Thursday, December 8, 2011

Comparable Aid Effectiveness Ratings strives to contribute to better aid by measuring effectiveness/impact of interventions and making them comparable. In order to achieve this, they support full project related transparency by donors and contracting agencies. 

The measurement is standardized and expressed quantitatively on an absolute scale. This allows full comparison at all levels: Between donors, projects, project types, etc. The concept focuses on project relevant information which can be aggregated to provide a full overview. It has been tested with Swiss agencies, but can be applied to any donor, project or implementing agency. 

A “universal evaluation standard” should have the in-built capability of allowing to adapt to future improvements and developments without having to greatly modify or drop older experiences for lack of compatibility. This is best done if the criteria are broad enough to accommodate new findings within them rather than having to add new ones. The criteria list, once again, is therefore essential and will necessarily have to be wide. 

It seems a daunting task to find and define a standard which satisfies all these requirements. AidRating professionals think that it is a worthwhile effort to try and see whether this is possible, and how such requirements could be met in practice. Because of this, they have attempted to design an evaluation framework which is capable to fulfill all these requirements. They report that they have found one and present it for discussion and possible further development. 

This is an abridged version of a longer article. It can be found under ”Universal Evaluation Standard” at this link.

Monday, December 5, 2011

Micro-development: Lend, Produce & Enjoy

In August 2010, just over a year ago, an online lending platform called The Hoop Fund launched, inviting users to "lend," "produce" and "enjoy" products from dark chocolate quinoa to hand-woven cardigans. 

Building on Kiva's model, The Hoop supports the fair trade movement, and helps fund small businesses in developing countries. But The Hoop reserves its finances for co-ops to improve labor conditions and product quality by funding new resources. 

CEO Patrick Donahue wrote on The Hoop Blog, "We were excited about how enthusiastically people responded to our vision of "invested consumption" how we each can invest in the makers of great products in the developing world, and create our own personal stories about how we turned our consumption into something more meaningful." 

As reported in a FastCompany article, that thinking led Marc Mathieu, a former marketing executive at Coca-Cola, to co-found The Hoop Fund, a new type of marketplace where consumers can shop while also investing in a sustainable supply chain. 

On The Hoop web site, you can make loans in $25 increments to support fair trade worker cooperatives in Peru, Thailand, and Indonesia. You can also buy a bar of chocolate or a wool sweater from the companies supplied by these co-ops. Once the loan is paid back, you can re-lend it to another Hoop project or use that money to make a purchase. "We're linking two ends of the value chain," Mathieu says. "I like chocolate, I eat chocolate, but I also promote this chocolate among my friends because I am personally invested in the change that this chocolate is trying to create at the producer level." 

The idea for The Hoop was first hatched by Deborah Hirsch, a fair trade expert who was struck by the success of online microlending platforms like Kiva. She partnered with entrepreneur Patrick Donohue, who had a track record of several successful enterprises in developing countries. "We thought, why can't this model be used for fair trade producers?" Donohue says. Hirsch and Donahue were on track to start a modest business when Social Capital Markets (Socap) conference co-founder Kevin Jones offered them funding and introduced them to branding superstar Mathieu. While Hirsch and Donohue drove the logistics, Mathieu utilized his marketing expertise to come up with the logo and the idea of the lend-produce-enjoy cycle that The Hoop is named for. 

Donohue acknowledges his platform's similarities to sites like Kiva and MYC4 but points to some key differences. "Kiva is a non-profit; most of their revenue comes from donations," he says. "Our business model is around driving sales for the products." 

The Hoop takes a cut of all products sold on the site, and gets promotional fees from partnering brands to keep our loans at 0% interest. Because the suppliers are established coops, there is less risk of loan defaults. Ultimately, The Hoop aims to change the producer-consumer paradigm to something a lot more connected. "When people start looking at their products in a different way and think about where things come from, they start pulling that into everyday decision-making," said Donohue. "The impact we hope to have is a shift in consumer value where people can say, 'there's a shift because I invested in it.'" 

The Chronicle of Philanthropy interviewed Donahue on how the site creates a sense of emotional investment in the products we purchase: "If you invest in the production of coffee, that's your coffee too," he says. "So you can go out and say to your friends and family, 'I helped make this cup of coffee. You should try it out.'" 

Thursday, December 1, 2011

Venture Capital Approaches for Aid

The U.S. Agency for International Development has launched the Development Innovation Ventures program to apply venture capital approaches to innovation in development. The idea is to use these methods to accelerate development outcomes while reducing the cost.

A model is to learn from the methods used in Silicon Valley and other innovation corridors that have fostered private sector innovation at blazing speed for decades. They could be useful in accessing the new capital flows in the developing world. Both academic testing and the venture finance models should jump the foreign assistance fence and become part of standard practice – a new development paradigm. 

The Innovative Ventures concept uses staged financing much like the Angel Investors in the Silicon Valley. DIV starts with small amounts of money to source and test promising ideas. Once the proof of concept is done, a little more is invested to find out if the market will actually adopt this innovation. And only then, once there is clear evidence that the innovation is working, larger amounts are invested to widely deploy the solution. 

It does not matter whether the innovation is planned to scale through the private or public sector. The emphasis from the beginning is that the idea must have the potential to improve the lives of millions of people and be sustainable in the long term without continued infusion of donor dollars. 

In just one year of operation, USAID is already seeing impressive results through DIV. One innovation is showing a 97 percent reduction in a self-test for the second most common reason moms die in childbirth. Another reduced fraud in the polling centers where it was deployed in elections last year in Afghanistan. Based on these results, it was used in the Ugandan elections with similar success. 

Maura O'Neill, the Chief Innovation Officer for USAID, writes in a recent Devex blog that "We know if we are to continue our quest in the development community to get cheaper, faster, more sustainable development outcomes, we need to grab great ideas from wherever they come. We need to seek real evidence that they can work at scale. We look forward to others building on the innovative financing methods so we might all learn together. Millions are counting on us. Time is not our friend. What methods are you finding that work?"