Value for Money
and Civil Society
Civil Society Department
February 2011
Slide 1
Two questions posed by Bond:
• What does DFID want CSOs to do on VFM?
• What is DFID’s policy on VFM for CSOs?
Slide 2
What does DFID want to see CSOs doing on VFM?
…..shared agenda, we want civil society organisations to be as
effective as they can be in eradicating poverty..
…..same agenda for all organisations – multilaterals, governments etc
Putting effectiveness at the heart of a CSO’s work:
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Having a clear vision
Being clear about results
Having sound, evolving partnerships
Being well governed and having strong organisational processes
Maximising value in everything an organisation does
Slide 3
What does DFID want to see CSOs doing on VFM?
Cont.
Less about:
• Isolated used of methods or
approaches eg SROI, DALYs,
CBAs
• Analysis delinked from
organisational processes
• Applying a VFM recipe book or
step by step guidance
• VFM as an add on, discrete
process or activity
• Blanket application of formulas and
ratios
Slide 4
More about
• Organisation-wide thinking
• Justifying your approach in your
specific context
• Identifying options and prioritising
areas for maximising value
• Continual commitment to learning
and improving
• Piloting and monitoring
• Showing evidence and feedback
loops
• Being practical
Myths about Value For Money
• It’s a race to the bottom – it’s not about what’s cheapest (eg
use of volunteers)
• It hinders innovation and risk taking – should make risks
and assumptions explicit as part of the theory of change, but
also the potential opportunities for scaling up/wider
application
• It encourages easy-to-measure programming choices – if
the results chain is sound, should not drive particular sectors
or projects further down the results chain.
Slide 5
What is DFID’s policy on VFM in its funding of
NGOs?
• NAO: optimal use of resources to get desired outcomes
• Proposals need to explain in what ways funding will offer the maximum
benefit for the resources requested.
• Consider and cost different options.
• All funding applications are scrutinized for VFM in terms of
administrative and programme funding – this is not new.
• VFM considerations are part of funding decisions, but what is key is a
sound proposal. “If a project/programme has been well thought through,
then it is more likely to be scored highly in terms of value for money”
• Consistency - the budget, logframe and proposal need to tell a coherent
story of change
Slide 6
Ways to think about VFM:
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Slide 7
Be practical. Value for money is part of the overall assessment and can not be de-linked
from other aspects of the assessment eg design, rationale
Give sufficient information to assess VFM eg unit costs, costs per participant/trainee,
cost effectiveness or rate of return, other options considered.
Work through the programme with partners – VFM applies to all organisations
receiving funding.
Justify why the approach has been chosen in terms of providing the best value given
the time and resources spent, the type of spend.
Provide clear analysis of what VFM means for you eg type of organisation or spend,
position on the results chain, geog spread
Explain the nature of the project and the context as it relates to VFM – what are the
real costs of ‘doing business’? eg harder to reach groups/areas, security concerns etc
Demonstrate the institutional systems in place to assess/monitor VFM
Have strong results focus – VFM flows from that.
How can CSOs demonstrate value…
• Monetizing eg costs per beneficiary, unit costs and compare
with industry/local standards where available. Extrapolate
sensibly.
• Benchmarking Compare your costs against other
CSO/govt/private sector provider and show how costs and
benefits vary
• Showing efficiencies: % costs on activities compared to
running cost, where budgets are being spent, staff based,
outreach approaches etc
Slide 8
Questions we ask of proposals…and of ourselves!
• Are there recent examples to show how CSOs ensure value
for money in their work?
• Is there evidence to show that CSOs think about cost
effectiveness in decision making and resource allocation?
• Is funding performance based within the organisation?
• Have CSOs used any comparators (either internal or
external) to highlight value for money?
• Are robust monitoring and evaluation systems in place?
Slide 9
More questions…(continued)
• Is there evidence to show that CSOs are continually looking
to improve value for money?
• How does the organisation control administrative costs?
• Is there evidence that the organisation achieves economy in
purchase of inputs?
• Are robust financial management, accountability and auditing
arrangements in place?
Slide 10
Conclusions
• Joint learning process – DFID doesn’t have the answers.
But DFID is keen to share knowledge and lessons
• Continual improvement rather than a hurdle to jump over
• Should reinforce poverty and results focus, and enhance
effective partnerships
• It’s building an organisational culture of VFM, with partners
too.
• Trail blazing - much innovation and leadership in civil
society
Slide 11
Leading the UK government’s fight against world poverty
LONDON
1 Palace Street
London
SW1E 5HE
EAST KILBRIDE
Abercrombie House
Eaglesham Road
East Kilbride
Glasgow
G75 8EA
Slide 12
Tel: +44 (0) 20 7023 0000
Fax: +44 (0) 20 7023 0016
Website: www.dfid.gov.uk
E-mail: enquiry@dfid.gov.uk
Public Enquiry Point: 0845 300 4100
If calling from abroad: +44 1355 84 3132