How to increase impact in a time of decreasing aid

The United States has budgeted a 36 percent decrease in foreign aid, halted the publication of aid data, and begun dismantling the U.S. Agency for International Development (USAID), developments that are having far-reaching consequences for low- and middle-income countries worldwide. Other Western countries are making significant cuts too—aid from Germany, the United Kingdom, and France dropped by 13 percent, 7 percent, and 3 percent, respectively, this year with more cuts next year according to data from the Center for Global Development, a nonpartisan organization that seeks to reduce global poverty through economic research. 

As a result, donors, philanthropists, and low- and middle-income countries need to simplify and prioritize their contributions and goals to ensure their collective efforts make the most impact. That’s according to two leading experts on foreign aid who spoke as part of the first installment of the Stanford King Center on Global Development’s two-part Speaker Series on the Future of Aid. The September 30 event, Innovation Under Tighter Constraints, featured insights from Rachel Glennerster, who leads the Center for Global Development; and Norma Altshuler, of Open Philanthropy, a funder and donor advisor. Their conversation was moderated by King Center Faculty Director Katherine Casey, the RoAnn Costin Professor of Political Economy at the Stanford Graduate School of Business.

Glennerster said she thinks aid funding needs “radical simplification.”

“Development is not stopping—there is still a lot of work to do in terms of… trying to make sure development funding is spent effectively,” Glennerster said. So, “what do we do about it? We should be… making fewer loans or grants; we should be making those much bigger… really focused on the things that we know are effective… When we’ve got less money, we need to focus on what we know works and do it at scale.”

What might simpler, more focused aid look like? Both Glennerster and Altshuler pointed to PEPFAR, a U.S. initiative focused on HIV/AIDS relief, as a model. Until recently, PEPFAR, which has invested more than $110 billion in HIV/AIDS prevention and treatment since it was created in 2003, has enjoyed widespread support in the United States (while the Trump administration has indicated PEPFAR will continue, aid organizations say they have experienced decreases in funding and the program’s authorization from Congress has not yet been renewed). PEPFAR is also an example of a simple, easy-to-understand effort.

“It’s too hard to explain what USAID did,” Glennerster said, noting the sprawling program’s many priorities and goals. “It’s very easy to explain what PEPFAR does… you get HIV medicines to people who are sick.”

Still, Glennerster said the coalition that came together to support HIV/AIDS relief—activists and members of the LGBTQ+ community, evangelical Christians, and the administration of President George W. Bush—would be hard to recreate today.

“Somehow these groups who now would not be in the same room together, were working together,” she said. “We’ve got to somehow tie that back together.”

She said progressives and development practitioners bear some responsibility for pushing other groups, including religious organizations, away.

“We’ve been so unwelcoming—it’s like, ‘development is a very complicated thing, leave it to the experts, don’t worry your pretty heads about it,’” she said. “And then we’re surprised that people don’t support it anymore. I don’t think that was a good strategy.” 

Altshuler said development projects can attract donor and aid dollars when they are both high-impact and “geopolitically realistic,” or aligned with donors’ priorities and supply chains. For example, the US funds ready-to-use therapeutic foods (RUTF) to treat children with severe acute malnutrition; this product is often made with US grown peanuts.

She also said that researchers can help identify high-impact initiatives that can attract philanthropic and aid agency funding, pointing to work on lead poisoning by Stanford King Center researchers including Jenna Forsyth and Stephen Luby that received funding from Open Philanthropy. 

“That’s the kind of idea that can be resonant… and it’s also cheap enough that philanthropists, including us, have been able to make a significant contribution,” she said.

Another way to increase impact, Altshuler said, is for donors to offer technical support to government officials in low- and middle-income countries who work to distribute aid funding and implement programs. As an example, she described a partner organization, the Clinton Health Access Initiative, which helped the Ministry of health consolidate health care deliveries in a country so that one truck might deliver materials for several different programs rather than multiple trucks making those deliveries individually. That requires centralized coordination and planning, she said.

Glennerster agreed that more coordination is required. She also said donors and aid recipients should play to their strengths. Philanthropies are well suited to funding research and development projects aimed at finding new solutions to widespread challenges. Multilateral organizations such as the World Bank, on the other hand, are better at scaling those solutions up. Recipient countries themselves, meanwhile, may be best suited to tailoring implementation on the ground.

The speakers also took questions from audience members, including about how to improve governance in low- and middle-income countries in a way that would increase their capacity to effectively use aid dollars. Glennerster noted that she and Casey have worked together on research about improving democratic leaders, processes, and institutions. 

“It’s very depressing to see some backsliding on democracy,” she said. “On the other hand, let’s go to the evidence that actually shows there are some things we can do.”

After the event, Casey said “I was particularly excited to host Rachel and Norma because of the incredible breadth and depth of their expertise, within and across their two careers they have worked on this issue from the perspective of academia, wealthy country donor, philanthropy, thinktank and thought partner to low income country governments. They brought nuance and sharp candor to their remarks that engaged and energized the audience.”

Altshuler said, “It was energizing to see the enthusiasm the Stanford community brought to this conversation. In an era of shrinking aid budgets, we need new ideas for cost-effective ways of spending limited resources, and the center can be part of how these ideas emerge and gain traction.” 

Check out our latest podcast episode of Eyes on Development for an extended conversation between Rachel Glennerster and Kate Casey on smarter, cost-effective aid.