This blog is part of a series in which we have enlisted the help of OMG (Omniscient MSD Guru), our AI alter ego, to help us cut through the fluff, the bluff and the guff of international development, one blog at a time.
Value for money.[1] Love it or hate it, it’s a part of our day job. There’s nothing inherently wrong with trying to quantify the results of spending somebody else’s money. So, what gives? Why does a bit of basic maths trigger a collective eyeroll? Let’s see what OMG has to say – or better yet – sing about it. Music is close to our hearts at Springfield, so let’s see what lyrical insights OMG can compose.
OMG, give us a playlist that makes sense of VFM.
“I want it all, I want it all, I want it all… and I want it now!” – Queen
Pop this classic on when funders demand All the Things. How can we quantify climate smart resilient, gender responsive transformative, sustained income increases that respond to host government priorities in geographic priority regions? Faced with impossible demands, it feels like each morning we get up we die a little – as Freddie might put it – but still hope to find somebody to love us.
Funders struggle to define ‘value’, let alone measure it. They are often faced with quantifying the unquantifiable. Fluffiness is part of the problem but fickleness is also a culprit. Programmes end up like a Christmas tree, bending under the strain of an expanding variety of additional ‘benefit baubles’ (growth, GEDSI, localisation, greenness… the Ambassador’s fave). And the funder’s political direction might change midstream, altering what value is desired. The best you can do is negotiate a tight core definition of VFM (the trunk of the Christmas tree), e.g. net additional income per dollar spent, and account for the baubles separately, outside your core VFM.
“Cheap thrills” – Sia
Sia’s not the only one who likes cheap thrills and we can’t just blame donors. Implementers sometimes go for easy wins too. Training 500 people for pennies might look good in a report or P&L statement but that’s about it.
Just because you spent less money doesn’t mean you fixed anything. If your VFM report is all ‘efficiency’ and no ‘effectiveness,’ congrats – you’ve measured how well you wasted money. Simplicity is always the default position. Inputs are easy to measure, so it is natural – and expedient – to define achievement in simple terms too: activities and outputs (e.g. people trained, vaccinations injected, clinics built), not sustainable outcomes. The bean counters might like this but it’s the developmental equivalent of a one-hit wonder rather than a lasting classic. More Baha Men than The Beatles. Which would you rather have on your CV or capability statement?
“Money for nothing” – Dire Straits
Some donors, in pursuit of VFM, try to cut the transaction costs of aid by giving dollops of funding directly to host governments (or NGOs or disadvantaged people). Cut out the middleman and just send a cheque.
This approach risks funding the status quo and prolonging dependency; it is difficult to see how it can be transformational or sustainable. It’s big on Efficiency but Effectiveness or Equity are harder to judge because it all happens “so far away from me” to tell whether you have made a difference (to borrow from Dire Straits again).
“Started from the bottom, now we here!” – Drake
The soundtrack for glory. If you stimulate real, lasting change you can demonstrate real VFM. There’s a missing ‘E’ in VFM: Exit.
Hell yes, OMG! If benefits continue to flow without your ongoing input, the value side of the equation gets bigger and your VFM looks better. And if you stimulate private sector investment, then you achieve more with less. But you need time, you must explain to your funder that leverage and multiplier effects are intentional and you have to measure it all. (Some funders get freaked out by investment leveraged because it complicates their spending ‘burn rate’. VFM? Go figure.)
“One of these things is not like the other” – Sesame Street
Big Bird nailed it. It isn’t helpful to compare apples to oranges, right? Is Mozart more valuable than Lady Gaga? ABBA vs Ray Charles? Do No 1s matter most? Album sales? InstaFaceTube likes? Longevity? Movie appearances? Transformational fusion of gospel, blues, jazz and country? Can VFM ever compare vastly different aid interventions to inform decisions?
Vexing questions, OMG. We need some Sesame Street smarts here. Springfield likes to keep things crunchy. VFM is a helpful rule of thumb for assessing an intervention or comparing similar types of intervention. But when aid is so diverse and value is so subjective, how useful can it be? An immediate ‘hit’ of direct delivery or sustained impact? Policy change or more latrines? Skilled youth or cleaner energy (perhaps cleaner, more energetic youth)? Economists, actuaries and VFM experts (yes, they exist!) will say it can be done. We’d say it is often done without rigour or transparency and interpreted without reference to the small print (e.g. the titanic assumptions).
Has a focus on VFM helped or hindered more effective development?
Assessing VFM was driven in part by donor-country politics. In an era of rising aid budgets (remember those?), scrutiny increased. Justifiably. Aid was treated like any other government departments, which made it more politicised, with its advocates and critics. VFM has been a tool used by both.
Haters saw aid as a racket and demanded business-like rigour, measuring return on investment. Some would argue that for the haters, no amount of aid benefit would ever be ‘value’. VFM was just a stick to beat aid with.
Lovers played the VFM game too, perhaps as a defensive measure. Unwittingly, they fell into the simplicity trap: aid reduced to numbers. At one end of the love spectrum is Bob Geldof and LiveAid: “give us yer f***in’ money” and “just X dollars will save an African life”. At the other end are the likes of Banerjee, Duflo, Gates and Stewart (see GiveDirectly, partly funded by Mr Musk), sophisticated advocates of a more reductive form of aid, so long as it is quantified: more is better, ends matter more than means, silver bullets rock.
To shift from music to theatre, Oscar Wilde wrote that “a cynic is a man who knows the price of everything and the value of nothing”. In our instantly gratified social media age, it’s not surprising that VFM is making us more TikTok and less Bohemian Rhapsody. VFM can be a useful measure, when not (ab)used in isolation, but we fear it has contributed to a dumbing down of development assistance, leaving it in a worse place.
[1] One of the most common conceptual frameworks for VFM is the 4E approach which uses economy, efficiency and effectiveness and equity. Economy considers the degree to which inputs are being purchased in the right quantity and at the right price. Efficiency refers to how efficiently the project is delivering its outputs, considering the rate at which intervention inputs are converted to outputs and its cost-efficiency. Effectiveness assesses the quality of the intervention’s work by considering the rate at which outputs are converted into outcomes and impacts, and the cost-effectiveness of this conversion. Equity refers to the degree to which the results of the intervention are distributed.