Merry Christmas, Happy New Year, and goodwill to everyone! Unless, of course, you’re a fat cat poverty baron, in which case you’ve got a lot to answer for. DFID has launched two inquiries into malpractice at Adam Smith International following Daily Mail revelations; more attacks swiftly followed on cash transfers and the World Bank (paywalled). It’s caused no small amount of navel-gazing and handwringing among my friends working in the aid sector – many of whom work for the aforementioned poverty barons. Consequently, this blog examines how DFID should respond – if at all – to these attacks on aid contractors.

It would be true – if complacent – to point out that right wing media attacks on foreign aid are never going to stop. Whether because DFID is expanding in a time of austerity, exporting the British welfare state across the world, or simply helping foreigners, aid has always been a target. But the attacks are still cause for concern. Firstly because if foreign aid doesn’t maintain some level of popular support, it will disappear before long. And secondly because, as many aid insiders will admit, Daily Mail accusations often have more than a grain of truth. Aid contractors are often overpaid and incompetent. Millions of pounds are wasted. The aid system is simply not working as efficiently or well as it should. So what should DFID do about this? How can they control contractor costs, and minimize wasted budget? Here are some thoughts – please add yours in the comments below.

• Cut DFID’s budget. Sorry Make Poverty History, sorry Oxfam, really sorry Bob Geldorf. I was actually a devotee of the 0.7% aid target until recently. But I’m increasingly thinking that DFID can’t manage the huge sums which have been allocated. Whether you believe that the 0.7% target is right or not, it makes no sense to give a target with no regard to the capacity of the agency to spend it. Perhaps the situation would be changed with a significant expansion of DFID’s staffing and capacity to manage funds, but that doesn’t seem likely any time soon.
• Stop using private contractors to deliver aid. A tempting idea, but currently impossible; DFID is locked into the model of using private contractors. There is simply no other politically acceptable way to deliver sufficient volumes of aid. Direct budget support is (I think) the best way to deliver aid; but that’s been out of fashion for a good few years now, and there’s no prospect of a Conservative government bringing it back. NGOs are a possibility, but they don’t have the spending capacity of the big contractors; and the more they take multi-million pound grants, the more they begin to resemble contractors themselves. UN and World Bank are another possibility, but if anything they are less transparent and more expensive than contractors. In this environment, there’s not much that aid workers can do beyond making the case for government to government transfer – an argument that seemed to be won not that long ago – and continuing to defend cash transfers as the best way to get aid directly to the people who need it.
• Demand full transparency. I find it shocking that DFID doesn’t automatically review the full budgets of all projects that it funds, including profit margins. I just don’t really understand how DFID could expect to keep costs down without this transparency. A more extreme version would be to publish all contracts online, as the Publish What You Buy group advocates. Transparency doesn’t necessarily push down costs, but it will certainly dramatically increase the incentives for DFID to try to do so.
• Invest in local staff. We’ve written about this before, at length; see here and here. In the long run, this is the only way to push down the cost of staffing, which is the major input for a lot of development projects.
• And the rest? This blog has posed fairly trivial changes so far; tinkering rather than rethinking. Given that the problem of outsourcing affects the whole public sector, not just aid (a fact often lost in the aid debate) it would be interesting to hear from other parts of the government on how they control contractor costs. One idea which I’d be interested in hearing more about is to set up a state owned contractor, independently run, which passes all profits back into DFID. This could bid against private aid contractors, ensuring competition and allowing government more scrutiny over what the actual costs are for this type of programme.

So that’s a quick run-through of my initial thoughts. Anything to add?

A defining image of modern international development is that of young aid workers, wearing fashionable jeans with bulging wallets, ignoring destitute beggars as they walk down the street. If you’re reading this blog, chances are that you’ve seen this yourself – or, even more likely, felt a twinge of guilt as you ignored starving people, on your way to work at an organisation that purports to help them.

Given that aid workers are notionally driven by a desire to help others, I’ve seen surprisingly few expat aid workers actually give money to beggars. I think this is mostly caused by a mixture of guilt and confusion about whether this actually helps. Does it just trap people in a cycle of poverty? Will they just use it for drugs and alcohol? Will it encourage them to pester more foreigners in future? With all these uncertainties, it’s easier simply to ignore the problem.

Understandable, but I hope I’m not alone in finding this morally questionable. In countries without a social safety nets, people begging on the street often genuinely have no other way to avoid starvation, and giving a few pennies can do more real good than your fancy new M&E framework. (Hard to believe, I know). For aid workers to simply ignore people who have nothing is an unpleasant dereliction of the instincts which got many of us into this business in the first place. So for those also wrestling with this challenge, here’s how I give.

• See what local people do. When you walk around with local staff, how do they treat beggars? Do they donate a coin, a note, or nothing? Do they give in some places, but not in others? Almost everywhere I’ve worked, people have given money regularly to beggars – often much more so than I would myself. Watch the local customs and understand what’s appropriate.
• Give small amounts of money, regularly. I get change every morning from the bus ride to work, and keep a few coins in my back pocket to give to beggars on the street. This works out as about three pence a day – pretty affordable for me. Giving large amounts of money can encourage people to stay on the streets (or to aggressively target foreigners) but I figure nobody would remain a beggar on the off-chance that someone will tip them a penny. Keeping money in my back pocket means that I don’t need to get out a wallet, which reduces the chance of theft.
• Don’t give if you feel uncomfortable or targeted. I don’t give to people who run up to me because I’m a foreigner, who knock on my window in the car at traffic lights, or who ask in an aggressive or unpleasant way. Selfish perhaps, but I think I have the right to walk down the street without being harassed.
• Don’t give to children, or people using children to beg. Arguments about the role of children in income generation will run and run – witness the latest debate on child labour. Based on conversations with people working with streetchildren, I think that giving money to children is more likely to encourage them to stay on the streets, even if they have homes to go to. Giving money to people who are using children to beg – for example getting their kids to run after you – also encourages this behavior. It’s tough sometimes, but I suggest ignoring children.
• Give larger amounts to serious charities. Of course, your three pence a day is hardly solving the root causes of urban poverty. Neither – in the vast majority of cases – is the project you’re working on. I think every aid worker should give 10% of their income to a well-chosen charity; whether one working abroad or back in your own country. The excuse that ‘you’re doing good through your work’ doesn’t really cut it, no matter how great you think your latest two-hundred page report was.

This is a pretty idiosyncratic list, based on limited experience and conversations with people working with the homeless. It’s clearly not a solution to poverty – but it does help me sleep at night. What would you add?