If We Show Them, Will They Care?

Participants in this month’s International Aid Transparency Initiative (IATI) meeting in Paris agreed to provide more responsive, detailed and transparent information about aid programs.  Will it make a difference?

As Owen Barder, who attended the meeting, acknowledges, changing organizational infrastructure and culture will not be easy. However, transparency is important for development projects because their effectiveness *might* improve if each aid agency knows what the others are doing, recipient governments can see the whole picture, and public watchdogs can hold them all accountable.  

Why do I say *might*?

We are increasingly awash in information.  Information availability used to be the binding constraint. But now we are on the brink of information overload, and the constraint is increasingly usability and incentives rather than availability.

Over the fifteen years I spent in the official aid sector (primarily at the World Bank, but also at USAID and the Asian Development Bank), I worked on millions of dollars of initiatives designed to increase the availability of information about aid projects.  In Indonesia, we did a giant database of all the coconut, rubber, and palm oil projects being funded by the various aid agencies.  In Russia, the G-7 was so concerned about poor aid coordination and duplication that they ordered the Bank to create a database of everything that was happening.

What was the net result of these initiatives?  Nada.  No change in behavior.  In each case, we made a Herculean effort to get the data into the database and distributed, but to my knowledge no agency changed what it did or how it did it.  And in both cases, the database efforts collapsed after about six months - both from lack of use as well as lack of incentive for anyone to provide the data.  

While I don’t have hard and fast data, I would guess that about 80-90% of information initiatives fail to achieve their intended effects -i.e., fail to change behavior so that some underlying phenomenon is improved.  For these initiatives to work, they require a combination of factors - the right information, gathered from the right sources, displayed through the right user interface, to the right people, at the right time.  Will the participants at the IATA meeting get all these right?  Are the right incentives in place?  Stay tuned...

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Democratizing Development: Hayek, Easterly, and Roberts Edition

Easterly makes two points about the search for solutions or at least things that might help poor people live better lives. One is that solutions are often proposed in isolation and are unlikely to work in isolation. Second, any solution that is going to work is likely to come from the use of local knowledge or at least dispersed knowledge rather than some expert who proposes some solution from the outside without local knowledge. These are both Hayekian insights.

That is from a nice post by Russ Roberts on an entry by Bill Easterly titled "The answer is 42! Why Development is not about solutions, it’s about problem-solving systems."

Taken together, these two posts provide much of the theoretical underpinning of the approach we are pursuing at GlobalGiving, to wit:  There are no universal panaceas, only solutions that work in specific places at specific times.  We want to help lead the formation of a marketplace (in the broadest sense, not just our own online marketplace), that effectively intermediates demand (for solutions) and supply (of money, networks, and expertise).

In such a market, there are rich information flows that go far beyond simple transparency.  Such a market generates information about what local people want (not what experts think they should have), about what approaches can meet those demands, and about whether ongoing initiatives are working - and how they could be improved.  All voices - regular citizens as well as experts - are heard and considered. This market is iterative - needs and solutions change over time based on both learning and shifting conditions.

Such a market subsumes but goes beyond aid itself.  It is part of a larger system of democracy.  It is the Democratization of Development in the fullest sense.  We are far from achieving it, but we are making progress.  As I have written here and here, the question is whether the official aid sector is going to help lead the charge or is going to be left behind, slowly fading to irrelevance.

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Aid Transparency: First the UK, Now the US?

This guest post is by Felipe Cabezas, who recently joined GlobalGiving.

DFID, the UK’s aid agency, recently committed itself to an Aid Transparency Guarantee, which will allow donors and beneficiaries to view aid spending and will increase aid effectiveness via beneficiary feedback.

 Holbrooke with Pakistani Foreign Minister Shah Mehmood Qureshi

In a letter to Senator John Kerry, Ambassador Richard Holbrooke echoed DFID’s statement. In reference to USAID’s work in Pakistan, he wrote that “[John Kerry’s] suggestion of providing more information about our efforts on the Internet is a good one, and we plan on putting more information on the USAID and Embassy websites as our plans become more concrete.”

It is great that USAID’s Islamabad mission is signaling a greater commitment to aid transparency, and hopefully it will consider the Center for Global Development’s suggestions when updating its website.

But USAID should not stop at Pakistan. It should provide the public with greater insight into its activities worldwide, thereby making the entire organization – not just one part – transparent.

DFID has already introduced a new kind of official aid agency: one that broadcasts its work and uses beneficiary feedback to improve its programs. If USAID embraces this model, it will join DFID as a leader in this “new age” of official aid.

Which other official aid agencies will follow?

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Corporate and International Giving Hold Up in Tough Times

It is no secret that the tough economic times have taken a toll on Giving in the US. Total giving fell by a total of over 5% in inflation-adjusted terms over the past two years.

The biggest decline came from decreases in foundation giving (over 7%), which should make them feel ashamed, since they are supposed to be cushion rather than exacerbate the effects of tough social and economic conditions.  

By contrast, giving by corporations was down less than average (only 4%) over these two years.

