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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.
This week, from November 29th through December 2nd, heads of government and multi-lateral institutions as well as representatives from business, and civil society will convene to evaluate the progress that has been made since world leaders met in Monterrey in 2002 to develop a plan to confront the challenges of international financing for development. Almost seven years later, some progress has been made towards fulfilling the commitments made there, but much is left to be done. In Monterrey, leaders made commitments to mobilize domestic and international resources, increase financial and technical cooperation, improve international trade, and address issues surrounding external debt and systemic challenges to financing international development.
The Third High Level Forum on Aid Effectiveness held in Accra, Ghana has come to an end, with as many as 1,500 people (officials, advocates, activists) milling and talking. The conference was convened as a follow-up to the 2005 Paris Declaration on Aid Effectiveness, in which donors and recipients agreed on five major principles to improve foreign aid: recipient country ownership of programs and reforms funded by aid, alignment of donor programs to recipient country priorities, harmonization and coordination between donors, managing for results, and mutual accountability of both donors and recipients for achieving those results.
This is a joint post with Nancy Birdsall and Bill Savedoff.
During a panel discussion we hosted at the World Bank and IMF annual meetings in Istanbul last month on mutual accountability and outcomes in aid, Max Lawson from Oxfam, in referring to COD Aid, said that CGD appears to have more effective publicity strategies and reach than the European Commission. While we do have a (small but) stellar communications team, our ideas spread far primarily because other organizations are seriously engaged in exploring and debating new ideas like the ones we have proposed (otherwise our tiny team would be sleepless, to say the least!).
One case in point is the recent COD Aid briefing paper issued by the Catholic Agency for Overseas Development (CAFOD) – a large international development organization based in the UK which raises about 75% of its funds from individual supporters.
Of course we agree with NYTimes development columnist par excellence Nicholas Kristof that our proposal for Cash on Delivery Aid should be tried. So we are sorry to quibble, but on a couple of points cannot resist.
First Kristof wrote: “The basic truth of foreign aid is that helping people is far, far harder than it looks.” And he’s right. But a big part of the difficulty is with us, not them.
“But we want them to begin counting.” This is the key line in Tina Rosenberg’s column today on Cash on Delivery Aid, where she responds to comments on her initial column from readers worried that governments in poor countries don’t have the capability or the resources to measure things – not even births and deaths.
This is a joint post with William Savedoff and Ayah Mahgoub.
Shout-out to Duncan Green and Oxfam for commenting on our new book and calling, like Nicholas Kristof, for pilots of COD Aid. Best of all, Duncan noted (as have several others such as Owen Barder in this note among others) that many of the usual concerns about COD Aid (see our FAQs for some) apply as much or more to other forms of aid.
But on one big point we disagree: It’s not true that COD Aid has been tried before.