industry isn’t the best model right now for anything, but how about re framing giving aid into an investment? Much of our financial industry looks to the outcome of an investment when deciding to continue to give. Making the recipient of aid (governments, NGOs…etc) accountable based on what they have done ensures that the donor and the recipient are on the same page.

    I almost forgot…. Investment in this sense wouldn’t always mean in terms of money. How many more children have you sent to school? How many people are not starving as a result of the aid given? How many more roads have you built? Those examples could be outcomes too.

  2. Benh 21 July, 2010 at 3:24 pm #

    The quote “Managing Poverty is Big Business…..but Eradicating Poverty is Revolutionary” is exactly why FH Canada set up the Poverty Revolution.

  3. John 21 July, 2010 at 4:02 pm #

    This is a great post. Thank You.

    Lately I’ve been thinking a lot about what it means to “Hire local staff and train them”. I wonder if that is backwards. Maybe “Hire local staff and let them train us” is more appropriate. At the risk of sounding all philosophical I have heard that humility is the path to wisdom.

  4. Dave Algoso 21 July, 2010 at 11:18 pm #

    I think your analysis of the current incentive structures is dead on. But that doesn’t mean it’s a problem that can actually be solved. Maybe one-off, incremental, marginal, equivocal change is just how the world works?

  5. Ian 22 July, 2010 at 8:27 am #

    Another great post.

    For me the biggest incentive challenge with aid agencies is the separation between the financers and the customers. In business at some stage you need to make a profit (unless you are Twitter) and so people need to like and pay for what you offer – either you provide it or you go out of business.

    In the aid world the people who pay (rich country governments, individuals and corporations) are not the ones that “benefit”, and so what organizations do is often done to meet the needs of donors rather than beneficaries – and of course since donors are often far removed in terms of geography and perspective from beneficiaries, then its not surprising that the outputs are sub-optimal.

    I don’t think there is an easy fix for this – but making the views and needs of beneficiaries more visible to donors, and finding ways to hold organizations more accountable to them would go a long way to help.

  6. D. Watson 22 July, 2010 at 11:46 am #

    What about some of the social entrepreneurial approaches that are in it to make money, but only do so if the poor’s business is profitable?

  7. lu 22 July, 2010 at 9:43 pm #

    like dave, i agree that your analysis is bang on, but unlike him, i don’t agree that it can be solved.

    the way that aid is (and must be, by its very nature) shaped is that there is a giver and a receiver and although the individuals involved might have their intentions (and hearts) in the right place, the very system has competing ideals and motivators.

    and it is not just humanitarian aid that suffers this blight. i have seen the very same things in the non-profit sector in canada, but interestingly, have not seen it in my short time in the corporate world, where everyone working across a variety of departments all must work towards the same goal – the profits made by the organisation.

    we can easily say that humanitarian aid workers, organisations, and beneficiaries all have the same goals too – to save and improve people’s lives – but how that is done is never easily agreed upon nor do we ever truly know how to to realise our goals, leaving us with the system that we have. it is broken and i hope to see it improved, but i recognise that it will never be a perfect machine.

  8. Observer 1 November, 2010 at 12:08 am #

    See the bigger picture. End aid.


  1. on entrepreneurship and NGOs « penelope m. c. - 28 July, 2010

    […] do many good things, but they are basically not structured to deliver effective aid to the poor. They are structured achieve and maintain their own existence. And while it is easy to want to point at the large household charities as examples, it is no less […]

  2. Big Business « Tales From the Hood - 18 April, 2011

    […] Shotgun Shack and I (once or twice) and plenty of others have already pointed out, so long as the recipients of aid and […]

  3. Some days… « Tales From the Hood - 12 October, 2011

    […] We basically lack the incentives to get aid right. […]

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