Profit reporting in development assistance risks counteracting lasting effects

The Government's focus on results risks leading to the aid organizations' legitimacy being assessed only on the basis of their ability to achieve short-term and easily measurable results rather than the ability to give the recipients influence and thereby contribute to long-term results. In addition, it leads to increased administrative costs, something that Minister for Development Aid Gunilla Carlsson (M) herself has criticized. It writes Per Karlsson, a recent graduate student at the University of Gothenburg.

The requirements for reporting results that are imposed on organizations in connection with development assistance cooperation means that the organizations' legitimacy is largely based on short-term, easily measurable results. This has the consequence that long-term but more difficult-to-measure work risks being de-prioritized in favor of quantitative efforts of a more easily measured nature. This also means that the long-term effects of development assistance risk being completely absent, as an excessive focus on short-term results means that the possible effects of long-term work are overlooked.

These are some of the conclusions from a C-thesis that was written this spring within the framework of the bachelor's program in Global Studies at the University of Gothenburg. The survey has been based on material collected through interviews with representatives of the Swedish civil society organizations Diakonia and Plan Sverige, as well as through a review of governing documents and reports from the same organizations. The essay states how the increased focus on profit reporting in recent years has contributed to a situation where the organizations feel limited by the strict requirements, and where they are forced to work to meet the donor's expectations in front of the recipient's. Swedish development assistance cooperation has been criticized by Development Minister Gunilla Carlsson for being inefficient with high administrative costs, at the same time as these requirements risk generating a counterproductive effect as increased requirements for profit reporting mean that greater resources must be invested administratively.

In the Government Bill for Global Development (PGU) as well as in the Paris Declaration, which form the basis for Swedish development cooperation, the further development of performance management is emphasized as central to streamlining cooperation. By ensuring that development assistance generates good results, the intention is to ensure that the money goes where it does the most good. However, this focus is something a majority of the survey respondents are critical of, and something they believe creates a misleading picture. If strict requirements are placed on the organizations to show good results, there is a risk that operations will be limited to sectors with safe, easy-to-measure results. In the words of one respondent, a focus on a quantitative result means that intermediate relationships are overlooked, relationships that are often a prerequisite for the activity to be conducted at all and central to the final outcome of development assistance. One only looks at the measurable result, without taking into account the context in which the aid operates and what effect the measured result ultimately leads to. Furthermore, these requirements mean that recipients of the assistance cannot be involved to the desired extent, as the reporting requirements make long-term relationship building more difficult. When the recipient of the assistance is involved from the beginning to the end in the assistance process, they "own" it, which creates good conditions for the long-term duration of the result. Deteriorating relations have a devastating effect on development aid ownership and thus run counter to Swedish policy for global development as well as the Paris agenda.

Seen on the basis of that chain of results, a model that linearly aims to illustrate the course of events and process within, for example, development cooperation, several of the respondents believe how the focus has shifted from impact to output. With a focus that increasingly emphasizes measurable results rather than long-term effects, the focus is shifted from an ideological point of view with a focus on impacts, the final effect of the activity, to output, quantitative and directly measurable results that describe what has actually been done for the money, without further consideration of what effect the activities carried out actually have. Already in Government Bill 100 from 1963, which is the basis for Swedish development assistance cooperation even today, it is emphasized how "the measurement of development assistance is a meticulous task" and thus something that is neither simple nor obvious. What do you know about the effect an effort will have in 10 years if the focus is only on the results that can be shown in the short term? How do you ensure that money is used in the best way if what you measure is limited to a short perspective without further taking into account the context and significance of the effort made? How do you know that reported numbers really say anything at all about efficiency and utility? With far too strict requirements to show results, a seemingly positive results report risks masking a loss that has failed in the worst case.

One respondent highlights that there is often a so-called “baseline” at an initial stage of an intervention, a basic value that is used as a starting point in order to see how the situation changes over time compared with the original situation. Without an initial survey of what the situation looks like, it is difficult to say exactly what result the business has achieved. Short time frames complicate the work of change as the pursuit of results does not give time to thoroughly evaluate the situation, something that thus has consequences and can be devastating in the long run.

Of course, there must be requirements for accounting as well as results, but the fact that as much as 90 percent of development assistance achieves its goals must be able to have a greater confidence that the money will be useful. Real change takes time, so the requirements for accounting must be adapted accordingly.

That results are important, however, is something that is consistently emphasized by all respondents. If the organizations are to be able to continue the work that is being conducted today, it is necessary to be able to maintain the trust from Sida, just as Swedish taxpayers must be able to see what the money achieves. There is also a need for continuous monitoring of the work to ensure that the money really achieves the pre-set goals. If the results that are sought are limited to short-term accounting cycles without further consideration of a lasting effect, however, the aid and the money channeled through civil society organizations risk showing good results without further knowledge of what effect the aid will have in the long term, if any. Of course, there must be requirements for accounting as well as results, but the fact that as much as 90 percent of development assistance achieves its goals (Odén, 2012 - PDF) one must be able to have a greater belief that the money is useful. Real change takes time, so the requirements for accounting must be adapted accordingly.

This is a debate article. The author is responsible for analysis and opinions in the text.

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