Results first, payment after: how can it improve development aid?

(photo banner: Wouter van Gens)

Written by: Ania Sharwood


Imagine you are having a new house built. You probably won’t make the exact schedule for the builders; how and when they do what. You trust they know what they’re doing. The bill is paid because they deliver a house that matches your wishes: stable structure, nice design, comfortable etc. So how would this same principal work in development aid?

A new management model to cooperate with our partners: we’re ready to go!
Max Foundation has always put a lot of effort into measuring impact in the field. But we felt we could be focussing more on measuring results, rather than specific activities to get the results. This would increase our impact. It led us to a model called payment by results (‘PBR’), widely used in many areas of business and rapidly gaining ground in the development sector. 

The traditional way, for international NGOs in general, is to pay partners who execute their work beforehand. And the NGO decides on the specific activities. With payment by results however, like the analogy of building a new house, you pay afterwards. You simply indicate which results you want and make sure they are verified. After a period of extensive research, working closely with our partner NGOs on the ground and our team in Dhaka, Max Foundation is excited to announce we have now launched our own version of this model, called ‘Max PBR’. 

Why we love this model: creating independence
To prevent child mortality in the most vulnerable, poorest communities, Max Foundation believes in investment, rather than solely aid. We want to ensure parties ‘helped’ can build healthy villages and successful businesses that become independent of external funding. We believe the payment by results approach will strongly contribute to this.

Apart from being more confident about our results, partners will have more autonomy and be enouraged to develop new ideas, leading to innovation in the field. They will gain a favourable market position by working this way. And finally, we expect this way of cooperating will lead to a more egalitarian, rather than a ‘parental’,  relationship with local partner NGOs. As our colleague Eefje Dekkers, coordinating the implementation of this method, puts it: “For example, instead of being instructed how many educational town meetings to organise, they have to make sure a certain percentage of people have been educated. How they get this result, is left to their own assessment, creativity and expertise.”

Tablets, big data and a call centre
How will ‘Max PBR’ work exactly? In the urban slums and remote villages where Max Foundation works, people will enter data about their household situation digitally, using a tablet. A key indicator for measuring our impact is the occurrence of stunting (inhibited growth) in children. Parents register how many children they have, how much they weigh and how tall they are. They are also asked to share their current knowledge on hygiene and circumstantial aspects such as access to clean water.

  
(Photo by Wouter van Gens. Weighing child as part of programme to prevent stunting)

These data will be collated in a large database and form a baseline for measuring future results of interventions. A major advantage is that these valuable data on community health will also be available to others, including the government. After the interventions have been done, such as education on sanitation, Max Foundation will verify the results by asking people what the effect has been in their households. We have set up a call centre in Dhaka for this and field visits will also be conducted.


(Photo by Eefje Dekkers: testing the application on a tablet to enter household data)

What happens with a force majeur like a flood?
Is it fair to expect local NGO’s, with often minimal budgets, to invest themselves first? And surely they cannot be held accountable for unsuccessful results after major flooding, like the one this past summer? What happens when there are technical failings? In our preparation phase we took these aspects into account and developed our PBR based model accordingly. For example, we will pay partners partly beforehand and agree on reasonable terms, to alleviate responsibility in case of force majeurs.

We look forward to sharing our first results in the near future. We also hope our learnings will be useful to the whole WASH sector!

If you are interested to learn more about this, please contact our communication manager Bram Pauwels via bram@maxfoundation.nl 

 

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