USAID’s push to make the most of every dollar

The U.S. Agency for International Development is throwing its weight behind cost-effectiveness — and in particular, evidence-based direct cash transfers programs — through two new position papers launched this morning. The papers represent a “very powerful signal” of where the agency is headed, USAID’s Isobel Coleman told Devex, and a call for USAID to use evidence on cost-effective programming to design, deliver, and evaluate the agency’s work across the world. The focus is on initiatives that maximize the impact of every dollar spent, Coleman said — and cash transfers are one way to do that. “The needs are tremendous, and the resources are very, very stretched,” said Coleman, USAID’s deputy administrator for policy and programming, in a phone call before the launch. “Now more than ever, we need to make sure that we are using our resources, and stretching them to go as absolutely far as possible, which really means a deepened emphasis on cost-effectiveness.” For the last few years, momentum around cost-effectiveness has been building at USAID, especially after the agency established the Office of the Chief Economist last year. Since the office opened last July, it has grown to a staff of 30, according to Coleman, and the team has worked with those across USAID to advise on how evidence on cost-effectiveness can be applied to the agency’s programming. The position papers outline how USAID is hoping to push that work forward, including through the use of direct monetary transfers to individuals, households, and microenterprises. “It’s not just about what’s good and what’s not good,” Coleman told Devex. “It’s really about understanding what’s best.” The push toward cash transfers Direct monetary transfers are not new to USAID — or to Coleman, who formerly served as the chief operating officer of GiveDirectly, a nonprofit centered on unconditional cash transfers. In Coleman’s remarks on Thursday morning, she spoke about how the agency had already been pushing forward on such programs in several countries, highlighting how in Uganda, those given cash transfers in 2008 still had higher incomes than their peers — to the tune of 17% — 12 years later. Similar programs have been operating in Kenya, Malawi, and Ghana, she added, with one study from Kenya showing that for every $1 transferred to low-income households, roughly $2.50 of additional economic activity was created. “The fact is that direct monetary transfers have been studied pretty much more than any intervention out there right now, in a rigorous way,” Coleman told Devex. “There are literally more than 100 studies that demonstrate that in fact, recipients spend the transfers wisely.” The monetary transfer position paper states that USAID “should aim to be a leader” in the direct monetary transfer space and utilize such approaches to deliver more flexible, localized programming. Such initiatives should be seen “as a core element of its development toolkit,” the paper posits, and pushes for a “sustained, systematic evidence-based adoption of the approach.” It prioritizes five principles to doing so, including: • Assessing existing evidence to determine whether cash transfers are a good fit for a project. • Harnessing monetary transfers to strengthen local markets. • Integrating cash transfers into USAID’s localization approach. • Utilizing USAID resources to design such programs. • Relying on the agency’s existing authorities and resources to manage monetary transfers. “We have tremendous needs and limited resources, so making sure that every single aid dollar is going as far as it possibly can — and that is really the impetus behind the cost-effectiveness work that we’re doing here at USAID,” Coleman said. The overarching goal: cost-effectiveness In the launch of both papers on Thursday morning, Coleman spoke about how USAID has “overhauled” the agency’s program design and implementation policy to hone in on cost-effectiveness — including through using research generated by the agency itself. “In the past two decades, there has been a large increase in the number of impact evaluations conducted and the amount of cost-effectiveness evidence available,” the position paper on cost-effectiveness states. “Yet the Agency has not fully leveraged the even larger — and still growing — body of cost-effectiveness evidence produced by others in low- and middle-income contexts.” Impact evaluations in low- and middle-income countries have quadrupled over the last decade, Coleman said, speaking from the launch of the position papers on Thursday — expanding from 2,000 studies in 2014 to more than 8,000 today. One of the cost-effective programs highlighted in the paper includes an immunization effort held by Seva Mandir, a local nonprofit organization in India. Seva Mandir held two types of immunization camps — the first of which provided free shots, and the second of which provided both free shots and a free bag of lentils. Researchers found that while villages reached by the first camp had a childhood vaccination rate of 18%, those reached by the second camp were vaccinated at 39%. In the camps providing lentils, each nurse vaccinated double the number of children, halving the cost of a full immunization from $55.8 to $27.9 per child. “My predecessors a decade ago really couldn’t have done this, because the body of evidence in the development world really didn’t exist in the way it does today,” said Coleman. “It is that growing body of evidence that provides us with the insights that we can glean to determine what is more effective in terms of programming, and what is not.” To capitalize on that evidence, the cost-effectiveness position paper outlines five principles to drive those aims further: • Focusing on impact per dollar. • Assessing cost-effectiveness by comparing different approaches. • Carefully considering local context. • Using existing evidence or producing it where none exists. • Remembering that cost-effectiveness is one consideration, but not the only one. USAID is now building a network of nearly 100 “cost-effectiveness evidence champions,” the deputy administrator explained, staff committed to pushing this work who are embedded in teams across the agency. They will also be partnering with external experts, having recently launched a new global platform — Promoting Impact and Learning with Cost-Effectiveness Evidence, or PILCEE — with the Center for Effective Global Action at the University of California, Berkeley, which works to provide technical support on cost-effectiveness to USAID. “In the years ahead, this will mean that any USAID staff member designing or managing a program should be able to access, at their fingertips, insights from the global evidence base about which approaches are most cost-effective for the outcomes they are trying to advance,” Coleman said at the launch. “It will also mean USAID is a larger contributor to that global body of evidence, conducting more impact evaluations to help inform our own decisions and those of our partners.” Update, Oct. 10, 2024: This article has been updated to clarify the name of the platform USAID has launched with the University of California, Berkeley.