1. Value for Money and Civil Society
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Civil Society Department
February 2011

2. Two questions posed by Bond:
What does DFID want CSOs to do on VFM?
What is DFID’s policy on VFM for CSOs?

3. 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:
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
Objectives for CS no different to those of other actors – govts, private sector, donors etc

4. 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
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

5. 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.
Example: Saying something is cheap doesn’t mean it offers VFM. Many proposals say we use volunteers instead of consultants, volunteers cost less, that is VFM. Only holds if can:
Show you get the same or greater output from the volunteer (or at worst get 10% of the expected output if the cost of the volunteer is 10% of that of a consultant)
Provide the total cost of the volunteer (ie their cost plus organisational support to place and manage them) compared to a consultant.
You can justify the human resource issues raised.

6. 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
If a project/programme has been well thought through then it is more likely to be scored highly in terms of value for money

7. Ways to think about VFM:
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.
If the project has been well thought through then it is more likely to be scored highly in terms of value for money.

8. 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
Link to organisations presenting and talk through good specific egs from recent funding rounds eg WWF, Alliance, Cafod etc

9. 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?

10. 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?

11. 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

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