Financial Times analyzes increasing pressures on aid groups to demonstrate accomplishments with donor money

Ahead of the U.N. Millennium Development Summit, the Financial Times' Alan Beattie analyzes the effects of tightening aid budgets on development program funding, emphasizing how such changes are resulting in a push for increased measures to assess the effectiveness of aid.

"Over the past decade, donor governments often focused on volume rather than quality. At a series of summits, most notably at Monterrey in Mexico in 2002 and Gleneagles, Scotland, in 2005, the advanced countries signed up to a lavish set of promises to increase aid by 2010," Beattie writes. "That phase seems to have run its course. … Instead of endlessly debating the need for more money, aid practitioners are being asked to show what they are delivering for it." In addition to donor countries, developing countries have appealed for greater transparency and accountability in how aid money is used, the piece notes.

Though "[i]t is hard to argue in principle with more transparency and more accountability … development experts warn that not only is true clarity over the destination of aid very hard to come by, but that an obsession with finding concrete results could end up with perverse effects," Beattie writes, outlining the flaws associated with several efforts by donors to assess aid effectiveness, including countries' progress toward the MDG targets.

The article examines the U.S.' own aid policies, which direct "over half its bilateral aid to the purchase of American goods and services - a practice universally decried by development economists," Beattie writes. The article notes the Obama administration "is aware of these criticisms and is undertaking an overall review of U.S. assistance, but so far changes have only been on a small scale. Rajiv Shah, administrator of [USAID], says that in a food security programme it launched this year, the U.S. is shifting towards using recipient country systems, which means engaging with them at head-of-state level."

Beattie writes, "The aid business is under pressure, and does not have a simple story to tell. As with other areas of economics and public policy, there are genuine disagreements over what to do and how. But those disputes, along with warnings against governments pushing too hard to link money with results, may find little sympathy among European and American taxpayers wondering why their own health budgets are being cut while public money is sent abroad" (9/15).