Source: Giving USA 2010

What is particularly impressive is that giving to international causes actually ROSE 7% over the past two years.  This is due partly but not entirely to the Haiti crisis.  I hope it also reflects a larger trend of Americans engaging more in the world around us.

What if development were an iPhone?

In my last post, I argued that the "operating system" used by the current international aid agencies is still in the dark ages.  I compared it to the punch cards we used when I first went to college.  We had to type our programs into a stack of hundreds of punch cards, walk them down to the computer center, hand them to an "operator," and wait in line for them to be processed.  The lower you were in seniority, the longer you had to wait.

Contrast that with today, when hundreds of millions of people have their own desktop (or laptop) computers, and several billion people have access to cell phones, which are beginning to emulate computers in many ways.  The advent of the iPhone and Android platforms also provide a way for hundreds of thousands of individuals or small companies to create and distribute new software.  That software may or may not succeed in the marketplace, but at least it has a chance of being downloaded and used, and there is a mechanism whereby the most popular new applications get flagged to other users.

So what would an analogous distributed operating system look like for the aid business?  The design of any such operating system has to address five questions:

1. Who is eligible to suggest what problems should be addressed?
2. Who is able to suggest the best solutions to those problems?
3. Who can fund those solutions?
4. Who can compete to implement those solutions?
5. Who is able to give feedback on how well the solutions work?

The existing system is closed.  It assumes that most of these questions will be answered within one of the "mainframe" organizations such as the World Bank, ADB, UNDP and bilateral agencies.  It even holds true for some large NGOs.  In each case, the organization tries to hire the best experts it can find to answer these questions.

A new aid system - a decentralized and distributed system - is now possible.  The expertise, resources, and technology all exist.  Unlike sixty years ago, large numbers of people (and not only experts) have relevant experience for the challenges faced by developing countries.  For example, the Peace Corps alone has over 250,000 alumni, but only the relatively few who work in aid agencies or large NGOs are able to contribute the expertise and knowledge they have.  And regular Americans alone give over $250 billion away each year to charitable causes - of which about 10% or $25 billion goes overseas - about the same amount as the US aid budget.  And the emergence of the PC, internet, cellphones, and related technology now make it possible to connect all of these people and resources directly to the people who need help.  If the existing agencies that run closed systems don't adapt, they will quickly become as irrelevant as the old IBM mainframes we used to use.

GlobalGiving shows that a distributed aid operating system can work.  We allow any qualified group in the world to post a project, and anyone (individual, company, foundation, or even aid agency) to fund it directly.  Projects have to post updates quarterly, and funders are allowed to ask questions and make comments.  We also allow other interested parties to visit and comment on the projects.  Most recently, we have begun to pilot ways of getting feedback directly from the beneficiaries via text messaging and even storytelling (thanks to support from the Rockefeller Foundation). Based on all this feedback, the projects that seem to be making the most difference get displayed higher on our search listings, which generally results in more funding - allowing the cream to rise to the top. 

The results have been that 2,700 projects in 110 countries have been funded over the past few years. Over 108,000 individual donors, combined with many leading foundations and companies around the world, have provided $30 million to these projects.  And many of these projects provide impact at a fifth of the cost of official aid projects (for example, irrigating land), while others pilot dramatic new ways to address such challenges as de-mining and tuberculosis, for example by training rats.

But that is only the proof of concept - and the tip of the iceberg.  In my next post, I will talk about why we keep innovating so fast at GlobalGiving, and how the GlobalGiving "operating system" could be adopted by the official aid sector, so that billions of dollars flow to the best projects in the most efficient way.

A New Operating System for Aid

Is it time for a new operating system?

DOS Operating System, circa 1982

That was the question I posed at a conference in Sydney last week hosted by the Lowy Institute and AusAID (Australia's foreign aid agency).  The topic of the conference was how AusAID might catalyze the innovation needed to create much greater results with their aid programs in developing countries.  The Australian government has pledged to double its foreign aid budget in the coming years, and AusAID wants to make sure it is well spent.

I began my presentation by talking about innovation in others fields, such as the computer industry.  I first showed a picture of a punch card, which was the way we put information into the (mainframe) computer when I went to college in the late 1970s.  I then showed how, over the next thirty years, competition led to rapid innovation.  Many people recall what a huge leap forward the DOS operating system was in the early 1980s, since it allowed people to use PCs on their own desktops.  Roughly ten years later, Microsoft released the Windows operating systems, which provided a graphical interface - another big advance.

All along, Apple had been selling its own graphical interface, but it struggled to avoid bankruptcy.  Once Apple released its beautiful Mac OSX operating system, however, it rapidly gained market share, forcing Microsoft to develop (after several failures), a powerful new release of its Windows system.  At the same time, Apple released the iPhone, a real game changer, especially when combined with Apple's App Store, which provided a distribution platform for hundreds of thousands of small, independent developers to release software applications.  As a result of its competitive success, Apple's market value overtook that of Microsoft in May 2010, and Apple recently released the iPad, which some people think could revolutionize the industry again.

iPad, 2010

The competition between Microsoft and Apple was based on what the customer wanted and liked.  Both companies experimented with many products, some of which failed and some of which succeeded.  They got rid (mostly) of the failed products and continually and incrementally enhanced the successful ones.  Every once in a while (as with the graphical interface and of the iPhone), they made giant leaps.

Contrast this with the aid industry, which, ironically, is managed in a centrally planned way even as it promotes market-based solutions to developing countries.  The big aid agencies get very little feedback from the ultimate beneficiaries - the people they are trying to help.   There has even been a recent trend around "partnerships and collaboration," whereby agencies agree to divide up their business and not compete.  For example, the World Bank might agree to concentrate on telecoms in a set of countries, while the ADB handles health.  This further insulates them from competition.  The result has been little innovation over the past decades.

In my talk, I asked "What operating system is the aid industry using right now?"  My answer was that, over the past sixty years, it may have not have progressed much beyond punch cards.  Even though there have been improvements to the various processes, the aid business is still based largely on a "mainframe" model, with a small number of mainframes such as the World Bank, ADB, UN, and bilaterals such as USAID, MCC, DfiD, and AusAID dominating the market.  What will it take to move toward a distributed "desktop" model of aid, and to stimulate the parallel creation of the DOS, Windows, Mac OSX, and even iPhone operating systems?

In my next post, I will talk about how GlobalGiving shows the possibilities of a distributed operating system for aid, and how pressure from our own competitors forces us to get better and better.

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The UK's new Transparency Guarantee

The UK Government is introducing a new ‘Aid Transparency Guarantee’, which will make our aid fully transparent to citizens in both the UK and recipient countries.

Aid transparency is critical to improving the effectiveness and value for money of aid. Making information about aid spending easier to access, use and understand means that UK taxpayers and citizens in poor countries can more easily hold DFID and recipient governments to account for using aid money wisely. Transparency creates better feedback from beneficiaries to donors and taxpayers, and helps us better understand what works and what doesn’t. It also helps reduce waste and the opportunities for fraud and corruption.

That is from a recent press release by DFID, the UK's aid agency.  Very impressive.  What I like about it is that they are publicly holding themselves accountable to do things (such as beneficiary feedback) that are not yet done at any scale - which means they will have to invent it.  (We are piloting beneficiary feedback at GlobalGiving and are excited about the possibilities.) 

Emotional Transactions

It’s always nice when someone gets you.

Seeing this post by Kevin Roberts, CEO of Saatchi and Saatch, about our work here at GlobalGiving gave me that sense.

He discusses how GlobalGiving uses the power of an “emotional transaction” to do good in the world—by allowing people not only to provide money to a cause, but to support an idea with which they genuinely connect.

This is the spirit we hope to foster through GlobalGiving: not only should we give to help change the world, but, in doing so, we should be engaging—intellectually and emotionally—with the people, ideas, and approaches that resonate with us and mean the most.

It is among those ideas—particularly when selected from among a vast marketplace—that we’ll find the most powerful ones (the “levers,” as Bill points out) to genuinely shift people and communities towards positive social change.

That’s what GlobalGiving is all about. Thanks, Kevin, for really getting us.

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A second bite of the Apple

In 1984 Apple launched the Macintosh. It was not the first graphical, mouse-driven computer, but it employed these concepts in a useful product. Then, in 2001, came the iPod. It was not the first digital-music player, but it was simple and elegant, and carried digital music into the mainstream. In 2007 Apple went on to launch the iPhone. It was not the first smart-phone, but Apple succeeded where other handset-makers had failed, making mobile internet access and software downloads a mass-market phenomenon.

That is from a nice article in The Economist about the launch of Apple's iPad.  As the article notes: "Apple...excels at taking existing, half-baked ideas and showing the rest of the world how to do them properly."  Earlier, I wrote about how we tend to think something WON'T work because it DIDN'T work when we (or someone else) tried it before.  But in fact most real breakthroughs come from someone tweaking something that has been tried before.  They may change the design details, or the available technology may have changed, or market conditions may have changed.  

Complexity often kills

Tainter looked at several societies that gradually arrived at a level of remarkable sophistication that suddenly collapsed: the Romans, the Lowlands Maya, the inhabitants of Chico Canyon... [He concluded that] they hadn't collapsed despite their cultural sophistication but because of it.

That is from a nice post Mari sent me by Clay Shirky about the collapse of complex business models.  Clay continues:

Early on, the marginal value of this complexity is positive - each additional bit of complexity more than pays for itself in improved output - but over time the law of diminishing returns reduces the marginal value, until it disappears completely.  At this point, and additional complexity is pure cost.

It is frequently hard to simplify complex systems, because "the whole edifice becomes a huge, interlocking system not readily amenable to change."  Often, "[c]ollapse is simply the last remaining method of simplification."

Clay's essay reminds me of what happened to the Soviet Union.  Gorbachev was unable to merely simplify central planning, and it finally collapsed.  All is not lost, however.  Bill Easterly argues here that complex systems can work well if they have "rules and incentives for the participants that make them self-correcting."